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- Country Name: Mongolia
- Assets: MNT 5,116,074,697
- Profits: MNT 108,024,259
- Ownership: 41.30% Sawada Holdings Co.
13.10% H.S. International (Asia) Limited (Hong Kong),
22.96% Tavan Bogd Trade Co. Ltd. (Mongolia),
13.32% Mrs. D. Hulan,
9.32% International Finance Corporation
- Date Modified: Jul-2015
Syndicated Analyses:Moody's Corporation "Moody's changes ratings outlooks of Mongolia banks to negative and affirms ratings" 08-Jan-2014:
Moody's change in the ratings outlooks to negative reflects the fact that the banks remain vulnerable to a deterioration in asset quality and high borrower concentration against the backdrop of intensifying adverse developments in the operating environment. Given the resource-based nature of the economy and a large lending concentration in mining, there is the risk of boom-bust cycles, resulting in a volatile operating environment.
Moody's has affirmed Khan Bank's B1 local currency deposit ratings, and the bca remains at b1. Its bca of b1 reflects its (1) strong franchise in Mongolia as the largest bank in terms of loans, as well as its extensive nationwide branch network, the largest among all domestic banks; (2) adequate capital position, as expressed by its Tier 1 capital ratio of 10.4% at end-September 2013; and (3) stable asset quality, mainly attributable to its large retail customers, which accounted for 64% of its total loan portfolio at end-September 2013. The ratings do not incorporate any uplift for systemic support because Mongolia's sovereign rating is also B1. However, we believe that there is a high probability that the bank would receive support, in case of need, due to its importance to the domestic economy.Reuters "Fitch Affirms Mongolia's Khan Bank at 'B', Outlook Negative" 12-Dec-2014:
The VR-driven IDR of the bank captures the weakening operating environment in Mongolia. Fitch expects asset quality of the bank to worsen as the weakening local currency lowers the capacity of borrowers to repay their foreign-currency loans. Liquidity is tightening following the policy rate hike in July 2014, while banks will face higher funding costs because of higher risk premiums demanded by international investors and stronger deposit competition.
Khan Bank's Outlook remains Negative considering the pressure on asset quality from the deteriorating operating environment. The rating also captures the bank's single related party lending exposure, which stood at 5.6% of total capital at 1H14. While performing, it is a concentration risk. We expect the bank's large retail lending portfolio to hold up well as these borrowers would be less affected by depreciation in the local currency.
Fitch downgraded the Support Rating (SR) and revised SRF of Khan Bank amid a weakening of the Mongolian government's ability to provide timely support to the banking system, due to shrinking foreign reserves and weakening local currency, which is reflected in its 'B+' sovereign rating with Negative Outlook. This is in spite of Fitch's belief that the government's propensity to support systemically important banks has not reduced.Wikileaks Public Library of US Diplomacy "Post's Response Re Investment Guaranty To Calvert Social Investment Foundation For Mongolian Microfinance Institutions Khan Bank And Khas (Xac) Bank" 01-Aug-2007:
Post has the following response to OPIC's request for background information regarding the two possible Mongolian microfinance institutions (MFI) Khan bank and Khas (hereafter using local spelling "Xac", but pronounced "khas") bank. First, to post's knowledge neither Khan Bank nor Xac bank has any ties to terrorism, money laundering, corruption, and violations of Mongolian or U.S. law. 2. (SBU) Both institutions have long and deep ties with the U.S Government.
Formally owned by the Government of Mongolia (GOM)and insolvent, Khan Bank was rescued by a USAID-funded management team and restored it to financial health. Once restored, AID assisted with the privatization of Khan Bank to a Japanese-Mongolian joint venture, which has continued to manage the bank according to best practices. In addition to the Japanese-Mongolian owners, other investors in Khan Bank include Development Alternatives Inc. (DAI) and the International Finance Corporation (IFC). In a May 4, 2007, report on Khan Bank, Fitch Ratings rated the bank as "stable" with a B+ issuer default rating for both foreign and domestic debt. 3. (SBU) With its extensive 439+ branch system, Khan Bank is Mongolia's largest retail bank serving most of Mongolia's 2.6 million citizens in some way. Khan Bank's reach makes it an essential institution for distributing pensions, salaries, and other Government of Mongolia transfers to both an urban and rural constituency that has difficulty accessing the relatively small number of branches of Khan Bank's competition. In addition, Khan Bank's branch network makes it the ideal venue for business to business transactions throughout Mongolia.Wikileaks Public Library of US Diplomacy "Shadowy Buyers Near Purchase Of Largest Mongolian Bank" 22-Dec-2006:
American CEO of TDB's chief competitor, Khan Bank (KB). Japanese-owned and American-operated, Khan Bank has the largest branch and Mongolian Currency deposit base in Mongolia.Wikileaks Public Library of US Diplomacy "Mongolia's Savings And Loan Crisis Contained?" 30-Nov-2006:
A recent poll found that Khan Bank was the number one trusted bank in Mongolia, effectively allowing them to pay 2% less interest to depositors over competitors.Wikileaks Public Library of US Diplomacy "Financial "Mongol-Philia": An Investment Debutante Emerges On The International Stage?" 12-Feb-2007:
An American banker of a Japanese-owned and U.S.-operated Khan Bank, told CommOff of amazing, unprecedented offers for cash from extremely reliable funding sources. A year ago the bank could not get long-term debt dollars, Euros, or yen at interest rates it could afford. But in late December and early January, the bank found itself the recipient of tremendous attention. Citibank's Hong Kong office contacted the banker and asked him if he'd be amendable to taking on US$25 million in debt at almost acceptable rates. JP Morgan offered much the same deal. Several unnamed Japanese financial institutions made similar offers. 3. (SBU) The World Bank's International Finance Corporation (IFC) and the European Bank of Reconstruction and Develop (EBRD) were also willing to pony up long-term financing, too . The banker stated that collectively the offers totaled up to over US$135 million.