Identifier
Created
Classification
Origin
07ULAANBAATAR444
2007-08-01 03:49:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Ulaanbaatar
Cable title:
POST'S RESPONSE RE INVESTMENT GUARANTY TO CALVERT SOCIAL
how-toVZCZCXRO7560 RR RUEHLMC DE RUEHUM #0444 2130349 ZNR UUUUU ZZH R 010349Z AUG 07 FM AMEMBASSY ULAANBAATAR TO RUEHC/SECSTATE WASHDC 1354 INFO RUEHUL/AMEMBASSY SEOUL 2879 RUEHBJ/AMEMBASSY BEIJING 5700 RUEHKO/AMEMBASSY TOKYO 2596 RUEHML/AMEMBASSY MANILA 1424 RUEHBK/AMEMBASSY BANGKOK 1506 RUEHLO/AMEMBASSY LONDON 0167 RUEATRS/DEPT OF TREASURY WASHDC RUCPODC/USDOC WASHDC 1345 RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC 0664
UNCLAS ULAANBAATAR 000444
SIPDIS
SENSITIVE
SIPDIS
STATE PASS OPIC FOR LOREN RODWIN
STATE PASS TDA AND EXIMBANK
STATE FOR EAP/CM AND EB/IFD/OIA
TREASURY FOR TTYANG AND FINCEN
TREASURY FOR USEDS TO WORLD BANK, IMF
MANILA AND LONDON FOR USEDS TO ADB, EBRD
E.O. 12958: N/A
TAGS: EINV ECON OPIC PGOV MG
SUBJECT: POST'S RESPONSE RE INVESTMENT GUARANTY TO CALVERT SOCIAL
INVESTMENT FOUNDATION FOR MONGOLIAN MICROFINANCE INSTITUTIONS KHAN
BANK AND KHAS (XAC) BANK
Ref: STATE 00103089
SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION
UNCLAS ULAANBAATAR 000444
SIPDIS
SENSITIVE
SIPDIS
STATE PASS OPIC FOR LOREN RODWIN
STATE PASS TDA AND EXIMBANK
STATE FOR EAP/CM AND EB/IFD/OIA
TREASURY FOR TTYANG AND FINCEN
TREASURY FOR USEDS TO WORLD BANK, IMF
MANILA AND LONDON FOR USEDS TO ADB, EBRD
E.O. 12958: N/A
TAGS: EINV ECON OPIC PGOV MG
SUBJECT: POST'S RESPONSE RE INVESTMENT GUARANTY TO CALVERT SOCIAL
INVESTMENT FOUNDATION FOR MONGOLIAN MICROFINANCE INSTITUTIONS KHAN
BANK AND KHAS (XAC) BANK
Ref: STATE 00103089
SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION
1. (SBU) 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.
4. (SBU) Xac Bank was once two separate institutions, the
UNDP-funded Micro-Start Mongolia (MSM) and the USAID-funded Goviin
Ekhlel, both organizations were specifically created with
micro-finance in mind. Although funded by the UNDP, MSM was
essentially privatized to a group of Mongolian NGO's who became
shareholders and served as MSM's board of directors, under the
supervision of western experts. As both organizations were dedicated
to micro-finance, it was argued that better results for shareholders
and services for clients were more likely to be obtained if the two
banks combined their resources and ceased competing for essentially
the same customer base.
5. (SBU) Currently Xac Bank maintains a 66 branch network covering
all of Mongolia's aimags (provinces),employing some 840 staff. At
the end of the 1st quarter 2007, total loans amounted to nearly
US$56 million in loans to some 60,000 borrowers. Total deposits
reached US$41 million among 154,000 savings and current account
holders. Foreign investors own 55% of the bank and include Mercy
Corps, a US-based charity, Micro Vest, ShorCap, and Triodos.
Moody's rated Xac Bank "Ba2" with a "stable outlook" for long and
short term deposits in both foreign and local currencies.
5. (U) Point of contact: Senior Commercial Specialist Michael
Richmond. RichmondMD@state.gov.
Minton
SIPDIS
SENSITIVE
SIPDIS
STATE PASS OPIC FOR LOREN RODWIN
STATE PASS TDA AND EXIMBANK
STATE FOR EAP/CM AND EB/IFD/OIA
TREASURY FOR TTYANG AND FINCEN
TREASURY FOR USEDS TO WORLD BANK, IMF
MANILA AND LONDON FOR USEDS TO ADB, EBRD
E.O. 12958: N/A
TAGS: EINV ECON OPIC PGOV MG
SUBJECT: POST'S RESPONSE RE INVESTMENT GUARANTY TO CALVERT SOCIAL
INVESTMENT FOUNDATION FOR MONGOLIAN MICROFINANCE INSTITUTIONS KHAN
BANK AND KHAS (XAC) BANK
Ref: STATE 00103089
SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION
1. (SBU) 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.
4. (SBU) Xac Bank was once two separate institutions, the
UNDP-funded Micro-Start Mongolia (MSM) and the USAID-funded Goviin
Ekhlel, both organizations were specifically created with
micro-finance in mind. Although funded by the UNDP, MSM was
essentially privatized to a group of Mongolian NGO's who became
shareholders and served as MSM's board of directors, under the
supervision of western experts. As both organizations were dedicated
to micro-finance, it was argued that better results for shareholders
and services for clients were more likely to be obtained if the two
banks combined their resources and ceased competing for essentially
the same customer base.
5. (SBU) Currently Xac Bank maintains a 66 branch network covering
all of Mongolia's aimags (provinces),employing some 840 staff. At
the end of the 1st quarter 2007, total loans amounted to nearly
US$56 million in loans to some 60,000 borrowers. Total deposits
reached US$41 million among 154,000 savings and current account
holders. Foreign investors own 55% of the bank and include Mercy
Corps, a US-based charity, Micro Vest, ShorCap, and Triodos.
Moody's rated Xac Bank "Ba2" with a "stable outlook" for long and
short term deposits in both foreign and local currencies.
5. (U) Point of contact: Senior Commercial Specialist Michael
Richmond. RichmondMD@state.gov.
Minton