The European Bank for Reconstruction
and Development (EBRD) has announced a synthetic loan worth USD8 million in
local currency to XacBank for financing micro and small businesses in Mongolia.
XacBank is the second largest microfinance bank in Mongolia, and the EBRD holds
approximately ten per cent equity stake in it.

Extended under the EBRD’s Mongolia Financial Sector Framework, the loan will
enable XacBank to meet the growing demand for local currency financing and
increase further its outreach to entrepreneurs in remote areas. The synthetic
local currency loan, the first one provided by the EBRD in Mongolia, will help
XacBank increase the term of its local currency funding, and expand its
portfolio of loans in MNT. This will enable XacBank’s clients to repay their
loans in the same currency as they earn from their operations.

It is envisaged that a technical assistance program will accompany the loan
financing to further strengthen the bank’s MSME lending business by providing
capacity building and strengthening risk management and internal control
practices. “With this transaction and in close cooperation with our partner
bank XacBank, the EBRD is deepening its support for Mongolian micro and small
enterprise sector which is an essential element for private sector growth in
Mongolia.  This local currency facility is the first the EBRD has executed
in Mongolia and it will enable XacBank to mitigate the foreign currency
exchange risks for its clients”, said the Head of the EBRD Office in Mongolia,
Mr. Philip ter Woort.