The Bank of Mongolia has paid special attention to the big picture, such as building the essential building blocks of financial stability, making the necessary reforms in the banking sector, and regularly improving its supervisory framework. By going public, banks are becoming more transparent and accountable, with better governance and ownership structures.

When Mongolia began its transition to a market economy, creating a two-tiered banking system with the central bank and commercial banks was a historic reform. Now, after 30 years, the domestic systemically important banks going public can be considered the next major reform. This is an important event that marks the beginning of the next 30 years of the banking industry in Mongolia. In this sense, it is a remarkable time for bank customers, regulators, and investors.  In January 2021, when the central bank published an amended banking law, two particular demands stood out.

First, it required each of the five domestic systemically important banks (D-Sibs) to list a minimum of 5% of their shares on the local stock exchange by June 2022. Second, it told all lenders to dilute ownership by the end of 2023, to ensure that no individual owned more than 20% of a bank’s total shares.

The big-five operators – Khan Bank, Trade & Development Bank (TDB), XacBank, Golomt Bank and State Bank, which at the end of 2022 together controlled a little over 90% of all banking assets – to complete initial share offerings in just 18 months.