📋 Tender Overview
Location:
Mongolia
Project number:
55861
Business sector:
Financial institutions
Notice type:
Private
Environmental category:
BE
Approval date:
29 Jan 2025
Status:
Pending Approval
English-language PSD published:
25 Dec 2024
Project Description
The provision of a senior loan of up to US$ 40 million (A-Loan) to XacBank JSC (XB) under the Youth in Business Programme in Central Asia (YiB CA Programme), aimed at financing private micro, small, and medium-sized Enterprises (MSMEs) in Mongolia. Subject to market conditions, the Bank will seek to raise an additional amount of up to US$ 120 million (B-Loan) for the account of participants.
Project Objectives
The proposed loan will enable XB to (i) support youth led/owned MSMEs in overcoming the consequences of the challenging market environment and increasing their resilience and adaptability; (ii) diversify its funding base; and (iii) launch a new product encompassing both financing and nonfinancial services (NFS) targeted at young entrepreneurs, which will increase their access to finance.
Transition Impact
ETI score: 71
ETI: 71
The Project will contribute to the YiB CA Programme's objectives and support its Inclusive (Primary) and Competitive (Secondary) qualities. The facility is expected to increase lending to youth MSMEs, facilitate XB's capacity building and promote the transfer of skills to young business owners/managers in the country.
Client Information
XAC BANK JSC
XB is the fourth-largest commercial bank in Mongolia with total assets of US$ 1.7 billion, a net loan portfolio of US$ 975 million, and a market share of approximately 8.8 per cent. As a universal bank, XB primarily focuses on MSME and retail lending and operates nationwide with 71 branches.
EBRD Finance Summary
USD 40,000,000.00
A senior loan of up to US$ 40 million (A-Loan)
Total Project Cost
USD 160,000,000.00
The raising of an additional amount of up to US$ 120,000,000 (B-Loan) for the account of participants will be on a best effort basis and is subject to market conditions.
Additionality
Financing structure:
The EBRD remains one of the few institutions, providing long-term funding in Mongolia. The provision of a 3-year funding will better meet sub-borrowers demand for longer-tenor loans, especially the ones with investment-type use of proceeds, which can be in particular demand of youth entrepreneurs.
Innovative financing structures and/or instruments:
The Project will benefit from the First Loss Risk Cover ("FLRC") and the Result-Based Compensation ("RBC"), which are tailor-made and innovative instruments in the Mongolian market. FLRC and RBC are intended to support XB in offering lower or more flexible collateral requirements.
Standard setting: helping projects and clients achieve higher standards:
Through a combination of elements (financing; FLRC; RBC; and TC), the YiB CA Programme helps clients raise their inclusive financing standards by gen
