Project detail - XACBANK LLC


Status: Approved investment
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The information as disclosed is indicative and provided on an "as-is/as available" basis for general informational purposes only and should not be construed as financial, legal or investment advice, nor as a commitment or an offer to arrange or provide any financing. The final decision to provide financing is subject to the terms and conditions of FMO in its sole and absolute discretion. When providing links to other sites, FMO bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. The information on proposed investment for high-risk investments is made available in the language relevant to the country or region where the bulk of operations take place. Translations of any information into languages other than English are intended as a convenience for local stakeholders. In case of any discrepancy, the information provided in English will prevail.

Who is our customer

XacBank (“Xac”), FMO’s longstanding client in Mongolia is one of the key banks in the FI Asia Mongolia strategy. Established in 2001 Xac is Mongolia’s fourth largest bank measured by total assets. The bank is leading in (FMO supported) sector initiatives like the Mongolia Sustainable Finance Initiative, the Green Credit Fund and the Mongolian Bankers Association. FMO has a financing relationship with Xac since 2007.

What is our funding objective?

The proposed investment aims to provide a senior loan to Xac, to help it capture the potential lending growth during the recovery of the country’s macro economy, and enable it to eventually provide more financing support to the micro, small and medium enterprises (“MSMEs”) in the country.

Why do we fund this investment?

The senior loan allows the bank to grow further and expand its focus areas, green and SMEs. Xac has an extensive network of branches throughout Mongolia. Xac originally focused on providing microfinance loans in both rural and urban Mongolia but over the past years the bank has moved upmarket and now mainly focuses on SMEs (around 30% of the total portfolio, in addition to 10% micro-business loans) and retail lending (40%- mortgages, credit cards). The bank is also a market leader in Green Lending. As of 2018, Xac has become an accredited entity of the Green Climate Fund (GCF).

What is the Environmental and Social categorization rationale?

Xac has been classified as FI-B E&S risk category. It has a current existing and well-functioning Environmental and Social Risk Management System in place based on local Mongolian legislation. Xac has a dedicated and committed E&S staff in place who continuously work on managing, monitoring and improving the ESMS.

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