Mongolia: Banking Sector Rehabilitation and Financial Stability Strengthening Program

Sovereign Project | 51054-001

The Asian Development Bank is helping Mongolia restructure its banking sector, which suffers from high levels of non-performing loans, weak governance and a lack of competition. The program supports government policy actions to strengthen and stabilize the sector, including the development of an industry-restructuring plan and measures to improve governance, risk management and competition.

Project Details

  • Project Officer
    Haydarov, Aziz K.
    East Asia Department
    Request for information
  • Country/Economy
  • Modality
    • Loan
    • Technical Assistance
  • Sector
    • Finance
Project Name Banking Sector Rehabilitation and Financial Stability Strengthening Program
Project Number 51054-001
Country / Economy Mongolia
Project Status Closed
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 3533-MON: Banking Sector Rehabilitation and Financial Stability Strengthening Program
Ordinary capital resources US$ 100.00 million
TA 9320-MON: Banking Sector Rehabilitation and Financial Stability Strengthening Program
Financial Sector Development Partnership Special Fund US$ 750,000.00
Technical Assistance Special Fund US$ 750,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector

Finance / Finance sector development

Gender Equity and Mainstreaming No gender elements
Project Rationale and Linkage to Country/Regional Strategy
Impact The program is aligned with the government's Economic Recovery Plan, 2016 and will support the government's plans for a well-developed finance sector and a stable financial system that helps the poor and vulnerable.
Project Outcome
Description of Outcome Strengthened and stable banking industry
Progress Toward Outcome The loan was approved in May 2017 and became effective in July 2017. Subsequently all policy actions were deemed to have been met and the loan was disbursed in full in August 2017.
Implementation Progress
Description of Project Outputs

Framework for bank restructuring completed

Financial stability enhanced

Competition and governance strengthened

Status of Implementation Progress (Outputs, Activities, and Issues) All policy actions have been met. The consulting firm for the piggy back TA was already mobilized and inception mission was held in November 2017. The intergovernmental working group on the establishment of a government-supported asset management company (AMC) has completed development of a legal framework for the AMC. Research has been completed and a preliminary proposal for an AMC structure was presented to the government in September 2018. The draft law reached parliament in July 2019 and has not progressed. A successful study tour was held to visit AMCs established in Spain and Ireland after the global financial crisis in 2008. The tour included members from the Bank of Mongolia and also a Mongolian Member of Parliament (MP). The draft law was prepared by the working group comprised of members of the Bank of Mongolia, Ministry of Finance and Ministry of Justice. The draft law was submitted to Parliament for consideration in July 2019. The draft law has incorporated recommendations of the TA team. Plans have been discussed with the government on the Privatization of State Bank LLC. The Government's plans for privatization have been paused. The TA team has provided support to the Mongolian Bankers Association on the potential to establish a private sector resolution program for non-performing loans. The progress to establish a corporate debt restructuring committee has stopped as the volume of loans that could potentially be included in a formal debt restructuring were identified as nominal because most loans are not funded in a lending syndicate. The banking sector continues to suffer from rising NPLs. Political will to move on the AMC or other NPL resolution mechanism has declined due in part to a cyclical rebound in the economy and upcoming elections. The piggyback TA is planned to close on 31 July 2020.
Geographical Location Nation-wide
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects NA
Involuntary Resettlement NA
Indigenous Peoples NA
Stakeholder Communication, Participation, and Consultation
During Project Design Close discussion was held with the the Bank of Mongolia and the Ministry of Finance. Additional discussion was held with the Mongolian Bankers Association.
During Project Implementation Continued dialogue has been held with the Ministry of Finance, Bank of Mongolia and the Mongolian Bankers Association to track policy action compliance and monitor further progress.
Business Opportunities
Consulting Services ADB will engage TA consultants through a firm. Selection will follow ADB's Guidelines on the Use of Consultants (2013, as amended from time to time) using the quality- and cost-based method, with a quality cost ratio of 90:10, following a full technical proposal. The TA will provide 48 international and 31 national person-months of consulting services.
Responsible ADB Officer Haydarov, Aziz K.
Responsible ADB Department East Asia Department
Responsible ADB Division Public Mgt, Financial Sector and Regional Coop Division, EARD
Executing Agencies
Ministry of Finance (formerly Ministry of Finance and Economy)
Ministry of Finance
[email protected]
S.Danzangiin Gudamj 5/1, Zasgiin Gazriin
II Bair, Ulaanbaatar 15160 Mongolia
Concept Clearance 02 Mar 2017
Fact Finding 06 Feb 2017 to 17 Feb 2017
MRM 14 Mar 2017
Approval 30 May 2017
Last Review Mission -
Last PDS Update 31 Mar 2020

Loan 3533-MON

Approval Signing Date Effectivity Date Closing
Original Revised Actual
30 May 2017 31 May 2017 31 Jul 2017 31 Dec 2017 - 03 Aug 2017
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 100.00 Cumulative Contract Awards
ADB 100.00 01 Apr 2022 100.00 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 01 Apr 2022 100.00 0.00 100%

TA 9320-MON

Approval Signing Date Effectivity Date Closing
Original Revised Actual
30 May 2017 23 Jun 2017 23 Jun 2017 31 Jul 2019 31 Jul 2020 28 Aug 2020
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,500,000.00 0.00 0.00 0.00 0.00 0.00 1,500,000.00 01 Apr 2022 1,424,485.11

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

Evaluation Documents See also: Independent Evaluation

Title Document Type Document Date
Mongolia: Banking Sector Rehabilitation and Financial Stability Strengthening Program Validations of Project Completion Reports Mar 2021

Related Publications

None currently available.

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No tenders for this project were found.

Contracts Awarded

Contract Title Approval Number Contract Date Contractor | Address Executing Agency Total Contract Amount (US$) Contract Amount Financed by ADB (US$)

Procurement Plan

None currently available.