Mongolia: Strengthening Banking Sector Stability and Performance

Sovereign Project | 51415-001

The TA will support implementation of the Medium-Term Banking Sector Strengthening Program for 2020-2023 approved by the Bank of Mongolia (BOM) in September 2020. The TA will focus on (i) upgrading bank ownership and accountability frameworks, (ii) improving reporting and regulation of banks' assets, and (iii) promoting new financial products and business models.

Project Details

  • Project Officer
    Rosenkranz, Peter C.
    East Asia Department
    Request for information
  • Country/Economy
    Mongolia
  • Sector
    • Finance
Project Name Strengthening Banking Sector Stability and Performance
Project Number 51415-001
Country / Economy Mongolia
Project Status Active
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 6613-MON: Strengthening Banking Sector Stability and Performance
Technical Assistance Special Fund US$ 750,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Private sector development
Sector / Subsector

Finance / Finance sector development

Gender Equity and Mainstreaming No gender elements
Description The TA will support implementation of the Medium-Term Banking Sector Strengthening Program for 2020-2023 approved by the Bank of Mongolia (BOM) in September 2020. The TA will focus on (i) upgrading bank ownership and accountability frameworks, (ii) improving reporting and regulation of banks' assets, and (iii) promoting new financial products and business models.
Project Rationale and Linkage to Country/Regional Strategy Stability of the banking industry, which constitutes more than 90% of the country's financial sector, continues to be affected by the high-level of nonperforming loans (NPLs), inadequate capital, and weak governance. The TA will help address the issues with bank ownership concentration and accountability, risk management, and paucity of technology-based new financial instruments and business models. It is an integral part of ADB's comprehensive, sustained, and effective support to the financial sector development in Mongolia. The TA will enable continued support to the implementation of the 2017-2020 medium term reform framework of the ADB-supported Banking Sector Rehabilitation and Financial Stability Strengthening Program. The TA follows on the recommendation of program's completion report that ADB should expand and deepen support to the finance sector and that future financial sector operations should the focus on banking reforms.
Impact

Investor confidence increased and financial intermediation of Mongolia's banking sector expanded

Project Outcome
Description of Outcome

Regulation and management for promoting governance, stability, and development of the banking sector improved

Progress Toward Outcome In end-February 2021, amendments to the Law on Banking became effective. The amendments are on reducing the ownership concentration of banks, better regulating the control of banks by influential shareholders, and transforming banks into open joint stock companies with eventual public listing of systemically important banks. This amendments were critical for effective implementation of the TA.
Implementation Progress
Description of Project Outputs

Policy advice on regulatory frameworks on bank ownership and accountability_finalized

Guidelines on reporting and regulation of banks' assets updated

Digital financial products and business models promoted

Status of Implementation Progress (Outputs, Activities, and Issues) The engagement of the consulting firm to deliver the TA's outputs is ongoing, and the_consulting firm was onboard in June 2021. Based on the request of the EA, implementation of Output 3 has been transferred to the Financial Regulatory Commision.
Geographical Location Nation-wide
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design During the preparation of the TA, consultations were held with the Bank of Mongolia, pertinent government agencies, banking industry associations, selected banks, and development partners.
During Project Implementation The Project Team maintains the close consultation with the Bank of Mongolia, Financial Regulatory Commision, and pertinent government agencies.
Business Opportunities
Consulting Services ADB will recruit a consulting firm (association of firms) to deliver the activities under the TA. The firm, which will be engaged through quality-and cost-based selection under a partial lump-sum contract using performance (output)-based terms of reference, will comprise international (15 person-months) and national experts (24 person-months) on (i) banking (ownership, control, mergers and acquisitions, asset-liability management); (ii) legal aspects of banking (corporate governance, legal form, public listing, fintech); (iii) financial management (bank accounting); (iv) finance sector development (banks, non-banks, capital market); and (v) fintech. The TA will also engage experts renowned in e-commerce, digital finance, and new business models to facilitate knowledge transfers from the regional countries' successful experiences. ADB will engage the consultants following the ADB Procurement Policy (2017, as amended from time to time) and its associated procurement instructions.
Procurement Procurement of goods is not envisaged under the TA.
Responsible ADB Officer Rosenkranz, Peter C.
Responsible ADB Department East Asia Department
Responsible ADB Division Public Mgt, Financial Sector and Regional Coop Division, EARD
Executing Agencies
Bank of Mongolia (Central Bank)
Timetable
Concept Clearance 14 Sep 2020
Fact Finding 28 Sep 2020 to 06 Oct 2020
MRM -
Approval 26 Nov 2020
Last Review Mission -
Last PDS Update 29 Sep 2022

TA 6613-MON

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
26 Nov 2020 19 Dec 2020 19 Dec 2020 30 Jun 2023 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
750,000.00 0.00 0.00 0.00 0.00 0.00 750,000.00 29 Sep 2022 25,189.75

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.

None currently available.


Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

None currently available.


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Tenders

Tender Title Type Status Posting Date Deadline
Banking Reform Advisory and Capacity Building Consulting Firm Firm - Consulting Closed 08 Dec 2020 08 Jan 2021

Contracts Awarded

Contract Title Approval Number Contract Date Contractor | Address Executing Agency Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
Capacity Development Technical Assistance 6613 14 Jun 2021 KPMG Audit LLC in association with KPMG Asesores, S.L. | #602, Blue Sky Tower, Peace Avenue 17, 1 Khoroo, Sukhbaatar District Ulaanbaatar, Mongolia Bank of Mongolia (Central Bank) 700,000.00

Procurement Plan

None currently available.