XacBank is a microfinance

Microfinance

Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services....

 institution and community development bank in Ulaanbaatar

Ulaanbaatar

Ulan Bator or Ulaanbaatar is the capital and largest city of Mongolia. An independent municipality, the city is not part of any province, and its population as of 2008 is over one million....

, Mongolia

Mongolia

Mongolia is a landlocked country in East and Central Asia. It is bordered by Russia to the north and China to the south, east and west. Although Mongolia does not share a border with Kazakhstan, its western-most point is only from Kazakhstan's eastern tip. Ulan Bator, the capital and largest...

, formed in December 2001.

Background and Main Challenges

XAC (Golden Fund for Development) LLC began in 1998 as part of the “MicroStart Mongolia” project under UNDP, shortly afterwards transformed into Mongolia’s first NBFI (non-bank financial institution

Non-bank financial institution

A non-bank financial institution is a financial institution that does not have a full banking license or is not supervised by a national or international banking regulatory agency. NBFIs facilitate bank-related financial services, such as investment, risk pooling, contractual savings, and market...

) by uniting the micro-financial service activities of six national NGOs (non-government organizations).

From humble beginnings, XacBank was formed in 2001 by merging the two largest NBFIs in Mongolia. Besides XAC LLC there was Goviin Ehlel (Gobi Start) LLC which was established by Mercy Corps with funding from USAID as a NBFI serving rural areas.

Mongolia, the size of Western Europe, has a population of around 2.7 million people, with one of the lowest per person density ratios in the world. By number of branches and infrastructure, XacBank is the 3rd largest bank in Mongolia, with more than 70 branches located in all aymags (provinces) of the country. With 70% of its clients living in the rural areas, successfully implemented franchising saving and credit cooperatives and mobile banking scheme and a newly projected Nomadic Banking - mobile phone based banking solution assist in reaching banked and unbanked clients in the most remote areas.

In 2008, XacBank had privilege of co-hosting the 11th Annual Conference of Microfinance Institutions, under the patronage of the President of Mongolia, where MFC (Microfinance Centre for Central and Eastern Europe and the New Independent States) held its first ever conference in Central Asia. The microfinance industry is maturing, and the conference addressed the changes taking place, with investors arriving on the scene in force, and the need for traditional MFI models to upgrade with new technology and business practice. Microfinance generally refers to loans, savings, payments, and insurance services targeted at low-income clients.

TenGer Financial Group LLC

Founded in 1999 as one of the first non-bank financial companies in Mongolia and was initially known as Goviin Ekhlel. It then became a holding company of XacBank upon the merger of Goviin Ekhlel with X.A.C. (Golden Fund for Development) two major non-bank financial institutions in 2001, which created XacBank and X.A.C.-GE Holding. X.A.C.-GE Holding was renamed TenGer Financial Group. It is a parent of XacBank and other companies such as, ХасLeasing, ХасSecurity and Horus Nomadic Solutions.

Tenger Financial Group's shareholders comprise well known international institutions, such as IFC

International Finance Corporation

The International Finance Corporation promotes sustainable private sector investment in developing countries.IFC is a member of the World Bank Group and is headquartered in Washington, D.C., United States....

 and Mercy Corps

Mercy Corps

Mercy Corps is a global aid agency engaged in transitional environments that have experienced some sort of shock: natural disaster, economic collapse, or conflict. People working for it move as quickly as possible from bringing in food and supplies to enabling people to rebuild their economy with...

, and local business entities.

In 2009 Tenger Financial Group successfully raised shares worth MNT 7.5 billion thanks to its shareholders including, EIT Capital Management LLC, IFC, EBRD, Mercy Corps, Triodos Bank Group, BlueOrchard Private Equity Fund and local NGOs. MNT 5 billion of this raised shares are expected to infuse Xac Bank's capital and enlarge its service scope.

Presence and Portfolio

By the end of 2008, XacBank served more than 64,607 borrowers and 112,917 depositors through 74 branches, with a total loan portfolio of over $ 56 million, deposits of $ 124 million, and a staff of 1020.

Products and services

XacBank’s core products include current and savings accounts, various credit and lending products, as well as both domestic and international remittances.

Moreover, XacBank provides not only credit and debit card products such as MasterCard and VISA card being an associate member of these organizations, but also, popular international remittances and settlements through SWIFT

Swift

The swifts are a family, Apodidae, of highly aerial birds. They are superficially similar to swallows, but are actually not closely related to passerine species at all; swifts are in the separate order Apodiformes, which they share with hummingbirds...

, EUROGIRO and Western Union

Western Union

The Western Union Company is a financial services and communications company based in the United States. Its North American headquarters is in Englewood, Colorado. Up until 2006, Western Union was the best-known U.S...

being a principal member of these networks.

The main product categories

• Deposit
• Loan
• Leasing
• Remittance
• Electron banking
• Trade finance
• Training and Consulting

Percentage of operations comprised by microfinance:

91-100%

Other services provided:

Full-scale financial services

Second-tier lending to MFIs

Main Funding Sources

• Loans
• Savings
• Shareholder capital

Largest funder

• TenGer Financial Group LLC

Network

Primary network

MFC (Microfinance Centre for Central and Eastern Europe and the New Independent States), EuroGiro network, Western Union, Swift network, GRI (Global Report Initiative)

Secondary network

MasterCard Worldwide, Visa International

External Evaluators' Rating

Primary rater

Moody’s Investors Service - “Ba1” as of May, 2007

Secondary rater

Planet Rating - “A” as of April, 2006

External links

• Xacbank.mn official site
• TengerFinancialGroup.mn, Tenger Financial Group official site