XacBank

Founded in 1998 as a microfinance project sponsored by UNDP and USAID, XacBank was converted into a commercial bank in 2001. XacBank plays an important role in promoting access to finance in Mongolia, including in rural areas, which still present broad income inequality and scarce sources of funding.

XacBank is seen as one of the most solid financial institutions in Mongolia. Still, it lacks broad access to long-term debt to sustainably grow. SIFEM contributed USD 8m to a IFC and FMO syndicated senior loan. By providing this scarce type of financing to XacBank, SIFEM will contribute to financial sector development in Mongolia, given XacBank’s importance in the local banking sector and its willingness to continue disseminating best-practices in the country. The SIFEM loan, combined with the loan of the other syndication participants, will create more favourable conditions for the Bank to extend long-term loans to MSME clients, a type of funding that is most needed in the country.

Additionally, by earmarking the entire amount of the loan for MSME clients, the SIFEM facility will directly foster financial inclusion by broadening access to credit in the country, especially considering XacBank’s footprint in Mongolia’s rural areas (as of 2015, 55% of the Bank’s branches are located in the countryside).

Furthermore, XacBank demonstrates a high level of commitment to sustainable financial products. XacBank has an EcoBanking unit, which is responsible for providing financial products focused on energy efficiency and renewable energy.