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Wednesday, July 6, 2011

Mongolia Briefing is a magazine and daily news service about doing business in Mongolia. We cover topics relating to the Mongolian economy, the market in Mongolia, foreign direct investment and Mongolian law and tax. It is written in-house by the foreign investment professionals at Dezan Shira & Associates

Goldman Sachs to Buy Stake in Mongolia’s Trade and Development Bank

Feb. 10 – Banking giant Goldman Sachs has agreed to buy a 4.8 percent stake in the Trade and Development Bank of Mongolia (TDB), according to a statement released by the Mongolian bank on Thursday. The value of the deal was not disclosed.

The investment was kept below 4.99 percent because buying a higher stake would have triggered greater requirements under U.S. legislation, according to Reuters.

“Mongolia is a booming and fast-developing economy driven by growth in the mining sector and commodities exports,” Balbar Medree, chief executive officer of TDB, said in a statement. The stake purchase will allow TDB to widen its product portfolio and expand its business further given Goldman Sachs’ “global expertise and financial strength.”

The country’s rapidly growing economy is mainly fuelled by the boost in mining and commodities exports, in which Mongolia should pour US$68 billion into over a period of four years, according to the bank’s estimates. Part of the investments must go for new roads and housing, TDB said.

The investment is being arranged by TDB Capital, the Mongolian bank’s wholly-owned investment banking subsidiary, the bank said in statement.

The Trade and Development Bank is a privately-owned lender formed in October 1990 and fully privatized in 2002, it is Mongolia’s first and only issuer of internationally publicly traded debt.

In 2004, TDB secured investments from the Asian Development Bank and International Finance Corp., which pumped in US$11 million, according to the Mongolian bank’s web site. The bank itself had US$1.3 billion in assets by the end of last September.

TDB is the largest corporate lender in Mongolia with a 25 percent corporate lending market share as of the third quarter of 2011. The lender has correspondent relationships with over 150 international financial institutions and 37 nostro accounts with HSBC Bank N.A, Citibank N.A, Bank of Tokyo-Mitsubishi UFJ Ltd, Commerzbank AG, and Credit Suisse.

In 2006, TDB became the first commercial bank in Mongolia rated by Moody’s Investors Service, which raised the lender’s outlook from negative to stable in December 2010, citing “improvement in liquidity, capital position and asset quality trend.”

Last November, TDB together with Bloomberg Media Group announced the formation of Bloomberg TV Mongolia. Bloomberg TV Mongolia is scheduled to launch in March 2012.

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