Current Macro-Economics and Mongolia’s Banking Sector

By , 11 December, 2009, 1 Comment

Mr. B. Enhhuyag, First Deputy Governor of Bank of Mongolia, “Views on Current Macro-Economics and Mongolia’s Banking Sector” “PART ONE of BCM Meeting Highlights”

On Monday, December 7, 2009, Business Council of Mongolia (BCM) held its last meeting of the year.  Guest speakers Mr. B. Enhhuyag, First Deputy Governor of Bank of Mongolia and Mr. Eric De SEZE, General Director & CEO of Areva Mongolia discussed “Views on Current Macro-Economics and Mongolia’s Banking Sector” and “Nuclear Energy and Uranium”, respectively.

Rather than spit out their presentations verbatim, I will highlight points that I found interesting.

Please note these highlights are written NOT written verbatim; they are written in my own words and, in some cases, there may be quite big errors.  Personally, I did not even anticipate that I might post some highlights online for view of the public at large.  Please bear with me.

Mr. B. Enhhuyag, First Deputy Governor of Bank of Mongolia, “Views on Current Macro-Economics and Mongolia’s Banking Sector”

  • Inflation in 2008, 2009 YTD, 2009 Estim, and 2010 Estim are as follows: 34%, 2%, 3.5%, and 6%
  • Looking into questionable Mongol Gazar loans by Banks
  • Savings Bank and Post Bank merger evaluation pending (this was originally proposed as a three-way bank merger along with Zoos Bank)
  • Economic crisis revealed deficiencies in banking: over lending, fraudulent activities, and obscure ownership
  • Golomt Bank and Trade and Development Bank of Mongolia are in compliance with Central Bank regulations.   Khan Bank is currently under evaluation, but so far its portfolio is looking OK.
  • These three large banks account for 70-75% of deposits and/or lending activities in Mongolia
  • There are, in total, 16 banks in Mongolia.  This is far too many.  We need fewer but stronger banks.  As such, we hope this trend of consolidation in the banking industry will continue.
  • 2010 budget spending as per Ministry of Finance is looking to remain high, especially in the first half of the year.  As such, Central Bank of Mongolia may need to tighten its monetary policy.
  • When alluding to reasons for some of the banking/lending woes, Mr. Enhhuyag mentioned Goldman Sachs for its lending of 187 billion tugrugs (roughly 128 million USD) into the Mongolian economy/banking/mining (? Sorry, this was not quite real clear, but the focus was on the amount of money loaned by Goldman).
  • When addressing questions for expected GDP for 2009, Mr. Enhhuyag mentioned that essentially Mongolian economy is a 6 billion tugrug (meant USD, I believe) economy.
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