The Central Bank has said it sees no reason to worry about the health of Trade and Development Bank (TDB). The bank administration has also strongly denied there is any problem whatsoever. The reassurances were found necessary after the city had been abuzz with rumors about the bank, with customer confidence continuing to be low following what happened at Zoos and Anod banks.

The bank’s Executive Director, Mr.  B.Medree, told media that one account holder who had extended his account by six months later complained that he had meant it to be extended for a year and demanded interest for a year. The bank refused this, explaining that it had his signature for a 6-month extension but he refused to listen to reason and threatened to write to the Prime Minister and the media. He then had articles published in newspapers that TDB had secretly met the Ministry for Finance and was about to go bankrupt. This is totally untrue. “In any case, the Ministry for Finance does not control the banking sector. The Central Bank does this and the Central Bank has no problems with us,” Mr. Medree said.

The Director of the Inspection Department at the Central Bank, Mr. B.Lhagvasuren, said they are “satisfied that TDB is doing well and there is nothing to worry”.

Source: News.mn; highlighted in the BCM Newswire by Mongolia Business Council

Goldman Sachs is believed to have filed a case against Mongolia in an international arbitration court in matters relating to Mongol Gazar and the Olon Ovoot mines.  This news comes in the wake of unconfirmed but strong reports that the Mongolian Government has lost the case against the Russian-owned Altan Dornod.

Mr. B.Lhagvasuren, director of the Inspection Department at the Central Bank, has denied any information about Goldman Sachs filing any case
Mr. Ts. Myanganbayar, a business magnate, mortgaged the Olon Ovoot gold mine license to several banks and to Goldman Sachs to borrow a total of MNT 210 billion. Of this, Zoos Bank, now known as State Bank, gave him MNT 60 billion, Anod MNT 30 billion, and Goldman Sachs MNT 15 billion.

Goldman Sachs is a global investment banking and securities firm but is not registered in Mongolia, nor does it have any accredited representative here. Accordingly, it may not have the legal right to enter into any commercial transaction in the country.  A man with only a visiting card is said to have been representing the company to meet Mongolian officials.  Nobody knows anything more about him, or what position, if any, he holds at the company.

It is believed that the Olon-Ovoot license was mortgaged to a company calling itself Goldman Sachs International.  The Mineral Department agreed to the mortgage but this is now being contested as mining licenses can be mortgaged only to banks or non-banking financial organizations and they have to be legal entities in Mongolia.

Source: Ardin Erkh newspaper; translated and delivered via the BCM Newswire by Mongolia Business Council

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.