Finnfund participates in a 200 million US dollar syndicated facility for Khan Bank to support green financing and MSME financial inclusion

In a significant move towards sustainable development and economic empowerment, FMO, the Dutch entrepreneurial development bank announced the arrangement of a USD 200 million multi-currency syndicated A/B term facility to Khan Bank, Mongolia’s leading universal bank. Following FMO in this syndicated transaction as parallel A-lenders are CDP, Italy’s development finance institution and Finnfund, Finland’s development finance institution and impact investor, as well as a diverse group of B-loan participants comprised of trusted partners of FMO such as BlueOrchard Microfinance Fund, the ILX Funds, Nations Trust Bank, Invest in Visions and Atlantic Forfaiting. The syndicated facility includes a 5-year Local Currency tranche of USD 40 million funded by FMO with hedging provided by TCX, marking the first multi-currency syndicated facility of this size in Mongolia’s banking sector. Through this facility, Khan Bank and the lenders are committed to supporting green financing and fostering a more inclusive and sustainable economy, with 30% of the proceeds targeted towards Green financing, and the remainder earmarked for supporting women, youth, Agri-SMEs and certified SMEs in the sustainable cashmere industry.

Mongolia faces unique environmental challenges due to its geographic location and extreme climate, making it highly vulnerable to climate change. The country’s rain-dependent agricultural sector and fragile ecosystems are at under significant strain, with climate change impacting local livelihoods faster than average, according to the World Bank Group.

While Green lending is emerging in Mongolia, Khan Bank has been a pioneer in this space. In 2015, it introduced its green loan product to bolster its green portfolio. With a clear focus in driving the increase, Khan Bank made significant strides in sustainable finance with the launch of Mongolia’s first Green bond in 2023, followed by the issuance of the country’s first Social bond in 2024.

Looking ahead, Khan Bank aims to allocate 10% of its portfolio to Green loans and 15% to Gender loans by 2026, demonstrating its long term commitment to sustainability and social impact. Furthermore, through this 2X Challenge-aligned loan—an initiative dedicated to deploying and mobilizing capital to empower women and boost their economic participation in emerging markets, FMO and Finnfund will allocate over 30% of their total loan amounts, with CDP contributing 30% of half of their loan amount to women-owned or women-led enterprises, meeting the 2X Challenge criteria.

To support these goals, FMO acted as the lead arranger, agent, and lender of this multi-currency A/B syndicated facility, mobilizing funds from both private and DFI capital and introducing Khan Bank to a new and diverse range of lenders, whose common goal is to support Khan Bank’s sustainability strategy and ensure long-term funding.

Juan Jose Dada, Director Financial Institutions at FMO, said: “We are proud to have successfully closed this landmark multi-currency syndicated facility, which sets a new precedent for our longstanding partnership with Khan Bank. This achievement not only strengthens our collaboration, but also showcases our shared commitment to sustainable economic development and climate action. Together, we are making significant contributions in reducing inequalities, supporting green financing, empowering underserved MSMEs in Mongolia. We look forward to creating even more positive impact together.”

Uuganbayar Terbish, EVP of Wholesale Banking at Khan Bank, commented:
“At Khan Bank, we are deeply committed to fostering meaningful and lasting impact for our customers, communities, and the environment. With this facility, we can provide more sustainable financing to address Mongolia’s unique environmental and social challenges. We are grateful to FMO for their leadership, guidance, and trust in our vision. Their support has been instrumental in connecting us with a diverse network of lenders and enabling us to pursue our mission of building a greener, more inclusive Mongolia.”

Khan Bank, FMO’s client since 2009, is the largest commercial bank in Mongolia, plays a pivotal role in the country’s banking sector and is known for its strong customer-centric approach, leadership in sustainable finance and leading market position. It serves 82% of Mongolia’s population through an extensive network of 547 branches and diverse digital channels. Its comprehensive banking services reach individuals, small and medium-sized enterprises (SMEs) and corporate customers across both urban and remote regions, driven by strategic focus on digitalization, rural enterprise support, and most importantly, on sustainability.

“We are very happy to participate together with other DFIs and private lenders in this FMO-led syndication facility for Khan Bank in Mongolia,” said Kyaw Latt, Finnfund’s Investment Manager, Financial Institutions. “This long-term financing will further support the Bank’s commitment towards green financing and inclusive economy for customers, businesses and communities across Mongolia as well as addressing climate change challenges faced in the country. This investment is also very well aligned with Finnfund’s priorities as it focuses on empowering women, driving climate action, accelerating clean transition and paving the way for economic growth through SMEs.”

CDP, Italy’s national promotional institution has joined the financing with an additional $20 million pledge, to foster Mongolia’s green resilience and SMEs development, in line with its mandate as Italian development finance institution, with a particular focus on sustainable cashmere business. Cristina Morelli, CDP’s Head of Sovereign, Financial Institutions and Corporate Financing stated: “This financing represents a key step forward in strengthening economic opportunities and promoting innovation in the Eurasian region. Collaborations like this are vital to unlocking potential and driving impactful change, and we are proud to support initiatives that empower businesses and communities.



About FMO
FMO is the Dutch entrepreneurial development bank. As a leading impact investor, FMO supports sustainable private sector growth in developing countries and emerging markets by investing in ambitious projects and entrepreneurs. FMO believes that a strong private sector leads to economic and social development and has a 50+ year proven track-record in empowering entrepreneurs to make local economies more inclusive, productive, resilient and sustainable. FMO focuses on three sectors that have high development impact: Agribusiness, Food & Water, Energy, and Financial Institutions. With a total committed portfolio of EUR ~13 billion spanning over 85 countries, FMO is one of the larger bilateral private sector development banks globally.

About Khan Bank
Khan Bank JSC (Khan Bank) is Mongolia’s largest commercial bank, representing one third of the country’s banking sector. Through its extensive network of 547 branches and digital channels nationwide, Khan Bank provides banking services to an estimated 82% of Mongolian population as of Sep 30, 2024. The bank provides comprehensive banking services and access to finance to individuals, small and medium sized enterprises and corporate customers in even the most remote areas of Mongolia. Khan Bank is a long-standing client of FMO since 2009 with good track record.

About CDP
Cassa Depositi e Prestiti (CDP) is the National Promotional Institution and Financial Institution for International Development Cooperation appointed by the Italian State to promote the sustainable development of Italy and partner countries. CDP supports economic growth, social inclusion and the ecological transition by investing in innovation, business competitiveness, infrastructure and local development. For more information, please visit www.cdp.it

About Finnfund
Finnfund is a Finnish development financier and impact investor. We build a sustainable future and generate lasting impact by investing in businesses that solve global development challenges. We invest 200–250 million euros in 20–30 companies in developing countries each year. Our focus sectors include renewable energy, sustainable forestry, sustainable agriculture, financial institutions, and digital infrastructure and solutions. Today Finnfund’s investments, commitments, and investment decisions total about 1.23 billion euros, half of them in Africa. For more information, please visit www.finnfund.fi