Ulaanbaatar, Mongolia, November 25, 2015—IFC,
a member of the World Bank Group, FMO (the Netherlands Development Finance
Company), the Central Bank of Mongolia, and the Mongolian Bankers Association
today launched a Handbook on Related-Party Transactions (RPTs) for the
financial sector in Mongolia.
The handbook’s primary objective is to guide Mongolian banks on proper
management of related-party transactions, i.e. transactions between all
persons and entities that, by virtue of their positions, authorities, ownership
and relationships, have scope for the direct or indirect influence on the
bank’s decision making regarding RPTs. The guidebook is a consolidated
source of best practices to deal with RPTs, but also offers detailed guidance
on how banks can effectively implement key elements of the Central Bank
of Mongolia regulations and the Company Law of Mongolia.
The launch event, organized at the Central Bank of Mongolia’s premises,
was attended by management and staff of all 14 Mongolian banks, the Development
Bank of Mongolia, audit firms, and other banking and finance institutions.
Regulators and international banking and corporate-governance experts discussed
solutions for conflicts of interest arising from related-party lending
and ways to benefit from international best practices.
“We announced the development of a handbook on RPTs during the Corporate
Governance Forum in September 2014, said J. Unenbat, CEO of Mongolian Bankers
Association. “We hope this handbook will become a useful tool for
shareholders, senior bank management and bank staff such as internal auditors,
compliance officers, board secretaries, and lawyers.”
“Related-party transactions, if not conducted at arm’s length, are a
threat to the financial sector in many countries. We are undertaking similar
initiatives in other Asian countries as well. However, we are impressed
with how the Central Bank of Mongolia and private sector banks have embraced
this initiative and are tackling the issue head on”, said Marnix Monsfort,
Manager of Financial Institutions in Asia for FMO.
“Poorly-disclosed and abusive related-party transactions, especially in
a concentrated market like Mongolia, can challenge credibility and integrity
of the bank and the banking sector as a whole,” said Tuyen D. Nguyen,
Resident Representative for IFC in Mongolia. “This handbook will help
Mongolian banks standardize and manage RPT risks.”
“The Mongolian banking sector is committed to improve its corporate governance
practice,” said Batshugar Enkhbayar, Deputy Governor of the Central Bank
of Mongolia. “We appreciate the cooperation of our international partners
in developing this useful guide.”
FMO has been active in Mongolia since 2007. To date, FMO has an outstanding
portfolio of $237 million of which 60 percent is in the financial sector.
In addition, FMO works closely with MBA and IFC on developing, implementing,
and supporting sector-wide initiatives for the financial sector.
IFC has invested in Mongolia’s banking sector since the late 1990s and
supported its efforts to improve corporate governance since 2009. Improvements
in related-party disclosures have helped Mongolia rise in the global Doing
Business rankings with respect to protection of minority investors. Recent
initiatives include the corporate governance scorecards developed in 2013
for Mongolia’s 20 largest listed companies, benchmarking Mongolia’s current
practices to global standards.
IFC’s Corporate Governance Program in East Asia and Pacific is funded
by the State Secretariat for Economic Affairs of Switzerland.
IFC, a member of the World Bank Group, is the largest global development
institution focused on the private sector in emerging markets. Working
with more than 2,000 businesses worldwide, we use our capital, expertise,
and influence, to create opportunity where it’s needed most. In FY15,
our long-term investments in developing countries rose to nearly $18 billion,
helping the private sector play an essential role in the global effort
to end extreme poverty and boost shared prosperity.
For more information, visit www.ifc.org
FMO (the Netherlands Development Finance Company) is the Dutch development
bank. For 45 years, FMO has been investing in the private sector in developing
countries. We believe in a world in 2050 where nine billion people can
live well and within the boundaries of the planet. In pursuit of this vision,
our mission is to empower entrepreneurs to build a better world. We specialize
in sectors where we believe our contribution can have the highest long-term
impact: financial institutions, energy and agribusiness. Alongside partners,
we invest in the infrastructure, manufacturing and services sectors. With
an investment portfolio of EUR 8 billion, FMO is one of the largest bilateral
private sector development banks. For more information, visit www.fmo.nl
The Mongolian Bankers Association is a self-regulated professional association
that was established in 2000. With over 20 members, the association integrates
all 14 commercial banks, the Development Bank of Mongolia, 4 financial
and non-financial banking institutions, and 2 foreign bank representative
offices. The association’s vision is to lead the banking and financial
sector in support of the sustainable development and equitable economic
growth of Mongolia. For more information, visit www.mba.mn.
About the Bank of Mongolia
As the Central Bank, the Bank of Mongolia (BoM) ensures the stability of
the national currency – Togrog. Within this main objective, the BoM promotes
balanced and sustained development of the national economy, through maintaining
the stability of money, financial markets, and the banking system. In order
to implement its objectives, the BoM conducts activities such as issuing
currencies in circulation, formulation and implementation of monetary policy,
acting as the Government’s fiscal intermediary, supervision of banking
activities, organization of inter-bank payments and settlements, and management
of the official foreign exchange reserves. For more information, visit