Press Release – AmCham Mongolia and EuroChamber Hosted an Online Roundtable Discussion on Banking Sector Resilience and Reform
ULAANBAATAR, Mongolia – The American Chamber of Commerce in Mongolia (AmCham Mongolia), in partnership with EuroChamber Mongolia, organized an online roundtable on banking sector resilience and reform, bringing together a pool of prominent experts to discuss the existing challenges and define ways forward for banking sector development in Mongolia. The panelists were S. Bold, Senior Economics Officer, ADB; U. Ganzorig, Founder and Chairman of the Board, Mandal Insurance; G. Tsevegjav, Chief Executive Officer, XacBank; John Bell, Chief Executive Officer, Khan Bank; and L. Amar, Executive Director, Mongolian Bankers’ Association.
Erik Versavel, Chair of the AmCham Financial Services Committee, Vice-Chairman of the EuroChamber Board, and Country Director at ING Bank moderated the roundtable. The roundtable was highly popular with around 100 attendees, including AmCham members and representatives from domestic and international businesses. They discussed a range of critical issues, including the macroeconomic outlook of the country considering the significant impact of the COVID-19 pandemic on the economy and banking sector, as well as the government’s economic stimulus package and the central bank’s responses, the status of Mongolia’s IMF program enrollment, and banking sector risks and reforms.
In his opening remarks, O. Adiya, AmCham Mongolia’s Executive Director, stated that this was the first event jointly organized with EuroChamber and that he looked forward to insightful dialogues between the distinguished panelists. In his presentation, ADB’s S. Bold provided an update on the macroeconomic outlook of Mongolia in light of the COVID-19 pandemic. He highlighted the following: First, global and regional economic prospects and expectations have dramatically changed in the last 3-6 months, shifting from synchronized slowdown to downturn and recession due to the COVID-19 pandemic. Second, Mongolia’s economic growth had been slowing down before the COVID-19, and the pandemic outbreak has severely hit the economy through both external spillover and the risk of a domestic outbreak. Thus, economic growth forecasts now show a significant downward trend, as the country expects a substantial output loss. In this critical situation, ensuring financing stability, protecting employment, and maintaining social security are the top priorities. Third, various economic sectors, such as mining, transportation, tourism, manufacturing, industry, services, trade, MSMEs, public finance, monetary aggregates, and banking, have substantially been affected by the COVID-19 pandemic. Fourth, due to heightened risks and pressures on the balance of payments and the state budget, Mongolia’s external and domestic financing needs to be significantly increased. Fifth, countries across the Asia-Pacific region have been implementing comprehensive economic policy packages in response to the COVID-19 pandemic, consisting of coherent fiscal, monetary, prudential and other financial measures with both short-term targets and medium-term focuses on shock mitigation and relief, followed by stimulus and recovery measures when supply and demand constraints ease after global containment of the pandemic. Lastly, he shared some of the experiences of the ADB’s 68 member countries in terms of fiscal and monetary policy and countercyclical measures in response to the COVID-19 pandemic, and ADB’s role, support and response options.
Following presentations, the roundtable discussion among the panelists commenced. XacBank CEO G. Tsevegjav stated, “XacBank had started bank reform in-house by cutting unnecessary expenditures, investing in digital technology, and managing risks to make ready for an economic rebound.” He also said that a bank’s transparent communication with customers is essential during this pandemic, as it allows for win-win solutions for customers and the bank. He concluded that there would be more challenges ahead, and it is likely to take at least a year to recover from the economic crisis.
MBA CEO L. Amar stated, “The economy was slowing for five consecutive quarters; as a result, the ongoing credit crunch has severely accelerated. Without the intervention of policymakers, the banks can’t fulfill their role as financial intermediaries in this situation. As a result, the economy will continue to suffer.” He further noted that banking sector reform is mostly focused on the concentration of shareholder stakes and making the banks transparent. Several other issues are being proposed, but it seems as if policymakers can’t reach a consensus on how to proceed with reforms.
Chairman of the Board of Mandal Insurance U. Ganzorig stated, “A critical part of financial and banking reforms is to undertake pension reform since Mongolia’s social insurance system is very outdated. The draft legislation on pension reform is to be discussed by Parliament.”
CEO of Khan Bank John Bell emphasized, “Times of crisis bring opportunities to review business models and to optimize operations. Khan Bank is implementing teleworking, allowing staff to work remotely using modern technologies to ensure speedy work processes and service delivery to customers.”
Following the panel discussion, the panelists took part in a Q&A session and answered questions from the virtual audience.
After the roundtable, Executive Director of EuroChamber Tomas Bravenec thanked the panelists and participants for their informative and straightforward discussions, and thanked AmCham for a great partnership, noting that we will hold similar dialogues in the future.
About AmCham Mongolia
AmCham Mongolia is an independent, membership-driven organization that seeks to build, strengthen, and protect business between the United States and Mongolia, and to promote Mongolia as a destination for American investment actively. AmCham Mongolia is the official local affiliate of the U.S. Chamber of Commerce, the most significant business federation in the world with over 3 million member companies. AmCham Mongolia is also a member of the Asia-Pacific Council of American Chambers of Commerce, consisting of 29 American Chambers of Commerce in the Asia-Pacific region.