Mongolia’s banks have listed – now for the hard part
Mongolia’s five big lenders have successfully completed their IPOs, doubling the size of the local stock market. But the challenge of attracting more foreign institutional investment remains.
A landlocked Asian frontier state squeezed between a former global power at war with its neighbour and a modern superpower suddenly lacking economic momentum would seem an unlikely place to go looking for ambitious policymakers bent on transforming an archaic banking sector.
But then Mongolia always did do things a little differently. In January 2021, when the central bank published an amended banking law, two particular demands stood out.
First, it required each of the five domestic systemically important banks (D-Sibs) to list a minimum of 5% of their shares on the local stock exchange by June 2022. Second, it told all lenders to dilute ownership by the end of 2023, to ensure that no individual owned more than 20% of a bank’s total shares.
It was always going to be a big ask to get each of the big-five operators – Khan Bank, Trade & Development Bank (TDB), XacBank, Golomt Bank and State Bank, which at the end of 2022 together controlled a little over 90% of all banking assets – to complete initial share offerings in just 18 months, in the teeth of the worst pandemic in a century.