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WorldApril 2 2012

Banks race to keep pace with Mongolia’s growth

Mongolia’s mining industry is driving the economy’s rapid expansion and bringing challenges for local banks, which are scrambling to keep up with such dramatic rates of growth.
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Banks race to keep pace with Mongolia’s growth

Mongolia is in the midst of a copper, coal and gold rush. And now the mining boom is filtering down from international mining companies to the Mongolian supply chain, increasing the demand for financial services from Mongolia’s domestic banks.With gross domestic product growth at 17.2% in 2011, Mongolia’s small banking sector faces a number of challenges in keeping up with the rate of change.

“Liquidity is very tight,” says Norihiko Kato, acting CEO at Mongolia's Khan Bank, of one of the issues facing the industry at the moment. “There is a liquidity issue,” echoes Bat-Ochir Dugersuren, CEO at Ulaanbaatar-based XacBank. On the question of whether Mongolian banks are facing a liquidity crisis, Mr Bat-Ochir says: “It is an issue of liquidity to expand, not an issue of liquidity to service existing liabilities. It is not a liquidity crisis.” 

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