Finnfund part of a 172 million US dollar syndicated facility for Khan Bank to advance green growth and MSME inclusion in Mongolia

In support of sustainable development and MSME financial inclusion in Mongolia, FMO, the Dutch entrepreneurial development bank, announced the successful arrangement of a USD 172 million multi-currency syndicated A/B term facility for Khan Bank, Mongolia’s leading universal bank. Joining FMO in the syndicate are Impact Fund Denmark (IFDK), Denmark’s development finance institution and a first-time lender to Khan Bank, Finnfund, Finland’s development finance institution and impact investor, together with B-loan participants BlueOrchard Microfinance Fund and the ILX Funds. The syndicated facility includes a 5-year Local Currency tranche of USD 80 million funded by FMO. 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, rural, and agriculture SMEs as well as microenterprises.

Khan Bank is the largest commercial bank in Mongolia, and 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 84% of Mongolia’s population through an extensive network of 529 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.

Mongolia remains highly exposed to the effects of climate change, with agriculture-dependent communities facing increasing environmental pressures. In response, Khan Bank has established itself as a frontrunner in sustainable finance. The bank introduced dedicated green lending products in 2015 and has since played a pioneering role in Mongolia’s sustainable capital markets, issuing the country’s first Green Bond in 2023 and first Social Bond in 2024.

Khan Bank continues to advance its sustainability agenda, with targets to reach green lending to 10% of its portfolio and gender-focused lending to 15% by the end of 2026. The facility further supports gender objectives through its alignment with the 2X Challenge, a global initiative aimed at mobilizing capital to enhance women’s economic participation in emerging markets.

In addition, Impact Fund Denmark’s commitment will be dedicated entirely to financing eligible green assets.

Kyaw Latt, Investment Manager at Finnfund, said: “We are delighted to deepen our partnership with Khan Bank and support the continued development of sustainable finance in Mongolia. We have seen Khan Bank strengthen its approach to sustainable finance and set increasingly ambitious targets for green and inclusive lending. With its exceptional nationwide reach, Khan Bank has a unique ability to translate these ambitions into tangible impact for businesses and communities across Mongolia. We are particularly encouraged that this financing will support green investments and improve access to finance for women, young entrepreneurs and SMEs.”

Munkhtuya Rentsenbat, CEO of Khan Bank: “At Khan Bank our vision is to grow together with our customers. Through strong partnership with international investors, we are committed to unlocking opportunities and empowering women, MSMEs and young people to thrive. We believe that empowering our customers to grow is key to accelerating Mongolia’s transition towards a more inclusive, climate-resilient, and diversified economy.”

Frouke Hoekstra, Director Financial Institutions at FMO: “By bringing together development finance institutions and private investors, FMO is pleased to support Khan Bank’s longstanding commitment to a greener and more inclusive economy. This partnership will help expand access to long-term financing for businesses and communities across Mongolia, including women and young entrepreneurs and those in rural areas. We greatly value our relationship with Khan Bank and sincerely appreciate the trust and commitment of all our investment partners in making this important facility possible.’’

Dave Smit, Managing Director Financial Services, Impact Fund Denmark: “Access to finance is essential to turning green ambitions into practical investments. With its extensive reach across Mongolia, Khan Bank supports businesses and households to take that step. This financing will support green investments that contribute to a more sustainable and resilient economy.”

More information:
Kyaw Latt, Investment Manager, Finnfund, kyaw.latt@finnfund.fi, +358 40 631 2941

Media contact:
Valpuri Mäkinen, Communications Manager, Finnfund, valpuri.makinen@finnfund.fi, +358 50 384 2105