Mongolia Sells Majority Bank Stake
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NEW YORK (AP) _ Mongolia’s government said Tuesday it agreed to sell a majority stake in the country’s largest and most profitable commercial bank to a group of foreign investors.
Banca Commerciale Lugano of Switzerland and Gerald Metals, a major U.S.-based metals merchant, will pay $12.23 million for 76 percent of the Trade and Development Bank of Mongolia. The remaining 24 percent of TBD is held by Mongolian interests, mainly bank employees.
The deal, conducted through the country’s first international tender to sell a state asset, is expected to prove a breakthrough for Mongolia’s sluggish privatization program. The government and foreign aid donors say the program is crucial to develop a market economy, encourage investment from abroad and cut a government budget deficit that totaled 5.1 percent of gross domestic product last year.
TDB earned $4.4 million last year.
The foreign buyers agreed to invest a further $28 million in the bank over the next 24 months _ a sum equivalent to more than 2 percent of Mongolia’s annual GDP in nominal terms.
ING Bank of Holland will provide management for TDB, which handles about 70 percent of Mongolia’s foreign exchange transactions and has 40 percent of its loan market.
Mongolia has privatized a number of state assets since the country of 2.7 million began its transition from Communism a decade ago, but progress has been slow and uneven because of legal issues and disruptions caused by changes of government in the late 1990s.