Corporate Banking in Mongolia

Hi guys, I work in Mongolia as a corporate banker. I thought it would be interesting for you guys to know about how we in Mongolia work. As you might expect, it isn't that sophisticated and is rather pretty straight-forward and simple.

The Banking sector in Mongolia: We have 13 commercial banks and 3 of them are considered big. Each of them owns 20-25% of the market share and other 2 banks own about 10% each, meaning big 5 banks own 90% of the market. I work in one of the big 3. Mongolia has a pretty junkie credit rating and so do our banks.

About what I (will) do: Because I'm new to the job I can't speak to what most corpbankers in Mongolia do but I can describe what I have seen and done thus far. Our job title is Relationship Manager; we manage relationships between the bank and our clients. Our main responsibility is to give loans to corporate clients, attract their deposits and resolve their problems with the bank.

The loan size is usually between 1$-10$ mil. and sometimes it can go up to 50$ million. Very tiny compared to what you guys deal with but considering the size of Mongolia’s GDP is just 10$ billion, you can imagine it is pretty big money here. Loans include business loans, investment loans, trade finance etc.. No special skills or degrees required to be a RM. Except our banking OS which is made by Sri-Lankan company, we only use Excel and Word for our work. We use Excel to prepare cash flow, balance sheets and income statements.

I dont know for sure but I think our work is similar to what retail bankers do in the U.S. Probably the only difference is that we usually meet and work with CEOs and CFOs of “big” companies and get to know them personally and occasionally party with them. Of course “big” by Mongolian standards. My monthly pay is about $800usd before taxes and social insurance and it is considered ok here but abysmal by western standards. I earned twice as much when I was a student and worked as a part-time waiter.

People who work in mining earn 3-4k and their salary is considered huge. Even though we have an investment banking division, their work and role are not as same as in the West. Today I read that since 2005 only 14 IPOs had been issued and the Mongolian stock exchange is considered the 2nd smallest in the world. As can you see there is virtually nothing an investment banker can do in Mongolia. That is why the corporate banking division is considered more “prestigous” than IBD.

Some of you might be amazed but our average loan interest rate in local currency is 18-20% per year and savings is around 15-16%. USD loans are around 12-15% and savings rating is around 7-8%. If you are fine with the risks you can earn a pretty good amount just from the interest income. I know a few clients who have a couple of million USD and earn about 300-400K per year.

That's all for now, I hope you guys enjoyed my story.

 

Hi

800$ is pretty much on par (maybe a bit less) with what a Greek bank would pay for a new employee.. not that they hire lol

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Very very cool. Thanks for the information! Can you comment at all about the investment management and private equity industry in Mongolia? I was doing some research and there seems to be a 2-3 investment funds set up solely aimed at investing in Mongolia. Also, how bad is the corruption in Mongolia? I heard it mentioned a few times, but seeing an insider perspective would be great.

 

In my opinion investment management or PE industry is almost non-existent. Of course there are few funds established but their role and scale is very limited and not many people know or talk about them even in financial circles. When people have excess cash most of the people just deposit them into banks. Very few start a business, and even less who invest or buy shares. Investment environment was very volatile till last year with laws and regulations changing every couple years. Our lawmakers finally understood that we need stable environment and passed a law that grant stable conditions up to 15 years. Corruption is pretty big problem here especially for small entrepreneurs but we are seeing some progress and hope that it will be eradicated soon. Bureaucracy is also a big obstacle too but it is getting better.

 

At the moment (in short term) salary has become a problem for me. I think it will get better after few years or if I move to a different company. In a mid or long term - opportunity to develop yourself. I believe in "talent breeds talent" and I dont see not many talented people here. I was a waiter in Mongolia and Japan, and saw a very large gap in quality and standards between the two countries. I just imagine how things are different what I do now and what you guys do. We work with almost every industry except mining, we have a Mining banking division for that. Because our economy is not that diverse we dont have so many industries.

 

Thanks for sharing! I might use this as a plan b if getting into grad school doesn't work out. Can you tell me more about what is required in the way of language and technical skills for someone from the U.S. to break in? What is work-life balance like?

 
Best Response

There are many expats here and use English all the time so you will not have any problems in terms business communication. If you have a relevant experience and some connections I think you will have no problems. Work-life balance is very good, definitely less stress than in the developed countries. I know one Mexican guy who has no experience working in Wall street and graduated in Japan and came to Mongolia. He has become "big" after working few years, he even starred in a commercial. As I mentioned in the previous post, there arent many talented people here afaik. China has a huge impact on our economy and biggest trade partner and investor by big margins. We export more than 70% of our export and half of the import. It has become a pretty big concern that even the special law had to be introduced to limit Chinese state-enterprises. Russia has big stake in our railroad as it has 50/50 stakes with Mongolia. Their influence diminished greatly in last 20 years and we only dependent on their oil.

 

Thanks so much for answering my question, as well as filling in the gaps on my knowledge of Mongolia's economy. Perhaps you could private message me with some more details on relevant experience and how to network?

 

Great stuff. Being between two huge, controversial countries, Mongolia has a great vantage point. Is your economy more impact by moves in Russia or by China? How do you feel about the outlook of those countries, and yours moving forward.

Lastly, as a recent student in Japan, how do you feel about the extreme fiscal and monetary policies being undertaken there?

Thanks for the info

 

@"jaagii" feel free to correct me if I'm wrong, but iirc Mongolia has historically had close ties to Russia, at least going back to at least the 1920's or 1930's (in fact, Mongolian uses a Cyrillic script). These ties exist to a large extent because Mongolia was communist from 1924-1992, and the Russians pretty much helped to prop up Communist regimes everywhere during that time period.

That being said, I wouldn't be surprised if China was the major trading partner nowadays because of China's huge demand for raw materials.

 

China has a huge impact and we export almost everything exportable to them. When Chinese economy slowed ours did too. I am no expert on China or Russia so I cant say much.
I think it is a good for Japan to implement such policies. Since Koizumi Japan has finally someone who has guts. When I got there Japanese talked about their "lost decade" and since 2010 they changed it to "lost decades". I felt that Japanese people have lost their "spark" and optimism. Now they are finally looking optimistic about their future and big props to Abe for that.

 

Well for example one beer (0.5L) in nice bar will be 3$, in supermarkets it will be 1$. 1 kg of beef is about 5$, taxi rate is 0.5$/km. For reference (1 US gal = 3.7 L, 1 mile = 1.6 km, 1 pound = 0.45 kg). Dinner or lunch costs somewhere between 2-10$ depending on the location and quality of the place. 1LDK apartment costs between $40-$60K. Average government employee receives 300-400$ per month.

 

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