TDB shareholding structure is currently the following: Globull Investment & Development Management S.A. (“Globull”) with 76.0%, Mongol Postal Bank with 13.9% (2.9% direct and 11.0% indirect participation) and other minority shareholders with 10.1%. Globull was established by Ernst & Young at the request of the consortium consisting of Gerald UK (a wholly owned subsidiary of GMI) and BCL in Luxemburg in December 2002, with registered head-office in Luxembourg. GMI, the leading partner in the Consortium, has over 30 years of trading and merchant banking experience in Asia, including a 20-year physical presence in the region, and its interest in TDB stemmed from its historical links to the Mongolian copper and gold trade. On its turn BCL may participate in some of the GMI initiated Mongolian-sourced merchant banking transactions and, at some future time, transfer their asset management expertise to TDB. Institutional & Government Advisory (IGA), a wholly owned subsidiary of ING, was appointed as manager of TDB and a Management and Technical Assistance Agreement has been signed between all counterparts.

The proposed project consists of an IFC investment of up to $5 million in TDB, in Mongolia. The investment will have two components: - an equity participation in the form of a rights issue of up to the equivalent of $1.5 million representing an up to 10% equity stake; and, - a US$ denominated subordinated loan of up to $3.5 million, with a tenor of 7 years.

5.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	3.50
Equity	1.50

* These investment figures are indicative

TDB is headquartered in Ulaanbaatar, Mongolia. The bank has a network of 8 branches (3 in Ulanbaataar and 5 in the most important regional hubs) and 7 settlement centers covering the major population and economic centers.

This is an FI Type 1 project. TDB will be required to develop an environmental management system. TDB must require that investments under relevant operations meet host country environmental, health and safety requirements.
Location of environmental documents in locally affected community

- Development Impact: Since TDB’s privatization in December 2002 both Consortium and ING representatives have commented favorably on the constructive role which IFC and ADB representatives and consultants have played. Given TDB’s prominent position in Mongolia’s fragile economy, there can be little doubt of the important developmental role that a future IFC investment would fulfill. - Catalytic and demonstration effect: IFC’s investment will demonstrate to the general public that privatization has produced clear and tangible positive results for Mongolia. IFC’s support for the current Government of Mongolia privatization policy demonstrates that it is fair and in the country’s best interest. In time, and with the support of IFC, TDB expects to act as a catalyst for the development of a legal framework for new financial products such as mortgage lending, leasing, factoring and general and life insurance – basic financial service activities which are currently at inception or weak to the point where they impinge upon the country’s ability for further development. - Financial reforms and FDI attraction: Mongolia has seen only limited foreign direct investment to date. IFC’s investment in TDB following its successful privatization will raise awareness within the international community as to Mongolia’s financial stability. It will create an environment in which foreign investors will feel less exposed and will be a sign to foreign corporations that IFC is sufficiently confident in Mongolia’s banking sector and future investors will feel less exposed. - Promotion of competitiveness in banking sector: This investment is designed to strengthen Mongolia’s commercial banking sector. Although TDB’s ING-seconded management has been given full authority by the Consortium to manage the bank without intrusion, both the Consortium and the ING management is keen for IFC to play a leading role in terms of the development and implementation of best practices in Mongolia’s largest bank which, in turn, will set higher standards for the entire sector as well. Advancement of best practices and corporate governance: IFC will be teamed with financial partners of international standing to promote quality services such as ensuring borrowers’ compliance with good corporate governance requirements, hedging currency and metals price risk, ability for co-financing and loan syndication, handling of trade related requirements in the framework of specific projects. Introduction of new financing techniques will be cost effective for borrowers and will result in trade promotion. This proposed investment represents a clear signal that IFC has confidence in TDB’s management, strategy, and potential. IFC Role: Mongolia’s financial sector remains in its nascent stages. The sector requires support from the international financial institutions to develop all its aspects in accordance with international best practices, including retail and corporate lending, mortgage finance, leasing, and insurance. IFC’s investment in TDB will help to ensure the future sustainability of Mongolia’s largest and longest standing financial institution and will have a significant developmental impact. As a minority shareholder, IFC would have access to valuable market intelligence and that would prove to be an excellent source of information as to the major issues facing business in Mongolia, including banking regulations, tax and bankruptcy laws. The lessons learned from this investment should result in other investment opportunities that contribute to the sustained growth of Mongolia’s financial sector.