Bold Magvan, Chief Executive Officer of XacBank, one of the largest banks in Mongolia, visited Kyrgyzstan for the first time to share best practices and promote sustainable financing principles. During his visit, Mr. Magvan took part in the Green Economy Forum, had a number of meetings with local financial experts and focused on learning from Kompanion Bank’s experience. We are grateful to Mr. Magvan for making time for this interview despite his tight schedule.

Kompanion and XacBank are like sister companies

I’ve come to Kyrgyzstan for two main reasons. First, to represent Mongolian Bankers Association at the Green Economy Forum that took place in Bishkek. We were invited to share our experience in Sustainable Finance. The second purpose is to visit Kompanion Bank to learn Kompanion’s best practices in pasture land management. I’ve known about Kompanion for many years, but I have never had a chance to visit it until now. Kompanion and XacBank are like sister companies: we share the same founder and shareholders (Mercy Corps and Triodos), our vision and missions are almost identical. Speaking of banking sectors of our two countries in general, we can note some similarities because we have the same background—going from a former centrally planned economy to a more market-oriented system. Our issues and problems are identical. So are our banking sectors. Both countries are trying to build an international banking system from scratch.

XacBank’s key success factors

Today XacBank is the 4^th largest bank in Mongolia with $1BN assets. In terms of international standards, we are at the forefront as well. I would mention three crucial factors that have led XacBank to success. First of all, it is Mongolia’s liberal legal framework for banking services with minimum restrictions and government interventions. This gives you a free hand in providing financial services. The second success factor is timely intervention and assistance from international community—market players and partners have invested in XacBank providing funds to support micro lending in Mongolia. The investments included not only cash, but technical expertise and knowledge, openness, transparency, governance, networking, trainings, and exposure to external markets as well—the best they could transfer to Mongolia. The third success factor has been a great local management team: open to new creative, innovative and dynamic ideas. These three components have allowed us to achieve success.

Kompanion should be proud of its initiatives

Kompanion makes a huge contribution to preservation of the environment. It’s been impressive to see how a private bank is so eager to save the Kyrgyz land from pasture degradation at its own cost. We visited Kompanion’s clients, shepherds and villagers in Karakol and other locations and saw degraded and overgrazed lands be saved. Shepherds and families attended Kompanion’s trainings with great interest and now they are so happy seeing the results, seeing their pastures now recovering. Local government officials and households were very enthusiastic and eager to be involved in this activity arranged by Kompanion. Kompanion should be proud of this initiative. Besides land management, I saw Kompanion’s veterinarians and agronomists provide trainings to shepherds and local people encouraging them and giving them hope for better life. The trainings were aimed at improving peoples’ skills in healthy livestock management that helps prevent livestock diseases. This is another critical area where Kompanion plays a huge role on behalf of the Kyrgyz society. Providing technical expertise and knowledge through veterinarians and agronomists, Kompanion contributes to saving the whole country from animal diseases which could otherwise spread out and damage the agricultural sector of Kyrgyzstan.

Everyone will follow Kompanion very soon

Saving lands from degradation and preventing animal diseases are huge tasks that should normally be fulfilled by the government, the civil society and shepherds. It was impressive to see how Kompanion was brave enough to take leadership without hesitation to show a great example. These two contributions by Kompanion will have a huge impact on adding value to agricultural products and well-being of the population which is not acknowledged enough in Kyrgyzstan, from what I observed. But very soon many will follow Kompanion and will understand the significance of its activities. By that time, Kompanion will be ahead reaping the benefits and rewards of its hard work. I enjoyed greatly learning from Kompanion’s experience in this regard.

Always going ahead—this is our strategy

In 2009, jointly with our partners in Mongolia, we launched two financial and social education programs: Aflatoun (for children from 6 to 13) and Aspire (for children from 14 to 17). Since the launch of the program, we have trained more than 40,000 children in more than 100 schools. The Government was hesitant about the program at first, but ended up including a part of the program in compulsory curriculum since 2016. That was exactly what we wanted. Now we can exit—there is no need for us anymore. Teachers and schools can now continue the work on their own. Very soon we might go to ecological education for children, for instance. Always going ahead—this is our strategy.

Social responsibility is not about garbage collection

Collecting garbage, cleaning rivers and planting trees once a year is not an indicator of social responsibility today. This is just a drop in the bucket that can change little. Our main goal is to be socially responsible through our financial services on a daily basis. We provide environmentally friendly loans. This service strategy is the requirement of our stakeholders. Our loans should be used for environmentally friendly business development. We do not provide financial support to businesses that may harm the environment. This is what social responsibility means to us.

Preventing our borrowers from excessive indebtedness by setting conservative long repayment to income ratios and reasonable repayment terms is another strategy that we follow to provide customer-friendly financial services. In all our activities, we are striving to adhere to the principles of triple bottom line mission: “Planet, people and prosperity.”