Khan Bank kept its rural branches and turned near-liquidation into Mongolia's largest bank

Mongolia's Agricultural Cooperative Bank was created in 1991 out of the state bank's rural network: several hundred branches and more than 2,600 employees. Through the 1990s, politically directed loans to failing state enterprises, weak controls and a poor legal framework drove the bank toward insolvency and liquidation.

In 2000, USAID, the World Bank and the Mongolian government agreed on a privatization plan whose condition was an outside management team. DAI installed CEO Peter Morrow, who decided to leverage rather than cut the 269 rural branches — branches that 400,000 people were using mainly to pay taxes or collect salaries.

Morrow's team launched a lending program, converted payment services into deposits, built marketing, installed controls and training, and restructured management. Within half a year the bank was profitable again; the new brand and strategy drew three viable bids in the 2003 privatization.

Today Khan Bank is Mongolia's largest commercial bank, with more than 545 branches serving an estimated 78% of Mongolian households, including herders and farmers. IFC has been a partner since 2004, lending US$30 million in 2013 and a further US$40 million subordinated loan to fund SME lending.