Mongolia brings disaster risk centre stage www.reliefweb.int

ULAANBAATAR, 1 July, 2018 - Despite decades of rapid socio-economic development, Asia Pacific remains the most disaster-prone region in the world. In 2017 alone, more than 6,500 people lost their lives following more than 200 disasters that affected 66.7 million people.

From 3-6 July, the Mongolian government will host the 2018 Asian Ministerial Conference on Disaster Risk Reduction (AMCDRR) which takes place in the capital Ulaanbaatar. Co-organised with the United Nations Office for Disaster Risk Reduction (UNISDR), the AMCDRR aims to accelerate efforts in the region to reduce and prevent disaster losses through implementation of the Sendai Framework for Disaster Risk Reduction 2015-2030.

Mongolia faces a range of disaster threats including earthquakes, floods, forest fires and drought. One weather-related phenomenon unique to the country is the Dzud, caused by the twin impacts of drought in the summer and severe freezing weather and storms in the winter. One-third of Mongolia's population depends entirely on pastoral farming and the loss of pasture caused by Dzuds, leads to widespread starvation amongst livestock, devastating the herds and livelihoods of nomadic herders.

On the outskirts of Ulaanbaatar lies the suburb of Tahilt. Over the years this informal settlement has grown to accommodate an expanding population of herder families who having lost their livestock to successive Dzuds and been forced to migrate to the capital in search of work. For most, adapting to urban living has not been easy.

Since her husband died two years ago, 67-year-old Dorjpagma has been living in Tahilt. Her family were amongst the 157,000 herders affected by the 2016-2017 Dzud when more than 1.1 million livestock were lost.

“I had 300 sheep and goats, 30 horses and 20 head of cattle. Most of them died from starvation and the rest were stolen”, explains Doripagma. “Coming to the city was difficult as everything was so costly. Our traditional life was good compared to now. We used to be independent and lived off produce from our animals like milk, cheese and meat. We also produced cashmere wool from our goats”.

In 2018 Dorjpagma left her home in Zavkhan province and travelled 1,000 kilometres to Ulaanbaatar where she found work as a seamstress. Now she survives off a small pension. In her neighbourhood, she continues to remains vulnerable to the impacts of weather-related hazards. A week ago, heavy summer rains cascaded down from the surrounding hills and flooded her Gher (traditional Mongolian tent).

Having worked for Mongolia’s National Emergency Management Agency for 25 years, Namsrai Dumaa is familiar with the social and economic impacts of Dzuds.

“After Dzuds people come to the cities in search of work but they face a range of challenges. When they leave their homeland they often fall into depression because they lose their independent way of life and have to depend on other people. Sometimes urban people are not so welcoming”.

He has witnessed how climate change is fuelling more extreme weather patterns in Mongolia.

“Today in Mongolia the seasons are different. Winter is getting longer and temperatures are getting much colder. Dzud occurs not only in winter but also in summer when drought means animals don’t get enough nutrition. The local administration is working with herders to help them adapt to the changes in nature and be better prepared for Dzud. Understanding the risks is the first step, then acting on them is the next. For example, taking out livestock insurance is one way for herders to safeguard their livelihood.”

The AMCDRR in Mongolia will provide a platform that brings together a wide range of actors. Government ministers will come together with representatives from UN agencies, NGOs, the private sector and also civil society groups representing women, children and youth and people with disabilities.

“Our aim is to tackle disaster risk by engaging all sectors of society. We want an inclusive approach that brings coherence to disaster risk reduction (DRR) plans and approaches at the regional, national and local levels”, explains Loretta Hieber-Girardet, Chief of UNISDR’s regional office in Asia Pacific.

“Achieving the Sustainable Development Goals is the UN’s top priority, but many of these goals are under threat unless we find ways to reduce disaster losses. The impacts of climate change are driving the frequency and severity of disasters and if we are to reduce mortality levels and the massive financial losses resulting from disasters in the region, its vital that we accelerate action and increase investment in DRR”.

Over the last 50 years the Asia Pacific region has suffered nearly $1.3 trillion in economic losses to disasters. Losses in the region could exceed $160 billion annually by 2030.

Moody's assigns Counterparty Risk Ratings to 9 banks in Mongolia www.moodys.com

Hong Kong, June 28, 2018 -- Moody's Investors Service, ("Moody's") has today assigned Counterparty Risk Ratings (CRRs) to 9 banks in Mongolia.

The 9 banks affected are: 1) Bogd Bank LLC (Bogd Bank), 2) Capital Bank LLC (Capital Bank), 3) Development Bank of Mongolia LLC (DBM), 4) Golomt Bank LLC (Golomt Bank), 5) Khan Bank LLC (Khan Bank), 6) State Bank LLC (State Bank), 7) Trade and Development Bank of Mongolia LLC (TDBM), 8) Transport and Development Bank LLC (TransBank), and 9) XacBank LLC (XacBank).

Moody's Counterparty Risk Ratings are opinions of the ability of entities to honour the uncollateralized portion of non-debt counterparty financial liabilities (CRR liabilities) and also reflect the expected financial losses in the event such liabilities are not honoured. CRR liabilities typically relate to transactions with unrelated parties. Examples of CRR liabilities include the uncollateralized portion of payables arising from derivatives transactions and the uncollateralized portion of liabilities under sale and repurchase agreements. CRRs are not applicable to funding commitments or other obligations associated with covered bonds, letters of credit, guarantees, servicer and trustee obligations, and other similar obligations that arise from a bank performing its essential operating functions.

At the same time, Moody's downgraded the Counterparty Risk Assessment (CR Assessment) of DBM to B3(cr) from B2(cr) to be consistent with the government support notching guidance per the Banks methodology.

RATINGS RATIONALE

The CRRs assigned to the 9 Mongolian banks are in line with the CR Assessment assigned.

Because Moody's considers that Mongolia does not have an operational resolution regime, in assigning CRRs to the Mongolian banks subject to this rating action, the rating agency applies its basic Loss Given Failure (LGF) approach. Moody's basic LGF analysis positions CRRs in line with the banks' CR Assessment, one notch above their adjusted BCAs.

None of the 9 Mongolian Banks' CRR incorporate any uplift from government support.

OUTLOOK

CRRs do not carry outlooks.

FACTORS THAT COULD LEAD TO AN UPGRADE/DOWNGRADE

Bogd Bank LLC -- WHAT COULD CHANGE THE RATING UP

Bogd Bank's b3 baseline credit assessment (BCA) is at the same level as Mongolia's sovereign rating, and, as such, a positive rating action is unlikely in the absence of an upgrade of the sovereign rating.

Bogd Bank LLC -- WHAT COULD CHANGE THE RATING DOWN

Factors that could result in a downgrade include (1) a downgrade of Mongolia's sovereign rating, or (2) a downgrade of the bank's BCA.

Bogd Bank's BCA could be downgraded if the bank's (1) asset quality deteriorates significantly (for example, with problem loans/gross loans exceeding 9% on a sustained basis); (2) tangible common equity falls below 8%; or (3) profitability deteriorates significantly, leading to annual net losses on a sustained basis.

Capital Bank LLC -- WHAT COULD CHANGE THE RATING UP

We will upgrade Capital Bank's BCA and long-term ratings if the asset-quality review (AQR) and additional funding from an international fund result in asset quality and capitalization levels consistent with a BCA of b3.

Capital Bank LLC -- WHAT COULD CHANGE THE RATING DOWN

The outlook on Capital Bank's domestic currency long-term rating could be changed to stable from positive if the bank is unable to secure additional capital to improve its capitalization. Factors that could result in a downgrade include (1) a downgrade of Mongolia's sovereign rating, and (2) a downgrade of the bank's BCA.

The bank's BCA could be downgraded if its (1) asset quality deteriorates significantly, for example, with problem loans/gross loans exceeding 9.0% for a sustained period; (2) tangible common equity falls below 8.0%; or (3) profitability deteriorates significantly, leading to annual net losses on a sustained basis.

Development Bank of Mongolia LLC -- WHAT COULD CHANGE THE RATING UP

DBM's long-term rating incorporates a one-notch uplift from its BCA and is at the same level as the sovereign rating. A positive rating action is unlikely in the absence of an upgrade of Mongolia's sovereign rating.

We will consider upgrading DBM's BCA if the bank's asset quality and profitability improve to levels consistent with a BCA of b3 while maintaining sound capitalization.

Development Bank of Mongolia LLC -- WHAT COULD CHANGE THE RATING DOWN

Factors that could result in a downgrade include (1) a downgrade of Mongolia's sovereign rating; or (2) a weakening in the strategic importance of DBM to the government, as a result of which we would change our assessment of government support.

Golomt Bank LLC -- WHAT COULD CHANGE THE RATING UP

Golomt Bank's b3 BCA is at the same level as Mongolia's sovereign rating and, as such, a positive rating action is unlikely in the absence of an upgrade of the sovereign rating.

Golomt Bank LLC -- WHAT COULD CHANGE THE RATING DOWN

Factors that could result in a downgrade include (1) a downgrade of Mongolia's sovereign rating, or (2) a downgrade of the bank's BCA.

Golomt Bank's BCA could be downgraded if the bank's (1) asset quality deteriorates significantly with its problem loans/gross loans exceeding 9% on a sustained basis; (2) tangible common equity ratio falls below 8%; or (3) profitability deteriorates significantly, leading to annual net losses on a sustained basis.

Khan Bank LLC -- WHAT COULD CHANGE THE RATING UP

Khan Bank's b3 BCA is at the same level as Mongolia's sovereign rating, and as such, a positive rating action is unlikely in the absence of an upgrade of the sovereign rating.

Khan Bank LLC -- WHAT COULD CHANGE THE RATING DOWN

Factors that could result in a downgrade include a downgrade of (1) Mongolia's sovereign rating; or (2) the bank's BCA.

The bank's BCA could be downgraded if its (1) asset quality deteriorates significantly (for example, if problem loans/gross loans exceeds 9% for a sustained period); (2) tangible common equity falls below 8%; or (3) profitability deteriorates significantly, leading to sustained annual net losses.

State Bank LLC -- WHAT COULD CHANGE THE RATING UP

State Bank's b3 BCA is at the same level as Mongolia's sovereign rating, and, as such, a positive rating action is unlikely in the absence of an upgrade of the sovereign rating.

State Bank LLC -- WHAT COULD CHANGE THE RATING DOWN

Factors that could result in a downgrade include (1) a downgrade of Mongolia's sovereign rating; or (2) a downgrade of the bank's BCA.

State Bank's BCA could be downgraded if the bank's (1) asset quality deteriorates significantly, for example, with problem loans/gross loans exceeding 9% on a sustained basis; (2) tangible common equity falls below 8%; or (3) profitability deteriorates significantly, leading to annual net losses on a sustained basis.

Trade and Development Bank of Mongolia LLC -- WHAT COULD CHANGE THE RATING UP

TDBM's b3 BCA is at the same level as Mongolia's sovereign rating, and, as such, a positive rating action is unlikely in the absence of an upgrade of the sovereign rating.

Trade and Development Bank of Mongolia LLC -- WHAT COULD CHANGE THE RATING DOWN

Factors that could result in a downgrade include (1) a downgrade of Mongolia's sovereign rating, or (2) a downgrade of the bank's BCA.

TDBM's BCA could be downgraded if the bank's (1) asset quality deteriorates significantly (for example, if problem loans/gross loans exceeds 9% on a sustained basis); (2) tangible common equity ratio falls below 8%; or (3) profitability deteriorates significantly, leading to annual net losses on a sustained basis.

Transport and Development Bank LLC -- WHAT COULD CHANGE THE RATING UP

TransBank's b3 BCA is at the same level as Mongolia's sovereign rating, and, as such, a positive rating action is unlikely in the absence of an upgrade of the sovereign rating.

Transport and Development Bank LLC -- WHAT COULD CHANGE THE RATING DOWN

Factors that could result in a downgrade include: (1) a downgrade of Mongolia's sovereign rating, or (2) a downgrade of the bank's BCA.

TransBank's BCA could be downgraded if the bank's: (1) tangible common equity falls below 8%; (2) profitability deteriorates significantly, leading to annual net losses on a sustained basis; or (3) asset quality deteriorates, with its problem loans ratio rising above 9%.

XacBank LLC -- WHAT COULD CHANGE THE RATING UP

XacBank's b3 BCA is at the same level as Mongolia's sovereign rating and, as such, a positive rating action is unlikely in the absence of an upgrade of the sovereign rating.

XacBank LLC -- WHAT COULD CHANGE THE RATING DOWN

Factors that could result in a downgrade include (1) a downgrade of Mongolia's sovereign rating, or (2) a downgrade of the bank's BCA.

XacBank's BCA could be downgraded if the bank's (1) asset quality deteriorates significantly, for example, with problem loans/gross loans exceeding 9% on a sustained basis; (2) tangible common equity falls below 8%; or (3) profitability deteriorates significantly, leading to annual net losses on a sustained basis.

The principal methodology used in these ratings was Banks published in June 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

All entities are headquartered in Ulaanbaatar.

Bogd Bank LLC reported total assets of MNT74.4 billion ($30.6 million) as of 31 December 2017.

Capital Bank LLC reported total assets of MNT745.6 billion ($374.1 million) as of 31 December 2015.

Development Bank of Mongolia LLC reported total assets of MNT3.74 trillion ($1.54 billion) as of 31 December 2017.

Golomt Bank LLC reported total assets of MNT5.21 trillion ($2.14 billion) as of 31 December 2017.

Khan Bank LLC reported total assets of MNT7.27 trillion ($2.99 billion) as of 31 December 2017.

State Bank LLC reported total assets of MNT2.34 trillion ($962.5 million) as of 31 December 2017.

Trade and Development Bank of Mongolia LLC reported total assets of MNT6.87 trillion ($2.83 billion) as of 31 December 2017.

Transport and Development Bank LLC reported total assets of MNT203 billion ($84 million) as of 31 December 2017.

XacBank LLC reported total assets of MNT3.04 trillion ($1.25 billion) as of 31 December 2017.

LIST OF AFFECTED RATINGS

Bogd Bank LLC

Assigned local and foreign currency long-term Counterparty Risk Ratings of B2

Assigned local and foreign currency short-term Counterparty Risk Ratings of NP

Capital Bank LLC

Assigned local and foreign currency long-term Counterparty Risk Ratings of B3

Assigned local and foreign currency short-term Counterparty Risk Ratings of NP

Development Bank of Mongolia LLC

Long-term Counterparty Risk Assessment downgraded to B3(cr) from B2(cr)

Assigned local and foreign currency long-term Counterparty Risk Ratings of B3

Assigned local and foreign currency short-term Counterparty Risk Ratings of NP

Golomt Bank LLC

Assigned local and foreign currency long-term Counterparty Risk Ratings of B2

Assigned local and foreign currency short-term Counterparty Risk Ratings of NP

Khan Bank LLC

Assigned local and foreign currency long-term Counterparty Risk Ratings of B2

Assigned local and foreign currency short-term Counterparty Risk Ratings of NP

State Bank LLC

Assigned local and foreign currency long-term Counterparty Risk Ratings of B2

Assigned local and foreign currency short-term Counterparty Risk Ratings of NP

Trade and Development Bank of Mongolia LLC

Assigned local and foreign currency long-term Counterparty Risk Ratings of B2

Assigned local and foreign currency short-term Counterparty Risk Ratings of NP

Transport and Development Bank LLC

Assigned local and foreign currency long-term Counterparty Risk Ratings of B2

Assigned local and foreign currency short-term Counterparty Risk Ratings of NP

XacBank LLC

Assigned local and foreign currency long-term Counterparty Risk Ratings of B2

Assigned local and foreign currency short-term Counterparty Risk Ratings of NP

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

The below contact information is provided for information purposes only. Please see the ratings tab of the issuer page at www.moodys.com, for each of the ratings covered, Moody's disclosures on the lead rating analyst and the Moody's legal entity that has issued the ratings.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

The first name below is the lead rating analyst for this Credit Rating and the last name below is the person primarily responsible for approving this Credit Rating.

Tae Jong Ok
Analyst
Financial Institutions Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Minyan Liu
Associate Managing Director
Financial Institutions Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

Mongolia revives plan for billion-dollar coal mine IPO www.asia.nikkei.com

ULAANBAATAR -- The Mongolian government has revived plans shelved several years ago for an international stock offering of the company that controls one of the world's largest coal mines, buoyed by recovering commodity prices.

Deutsche Bank's US unit fails Fed's stress test www.bbc.com

Deutsche Bank's US division has failed the second round of the Federal Reserve's annual two-stage stress tests, designed to assess how well the sector could withstand another financial crisis.

The German lender suffered from "widespread and critical deficiencies" in parts of its business, the Fed said.

Goldman Sachs and Morgan Stanley were only granted "conditional" passes.

But 31 of the 35 banks tested were given the all-clear.

Stress tests were introduced in the wake of the 2008 financial crisis and every year America's central bank, the Federal Reserve, puts the country's banks, including foreign subsidiaries operating in the country, through their paces.

The Fed measures whether banks are holding sufficient capital to cope with a recession and in the second part of the process it focuses on banks' "capital plans" such as how much cash they intend to return to shareholders. However this is the first year that the results of the US units of foreign banks have been publicly released.

All of the 35 largest banks subject to the tests passed the first part of the tests last week.

But the Fed found Deutsche Bank's US arm had "material weaknesses in the firm's data capabilities and controls supporting its capital planning process, as well as weaknesses in its approaches and assumptions used to forecast revenues and losses under stress".

The verdict is another blow for the troubled German lender whose financial health has been under the spotlight recently. And it will require the bank to make changes to the way it operates in the US.

US banks pass financial stress tests
Goldman Sachs and Morgan Stanley were given passes, but will not be permitted to increase the amount they return to shareholders beyond levels inline with the last couple of years, in order to bolster their capital cushions.

The Fed said it was also granting a conditional pass to Boston-based State Street, which will be required to take additional steps to manage and analyse its exposure to losses.

Last year was the first time all banks passed the second round of the tests.

The second part of the tests is closely watched because it determines how much firms can return to shareholders in the form of items like share buybacks and dividends.

'One-off event'
The Fed said it had granted the conditional pass to Goldman and Morgan Stanley because the companies' results had been skewed by tax changes passed last year.

The tax overhaul lowered the corporate rate from 35% to 21%, but led to larger-than-usual one-off tax bills for many banks, as a result of other changes to how losses and overseas profits are taxed.

"This one-time reduction does not reflect a firm's performance under stress and firms can expect higher post-tax earnings going forward," the Fed said.

Despite the restrictions, Goldman will still be permitted to spend up to $6.3bn on share buybacks and dividends this year.

Morgan Stanley said it planned to return $6.8bn to shareholders.

Making progress
The decision is the latest blow for troubled Deutsche Bank. Last month the firm announced more than 7,000 job cuts and its credit rating was cut by Standard & Poor's. The bank reported an annual loss of €500m (£438m) at the end of February.

Deutsche said its US division had "made significant investments to improve its capital planning capabilities as well as controls and infrastructure."

"Deutsche Bank USA continues to make progress across a range of programmes and will continue to build on these efforts and to engage constructively with regulators to meet both internal and regulatory expectations," the bank said.

The bank will be required to improve its operations, risk management and governance as a result of the test-failure. It will not be able to make distributions to its German parent firm without the Fed's approval.

Lafarge cement giant in terrorist funding probe www.bbc.com

Cement giant LafargeHolcim says its French subsidiary is under formal investigation in France over claims it funded a terrorist group in Syria.

Mongolian speaker denies Washington post corruption allegation www.news.mn

The Washington Post published an article on 26 June over a Mongolian political conspiracy to sell government positions. Entitled “Mongolian democracy has a familiar ailment, and it's all about money', the article outlines one of the biggest political scandals to hit the country since Mongolia became a democracy in 1990. The article refers to the, so- called, '60 billion case', which has been publicised by Mongolian political commentator D.Jagalsaikhan on his Jargal Defacto site.

Erdenet collateral scandal: Sh.Batkhuu released on bail www.news.mn

Sh.Batkhuu, former director of the 'Just Group', was released on bail on Wednesday because of health problems and banned from leaving the country. According to one source, Sh.Batkhuu was receiving high doses of insulin shots daily, however, these were increasing the risks of kidney failure and brain damage.

Mongolia's industrial production grows 23.3pc in Jan-May www.thefinancialexpress.com.bd

The volume of industrial production in Mongolia grew 23.3 per cent in the January-May period compared to the same period last year, amounting to $2.439 billion US dollars.

Khaan Quest 2018 int'l peacekeeping drill wraps up in Mongolia www.xinhuanet.com

ULAN BATOR, June 28 (Xinhua) -- An annual multinational peacekeeping exercise, code-named Khaan Quest 2018, concluded with a closing ceremony at Five Hills Training Area near the Mongolian capital on Thursday.

Apple and Samsung settle their epic patent infringement battle www.cnn.com

Apple and Samsung just ended their epic seven-year legal patent infringement fight.
The two companies agreed to a settlement in the case, according to court documents filed Wednesday, but did not disclose the terms.