Almost every Mongolian knows Peter Morrow, Chief Executive Officer of Khan Bank, one of the top banks in Mongolia. He, who generously contributes to Mongolian art and sometimes called as “a tough” man, has lived in Mongolia for many years and has almost become a Mongolian. Lately there has been a talk in public that “he is going to resign his post of Chief Executive Officer of Khan Bank”. He accepted my request to interview him about his life in Mongolia, his achievements and future plan.

It’s been ten years since you started your life in Mongolia. I want to start the interview about your first impressions about Mongolia?
I saw the offer as a carreer opportunity and challenge and I started my work under two years’ contract. When I first came to Ulaanbaatar there wasn’t much to enjoy. It appeared to be an old regional socialist city with obvious issues as air quality and infrastructure. But in 10 years there have been a lot of improvements. Although the last two years have been difficult Mongolia grew rapidly for the past ten years. The city looks much different; it has much growth and lot of money, cars, more buildings and much more activities.

Please can you provide some reason to your choosing of Mongolia? It was kind of strange that foreigner to manage Mongolian bank?
- The decision was made in an agreement between the Government of Mongolia, Bank of Mongolia, USAID and the World Bank. The decision was agreed to bring in a foreign management team and independent Board of Directors. Bank of Mongolia particularly insisted on bringing foreign manager, someone who has experience dealing with problem banks and someone who would be free from political interference.

It is said that you are an expert in the industry. How about your first career? What business would have you been running if you didn’t come to Mongolia?
Right after the University I worked for the Export and Import Bank, US Government bank in Washington DC. Then I worked for commercial banks in Chicago and South West in Phoenix for many years. I was running a consulting company at that time which I stopped to come here. If I hadn’t have come here I would continue my consulting.
Although banking crisis was finished, you were appointed as CEO when it was almost definite that Khan Bank was going to bankrupt. What was the first issue you addressed?
When I came here the bank was not lending money. It was handling simple transfers and had very little activity for a long. So the first task was to increase business, whereas to start making loans, bringing in more deposits, and start building the level of activities back to normal. We had many potential customers all over Mongolia but we were just not offering the products they wanted to buy. So At first we started lending traders and small business people and eventually developed loan products for herders, salary people, state employees, pensioners and many other types of borrowers. So these loan products began to bring in interest income and as the bank grew and prospered the interest income began to make profits that we can reinvest in technology, branch expansion and higher salary of the employees.

I heard a funny story that when you asked about the bank’s products, you were given shoes foreclosed as collateral. In practice, almost there was no concept of banking products, wasn’t it?
Bank did not loan money for two years when I came here. So the only loans that bank had were old loans. So basically we started completely fresh, new procedures and policies, and we made these new products to everybody. We didn’t allow people to take bribes and we didn’t allow people to make loans to their friends. We opened up the availability of the banking services to everyone. I was aware of those bad practices back in the 90s before I come here, but basically we didn’t allow them to continue. Generally when we started here the Agricultural Bank was in a very poor condition because the bank didn’t have any money to spend for its facilities. So the biggest concern the employees had were making sure the stoves work, fixing leaking roofs and of course the salary was very very low. The average salary of the Agricultural Bank’s small soum office employees was MNT 30.000 or MNT 40.000 monthly. So we spent a lot of focus on repairing some of these serious problems, bringing salaries up and improving the business.

You traveled to countryside a lot, even more than a Mongolian?
Sure, I’ve been to all aimags of Mongolia many times. And I’ve probably been to 275 soums out of 330 roughly. I usually take 3-4 business trips every year. We try to go for a week each one and drive between aimags centers and seeing as many soums as possible. I’ve been to Bayan-Ulgii 9 times last summer.

Why have you visited the Bayan-ulgii aimag so many times, business need or preference of the Kazaks traditions and customs?
No specific reason. I like all parts of Mongolia. When i visit rural aimags, I visit as many offices as possible on the way. I have frequently visited, not only Bayan-ulgii aimag, other aimags, e.g. Umnugovi aimag 7-8 times.

There have been many different perspectives in the community about your bank’s herder’s loan.  For instance, while some people say that Khan Bank exploitates herders, others namely the herders say that the bank would have collapsed if the Bank had not disbursed the herder’s loans to the herders. When did the Bank start to disburse this type of loans?
Herders did not use banks until 2002. That’s why KB invented a loan product only for the herders. We required them all to open current accounts so that they could receive their meat and cashmere income through a current account and pay their loans that way. Before that meat and cashmere buyers went out to the countryside with suitcases of cash. We changed the whole economy of herding from a cash economy to one that deals through the banking system. I would like to say that the information recently spread out on some mass media means is misinterpreted or simply not true. Our herder loan contributed to the improvement of herders’ livelihood. 40 % of our loans are used for educational purposes, tuition fees & other necessities. The loans were also used and benefited for improvement of herders’ livelihood.  For instance, in 2002, 14 percent of total herder families had generators for electricity; in 2009 it was increased up to 75 percent. Herders have had not only generators, but also a number of household items e.g. electric appliances, satellite dishes, & DVD players, for their daily lives. This clearly shows the benefits of herder’s loan.
Herders over the years always paid their loans on time, only a very few herder loans default. We almost never foreclosed and took animals. In 2008 and 2009, both years, we had very bad cashmere and meat prices. And then after that the worst zud in many years. So we worked very closely with our herder borrowers, we restructured every loan that was possible to restructure and made sure that they made it went through the winter. For many of them we forgave, and waived penalties and did not collect money we were entitled to collect. More than 90% of our herder loans are current. And it has been like that through the difficult years. Some herders, small percentage, lost all their animals. We don’t have those numbers now, waiting for the official numbers from the Ministry of Agriculture. The Bank is disbursing herder loans and the portfolio is growing. Actually very few herders blame KB for anything. This was all a lot of publicity that was used to attack us by adversaries. In February, the middle of the worst of the Zud, I went out myself to the most difficult soums out in the west and everywhere I went herders were grateful about the bank.

Dzud happened. There had been a rumour than Khan Bank would go bankcrupcy. Meanwhile, herder’s loan accounts for how many percentage in total loan portfolio of your bank?
Herder loan is one of the good and quality loans at the Bank. About 5-6 % of the total loan portfolio is herder loan.

By the way, do you have livestock? How many heads of livestock do you have?
I don’t have many animals other than occasional race horse. I leave the gift horses in their herds. So it is hard to say that I own livestock.

After you came to Mongolia, have you had any challenge that made you to think about going back to your home? And what was the most impressive for you?
Never, certainly there are frustrations everywhere. Mongolia is in a very early years of conversion to market economy and democracy, that we’ve had in the west for over 1 or 2 centuries. So there are problems, there are growing pains, there are adjustments and sometimes they can be frustrating. Never would I thought of not staying.
In connection with family history research and I did some DNA test run and I’m not decended from Chinggis Khan and I was disappointed with that (laughed). I think it’s hard for anyone to live here among Mongolian people to enjoy the country experiences without feeling very close to Mongolian people. As I working together with Mongolians, they create warm and friendly atmosphere.  For me, Mongolia is a great place to live in.

So do you mean that you will continue living in Mongolia?
Yes, I will be living in Mongolia in the future. While my home is in Arizona, I visit my home 2-3 times a year for short period.  I have been spending most of a year living and working in Mongolia. I married to a Mongolian woman so one can say that Mongolia is my home.

I see in your office many Buddhist religious items. Also I’ve heard that Gongor Buddha is your organization deity and was placed even when Khan Bank used to be Agriculture Bank. Aren’t you a Christian?      
I was once in Tibet and my Tibetan friend asked if I was a Buddhist. I said no and he said “actually you don’t have to sign up to be a Buddhist, you don’t have to do anything, you just have to be a good person and do the right things. So I think you are a Buddhist”. I was raised in Christian tradition and but i don’t practice Christianity. I do drive a great deal of satisfaction and comfort from Buddhism. Have many Buddhist friends. GuruDeva Rinpoche was one of my closest friends. He took care of all rituals of our Bank. Personally I’ve taken a particular interest in Danzanravjaa and visited Khamriin Hiid on several occasions and I’ve written articles on Danzanravjaa. I first visited Khamriin Hiid in 2001 and I learned about Danzanravjaa, his life and his amazing scope of his work. Also I met Altangerel and learned the history of Tahilch that has maintained the legacy of Danzanravjaa. It’s an amazingly powerful story.

People know about your passion for the paintings and about your tradition of purchasing them. How long have you been interested in paintings?
I come from a background that is more musical than visual arts. My mother and my grandmother were both orchestra violinists. Initially I was buying paintings not as a collector. When I came here I found out that there was a very active artists doing very interesting work. And there were very few people buying their works; there weren’t any corporate art collection at that time.  So we started the KB collection in 2002 to make the place look nicer, to improve the work environment of our employees and customers to see something interesting when they visit the bank and as an example hoping other companies do the same and put more money into the art community. I was one of the founders of the Arts Council in 2002 and I still serve as their Vice Chairman.

Seems you are supporting young artists and collecting mostly their products. Is this an opportunity becoming well-known among because you are financially supporting them and them or it is rather banker’s interest to obtain good quality product cheap?     
Actually the first paintings I bought and the bank bought were from the famous and established artists such as Sarantsatsralt, Munkhjin, Enkhjin, Bumandorj and Enkhjargal. In my collection there are paintings of young artists, students and pupils then at that time. Throughout the years you have many young and talented artists who needed support and more attention because they don’t get the same attention level as the famous artists. So we started supporting them.

People know that you are interested in art paintings. Do you have any other hobby?
I am not a person who makes things as a main hobby. There are things I enjoy doing. I like art and literature, enjoy reading and thinking. Also I like taking photos, collecting antiquities like ger furnitures, copper pots, tea kettles and old artifacts. I wrote about 35 articles about Mongolia and Mongolian people. Planning to print them one day.

Quiet many people consider you as the owner of Khan Bank. Are you the owner of this Bank?
I’m the Executive Director of Khan Bank and I have a few shares of the bank. Our owners are Japanese, Americans and Mongolian and international investors. 

It is said that you are leaving your post. Why have you decided to resign? Is the next CEO going to be a foreigner?
I came to Mongolia under two-year employment contract and it’s been ten years. I have worked long enough. I’ve long planned to retire after ten years and I think it’s time for somebody new to take over and take KB to new heights. Actually, my employment contract will expire by the beginning of next month. Next CEO will be an English person. However, as specified in my contract I will stay with Khan Bank for at least two more years, will stay with the BoD of Khan Bank and work closely with the successor during the transition period. During the past 1.5 year BOD of Khan bank made a research on CEO candidates. We set high requirements and made the choice from the candidates offered by the leading international agencies. I also would like to have time to do the other things I wanted doing in Mongolia. I would like to get at least one book, probably two books about Mongolia published. I’m on the board of Mongolian Stock Exchange, some companies and NGOs in Mongolia. I think I will dedicate more time for those works as well.

When economic crisis cause serious impact on all businesses and people, government announced to issue a guarantee on citizens’ savings. It is said that this decision has given the Executive Managers of commercial banks opportunity to weasel out of their responsibility and to make a profit from bankruptcies of their banks. What is your opinion on this issue?       
This law was passed after bankruptcies of “Anod” and “Zoos” banks. The same measure was taken globally during economic downturn. So Mongolian Government was not an exception. As a matter of fact, the issued guarantee enabled banks to increase their deposits gradually whilst reducing the interest rate of loans and deposits. Politicians also have underlined that fact. As for Khan Bank, we have reduced deposit interest rate four times since last fall. Even though, cash flow has not been reduced. Today, Khan Bank liquidity is MNT 700.0 billion. As deposit interest rate declines, loan interest rate declines as well, which is good for our customers and for Mongolian economy.                     

During Mongolian national holiday you greet people always dressed in our national costume, deel. How many deels do you have?
I have two dels.

Thank you for the interview.
E.ENEREL