Source: English.News.mn                        Date: 26 August, 2010

The Director of Inspection at the Central Bank, Mr. B.Lhagvasuren, has said they are still pursuing many loans issued by Anod Bank under dubious circumstances and hope to get some of them paid back. He said the Mongol Gazar company had taken several large loans from several sources by offering its Olon Ovoot gold mine’s license as collateral. The total amount it borrowed was around MNT200 billion, including MNT10 billion from Anod Bank, MNT70 billion from Zoos Bank, and from others like Goldman Sachs. The Central Bank is now negotiating with the Just Group that operates Olon Ovoot on how the debts can be repaid with revenue from the mine.

Asked why the Central Bank never intervened when a company took several loans against the same collateral, Mr. Lhagvasuren said a study of the relevant papers makes it clear that all the concerned banks were well aware of the borrower’s debt situation, but decided to take the risk of giving the company a fresh loan knowing that the property now being mortgaged had already been pledged to another bank. The Central Bank cannot intervene in such cases, as every bank is a private organization that works for profit and should be free to take its own business decisions, based on its own risk perception.