International consultant on developing methodology for project development, credit appraisal and its risk management
Урилгын дугаар: C21/CS/008
Захиалагч: Сангийн яам
Зарын төрөл: Зөвлөх үйлчилгээ
Зарласан огноо: 2021-07-27
Дуусах огноо: 2021-08-09 15:00:00  

Зарын урилга

A. BACKGROUND

The Development Bank of Mongolia (DBM):

Overview

DBM was established in 2011 and its main policy mandate is to support sustainable economic and social development of Mongolia through financing of large-scale export-driven projects. The sole shareholder of DBM is the Government of Mongolia (GoM).

Lending Operation

Until 2017, DBM’s loan portfolio consisted of projects backed by the state budget and, secondly, projects implemented by corporates, state-owned companies and domestic commercial banks. Lending decisions were preapproved by the GoM. During its peak in 2016, loan portfolio reached MNT 6.0 trillion and loan book was primarily concentrated in the road, manufacturing and mining sectors. To align its lending operation to focus solely on bankable and none budget-related spending, total of MNT 3.2 trillion of loans backed by the state budget were transferred to the Ministry of Finance of Mongolia (MoF).

Since 2017, lending has been solely made to corporates, state-owned companies and domestic commercial banks. These projects are no longer backed by the state budget and relay on project cash flow and collateral as security. As such, project due diligence and credit risk management have to be robust to mitigate deterioration on asset quality. Lending decisions are now made at the Board level. At the end of 2020, look portfolio was MNT 2.8 trillion. Lending and guarantees portfolio consisted of mining – 33%, manufacturing – 32%, construction – 19%, commercial banks – 7%, power plants – 7% and the rest to none mining-related sectors. Going forward, DBM will focus more on affordable housing, renewable energy and labor-intensive none mining sectors.

Funding Activities

DBM raises funds by issuing bonds on the onshore/ offshore markets and by bilateral loans from international banks. Funds raised are either explicitly guaranteed or unguaranteed by the GoM. In 2012, DBM successfully accessed the international capital markets with the issuance of 5-year  USD 580.0 million senior notes guaranteed by the GoM. This was tender offered into GoM bonds upon maturity. Both GoM and Japanese Bank for International Cooperation (JBIC)Also, JBIC guaranteed 10-year JPY 30.0 billion bonds issued in 2013. In 2018, DBM issued 5-year USD 500 million unguaranteed senior notes in the international capital markets. At the end of 2020, funds raised totaled MNT 3.1 trillion of which 30% are explicitly guaranteed by GoM. Accessing the capital markets and repayment of these funds are dependent on efficiently managing the use of proceeds and successful implementation of projects.

Investments

DBM has invested into and established four subsidiary companies namely, Mongolian Mortgage Corporation (MIK), DBM Leasing LLC, DBM Asset Management Securities LLC, National Export Insurance LLC. At the end of 2020, total investments equaled MNT 175.0 billion.

Profitability

DBM’s profitability is driven by asset quality and provisions against loan losses. At the end of 2019, retained earnings was MNT (151.3) billion. Deterioration in asset quality and provisioning against none performing loans during 2020 is expected to increase losses significantly.

B. OBJECTIVE OF THE ASSIGNMENT

The objective of the international consultant is to assist in the implementation of internationally accepted standards and practices on project assessment and credit risk management. With successful implementation of these standards and practices, DBM will be positioned to improve its lending operation and asset quality. Developing a robust lending operation will help DBM access the capital markets to raise low cost of capital.

C. SCOPE OF THE WORK

The following assignments will be conducted by the international consultant, but not limited to:

  1. Develop manuals on how to apply project assessment and credit risk management standards;
  2. Assess current policies, practices and regulations on credit risk management against internationally accepted standards and guidelines;
  3. Propose practices, policies and standards to improve credit assessment and processing;
  4. Develop project monitoring system to assess risk of projects, borrowers and sponsors;
  5. Develop project and credit monitoring methodologies and guidelines;
  6. Provide detailed training on project assessment and credit risk management or any other relevant internationally accepted standards;
  7. Develop early warning system and determine the early watchlist triggers for project and borrowers;
  8. Develop the credit risk stress testing and limit setting guidelines;
  9. Assess risk appetite framework and recommend operational and financial risk limits;
  10. Develop backtesting methodology used to access lending operation and credit risk management; and
  11. Develop internal system and methodology to access credit rating borrowers.

D. DELIVERABLES

Based on the contracted assignments and detailed contract implementation plan approved by the client, the international consultant’s deliverables will include:

  1. Manuals on how to apply the project assessment and credit risk management practices to lending operations;
  2. Project risk management trainings and workshops provided to relevant staff;
  3. Provide methodologies and guidelines on project monitoring system and framework;
  4. Proposal of early warning system and early watchlist triggers for projects and borrowers;
  5. Proposal of the stress testing and limit setting guideline;
  6. Draft document on risk appetite policies and procedures;
  7. Proposal for backtesting methodology to access lending operation and credit risk management practices;
  8. Provide a credit risk scoring card;
  9. Provide an internal system and methodology to access credit rating of borrowers; and 
  10. Final report on set of practices, policies, guidelines needed for project assessment and credit risk management.

E. CONSULTANT’S QUALIFICATIONS/ SELECTION CRITERIA

Education: A suitable candidate should have master’s degree in the fields of Finance, Project management, and Risk management.

Experience: Incumbent should have at least 10 years of relevant professional and consulting experience in the development financing institutions.

Language skills: Academic/Fluent written and spoken skills in English.

F. SUPERVISION AND REPORTING

International consultant will report directly to a DBM personal responsible for overseeing the completion and delivery of the consultancy works.

G. CONTRACT DURATION

The consultant is expected to commence working effective from August 2021. The duration of the assignment is five months.

H. PAYMENT SCHEDULE

30% of the total remuneration amount – will be paid upon successful completion of the deliverable (i-iii) stated in the ToR conditional on the Client’s approval;

35% of the total remuneration amount – will be paid upon successful completion of the deliverable (iv-vi) stated in the ToR conditional on the Client’s approval; and

35% of the total remuneration amount – will be paid upon successful completion of the deliverable (vii-x) stated in the ToR conditional on the Client’s approval.

I. INSTITUTIONAL ARRANGEMENTS

The relevant employees at DBM shall provide and support necessary data and information to the consultant for performing the assignment. The assignment is expected to be carried out remotely.

If you possess the above qualifications, please submit the following documents via email to procurement@sffs.mn. 

1. Cover letter indicating why she/he considers her/himself suitable for the position;

2. Detailed CV highlighting relevant skills/experience;

3. Copy of diplomas or certificates; and,

4. Two (2) reference letters from previous last two employers.

Expressions of Interest must be delivered in a written form to the address below by e-mail before 15:00 pm on August 09, 2021 (local time, Ulan-Bator, Mongolia). 

Consultant will be selected in accordance with the Individual Consultant Selection Method set out in the Procurement Regulations: The following is the link to the World Bank’s website: 

https://policies.worldbank.org/sites/ppf3/PPFDocuments/Forms/DispPage.aspx?docid=083b3f94-a932-4395-a410-834f8bc14f8c

Further information can be obtained at the address below during office hours: 8:30 to 17:30 hours (local Ulaanbaatar time) or procurement@sffs.mn.

Холбоо барих

70120582

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