www.creditflux.com July 23, 2013
Morgan Stanley’s High Yield Sovereign Research has released a note expressing its surprise that Mongolia’s fifth largest lender, Savings Bank, has been declared insolvent and will be taken over by the government-owned State Bank.
The research points out that there was little to indicate that a collapse was imminent and the most recent available financial metrics appeared satisfactory. Earlier Morgan Stanley research had highlighted weakness in the Mongolian banking sector, but analysts say the speed of this move is unexpected and could undermine confidence in the entire banking sector, potentially posing a risk for the sovereign’s creditworthiness as a whole.
The collapse has gone largely unreported except for an article in Bloomberg which sources a central bank press conference. As yet, the central bank does not appear to have released any written statement about Savings Bank’s failure.