Sixteen commercial banks, more than eighty non-banking financial institutions, around 200 savings and credit cooperatives, 34 broker and security firms, four leasing companies, and sixteen insurance companies are active in the financial sector.
Out of sixteen commercial banks two are foreign owned, one is 100 percent government owned, one is a joint venture with the government, the share of which composes a little over 17 percent of total assets and the rest are in pure private ownership. The huge portion of the "cake" is the banking sector. This is due to the size as well as the innovation, and development converging towards a modern banking sector existing in the leading economies.
Prior to 1991 Mongolia had a one-tier banking system, which was transformed into a two-tier and later it was possible establish and develop a third and higher tiers such as non-banking financial institutions, savings and credit cooperatives. This transformation brought in itself exposure, experience, and knowledge. Although, the case of Mongolia shows quite vividly that in transition economies the weak emerging financial system might not have an effect on economic growth. With the development of financial intermediation most of the commercial banks, restaurants and shops, are providing their services on a non-cash basis, in addition, it is supported by a few ATMs in the city Ulaanbaatar. Lately, out of sixteen banks, two started to provide internet banking services to their customers, which will definitely bring further innovations not only in banking, but also the financial sector.
Aside from the commercial banks, non-banking financial institutions, savings and credit cooperatives are filling the gap at the micro level and distances in the outer reaches of Mongolia. Hence, some are at a certain level, exposing commercial banks to competition, though this part of the financial sector has been developed only recently and at its genesis is not as comparable, in terms of the size, as some small-scale commercial banks. Due to privatisation in the banking sector in recent years, international banking is breaking in. The state owned Agricultural bank was sold to a Japanese company, HS Securities. Furthermore, the Trade and Development Bank signed a management contract with the Dutch ING Bank in 2003.
Out of sixteen insurance companies one is an active participant at the Lloyds Market in London, and share their business with one of the biggest reinsurance companies in the world, namely, MunichRe, SwissRe, Willis Weber, Eagle Star, YasudaFire and Marine Insurance, Sumitomo and KoreanRe. In order to support long term investors, to hold on to the goals the government set, being precise with the term of the insurance sector, to support the establishment of life insurance companies, the Government of Mongolia is at the final stage of submitting a new draft law on insurance. On top of these, the sale of the Mongol Daatgal company, which enjoys a 90 per cent share of the insurance market, to "Angara-SKB", a joint consortium of the Russian Angara Insurance and the Mongolian Chinggis Khaan Bank, will definitely be seen as major privatisation and a significant change in the Mongolian financial sector.
The establishment of the Mongolian Stock Exchange was purely for privatization purposes at the start, but today more than 400 companies are listed there with their new products. Out of 650 million listed securities the government owns 72 percent and the rest are privately owned ones. In the near future there are plans to develop a proper mortgage market, therefore mortgage securities will come up as a new investment instrument in the financial sector. Another point is the casing of financing services, which enrich the financial sector. Only four registered leasing companies are in business now and operate at the very first stage of the leasing which is financial leasing. All these make the financial sector more and more complicated than before but simultaneously, it does make it possible to cover the large amount of clients by offering the services to every individual based on their demand, in other words reaching every single customer individually.