An interview with Erik Versavel, country representative ING in Mongolia
Mr. Erik Versavel arrived in Mongolia in September 2016 and took the helm as the country representative for ING Bank in Mongolia. Previously, Versavel has held country manager and CEO positions for ING in Ukraine, South Korea, China, and Indonesia. He has extensive experience managing international corporate client relationships.
An interview with Breakthrough Communications, January 2017
What inspired you to go into banking?
I began my banking career in Belgium after graduating from university in the early 1980’s. I was intrigued by international business, and was attracted to the industry that was playing a pivotal role in promoting development worldwide.
At the outset, I had offers from the three main banks in Belgium - and I ultimately settled on Bank Brussels Lambert. BBL had a very attractive profile in the market - it was young and dynamic. I started working internationally in 1989, and moved to Asia in 1993. BBL was acquired by ING in 1997 and I quickly integrated with this large, dynamic and expanding group.
Recall that in the early 1980’s the emerging markets were gripped by economic instability. At the time, Belgium was relatively stable and I wasn’t completely aware of the magnitude of the economic turmoil that was sweeping countries in Asia, Africa and Latin America. This, however, was the backdrop that set the stage for my first years in banking which inspired my fascination with the varied paths and policies that countries pursued in an effort to promote economic growth.
Since then, over the past 30 years, I’ve traveled to and served in many of the countries that I observed as a young banker. I’ve taken away lessons and some general rules that I think are relevant for all transition economies struggling with the challenges of economic growth and development.
Where have your worked and why?
London was my first overseas assignment. The proximity to Belgium was attractive, and the challenges of working in one of the world’s most important financial centers early in my career also laid a very strong foundation that helped me hone my skills and develop as a banker. In London I felt comfortable and was promoted.
As a result of these early experiences in global finance I gravitated towards developing markets, and I now consider myself somewhat an emerging markets specialist after serving in Korea, Indonesia, China and other countries. As a banker, I am optimistic, but also realistic.
My last assignment, before moving to Mongolia, was as chairman of the management board of ING Bank in Ukraine. During my stay, Ukraine went through a political revolution, with the ousting of then President Yanukovitch. We faced a deep financial and economic crisis, and as a result a large and complex IMF program was adopted to support the system. We had to deal with all possible issues to ensure that our business survived, including military drafting, a steep devaluation and debt restructuring.
You served in Indonesia between 1995-1998. These several years must have been very exciting, but also very challenging
My years in Indonesia were indeed challenging because they coincided with the collapse of the Suharto regime, and also with the Asian financial crisis, which had very harsh implications for Indonesia. A very large currency devaluation resulted in an almost complete inability of most companies to repay their foreign currency debt.
Consequently, I spent a lot of time on debt restructuring for corporate clients. We and the foreign banking community also worked with the government to ensure that trade finance limits remained available for banks and companies. As a result of my years in Indonesia, I also developed my own skillsets working in markets in crisis.
What transaction have you been involved with that you consider your greatest achievement? How did the transaction make a difference?
The banking that we pioneered with the large Korean companies was highly successful, and illustrative in important regards. Beginning in the early 1990’s we helped internationalize Korean companies’ business, introducing them to new markets in central and western europe. We helped the carmaker Kia build a new plant in Slovakia, and we helped finance Hyundai’s investment in the Czech Republic.
We led the transactions that helped these companies penetrate new markets, and as a result both expanded significantly. This expansion was consistent with the original Korean economic development approach prior to 2000, and which was ultimately adopted by the companies themselves.
Korean economic decision-making was heavily influenced by government plannning in the early years, which later gave way to private sector decision-making and leadership. This shift exemplifies the role of government in charting a path, and then the role of an independent private sector in executing the plan.
How do you compare and contrast Korea’s development success with the challenges that Mongolia now faces on its own road to economic growth?
Koreans say they have no natural resources, and that they have only themselves, their aptitude, skills and hard work to create wealth and drive economic development. And they have been very successful. Koreans are obsessed with education. They invest heavily in training, and in their schools. They work very diligently and long hours. A colleague told me several times: “I am not rich, and all I can give my children is education”. Investment in youth and education is critical to development.
It seems like an obvious observation, but of course Mongolia should also do everything possible to improve access to education. That is why ING in Mongolia has made it a priority to work with Unicef and other partners to develop new ger schools and “wash blocks”.
In my experience, I have observed that countries with substantial natural resources tend to encounter greater development challenges. Managing underground wealth is really hard.
What are Mongolia’s greatest prospects in the realm of diversificiation?
Mongolia’s greatest opportunities begin with a good plan. As I said earlier, the Koreans are experts in road-mapping and planning. They set very ambitious and clear objectives with identifiable milestones. This is a great skill.
I think Mongolia can and should be more ambitious, but ambition does not go very far without road-mapping. Energy, infrastructure and agriculture are sectors that almost cry out for development, and investment in these sectors should strive to adopt the best available technology. Development must be sustainable and forward-looking.
Many countries, including the Netherlands, have developed great technology and equipment to make agriculture efficient in some of the most challenging circumstances. We tried doing the same in Ukraine - also a potentially very rich country thanks to its agricultural endowments - but which adds almost no value in the sector. Compare this with Mongolia’s export of unwashed coal, which allows foreign importers to reap the highest profits by adding value through processing.
I am of course following very closely the financial developments in the country. When solutions are in sight and stability has returned, we need to start looking at export credit that will make financing possible. With Amcham, we are forming a Financial Services Committee. If all goes well, I will begin the process of organizing an Export Credit Agency conference in Mongolia in the 3rd or 4th quarter of the year.
What will turn Mongolia around?
Mongolia is facing a liquidity problem, not a solvency problem. It needs a mechanism to bridge the financing gap in the short term. At the time of this interview, the international community is waiting on an indication of support from the IMF. This will be very positive, and will restore confidence permitting the country to access international capital.
The country needs stability and the execution of its economic plans, including budget deficit reduction, the privatization of state-owned enterprises, and implementation of the infrastructure plans related to Oyu Tolgoi, Tavan Tolgoi, and energy sector projects. Foreign investors always require a well-enforced rule of law, economic and political stability, and a level playing field that underlies all decision-making.
What do you hope to accomplish in Mongolia? What are your personal goals?
After 30 years living and working in transition economies in Asia and Europe, I have experience and insight that can be shared with the government and civil society, corporate clients and other partners in an effort to assist the country develop economically. We have experience and an appreciation for what has worked in other countries, and for the measures that can and should be implemented in Mongolia.
What will it take for ING to succeed in Mongolia, and how will you position ING to contribute to future national economic growth and development?
ING is a global bank that has profound experience and institutional knowledge of Mongolia. We will continue to build on this competitive strength. Our business model is very focused, and it will remain so. If the economy grows and foreign investment returns, we will support and work with all relevant parties.
In summary, I would underline the importance of education, planning and ambition. From an economic perspective, the country should focus on adding value, and investing in sustainable and technologically advanced development.
It is my personal challenge to impart insight and share experience that can contribute to sustainable and more diverse economic development that creates more opportunities for international financial institutions.
About Erik Versavel
Mr. Erik Versavel is a Belgian national who holds a Masters of Law from the University of Antwerp. He arrived in Mongolia in September 2016 and took the helm as the country representative for ING Bank. Previously, Versavel has held country manager and CEO positions for ING in Ukraine, South Korea, China, and Indonesia. He has extensive experience managing international corporate client relationships and has worked with regulators, central banks, and governments to ensure stable and sustainable growth, and recovery of emerging and/or struggling economies.
ING entered the Mongolia market in 2003, and in 2009 became the first major foreign bank to open a representative office. It is one of the first foreign banks to execute a transaction on the Mongolian Stock Exchange. ING has strong sector and product expertise, particularly in natural resources, transportation and financial institutions.
ING is a global financial institution with a strong European base, offering banking services. ING draws on its experience and expertise, commitment to excellent service and global scale to meet the needs of a broad customer base, comprising individuals, families, small businesses, large corporations, institutions and governments. ING’s more than 52,000 employees offer retail and wholesale banking services to customers in over 40 countries, including Mongolia.