MALAYSIAN-listed bank Hwang-DBS Commercial Bank Plc has rejected a licence to become an investment advisory firm on the Cambodian stock exchange due to the “limited activities” such a role would permit.
The Securities and Exchange Commission of Cambodia granted in-principle approval for the bank’s subsidiary Hwang-DBS Securities (Cambodia) Plc to act as an investment advisory firm.
However, the bank rejected the offer this week, according to a statement released to the Malaysian stock exchange, as the role was more limited than the underwriting role it applied for.
“The application submitted by Hwang-DBS Securities (Cambodia) Plc to SECC was for a securities firm licence to undertake stock-broking, corporate finance, underwriting and investment advisory activities,” the company said.
“The Board ... has decided not to accept the approval-in-principle licence due to the limited activities permitted,” it stated.
An advisory licence would allow the company to advise on investing in securities for a fee and publish investment analysis. In comparison, an underwriting licence would have allowed the firm to manage public offerings and underwrite securities – acquiring the unsold portion of a public offer – as well as serving in the advisory role.
SECC Director General Ming Bankosal said yesterday that the decision was based on law.
“We did a thorough assessment in accordance with the criteria stated in the rules and regulations in effect,” he said.
According to an SECC prakas, or edict, a firm must meet certain human resources and professional experience requirements depending on the licence applied for.
It must also have minimum capital of 40 billion riels (US$9.5million) to operate as an underwriter and a minimum of 400 million riels ($96,000) to operate as an investment advisory firm.
The bank is now considering its next steps.
Han Peng Kwang, senior vice president of Hwang-DBS, wrote in an email yesterday: “For now, we intend to apply to SECC for a licence as a cash settlement agent. We will re-consider applying for an underwriter licence in the future.”
He declined to comment further on the SECC’s decision.
Four banks – ACLEDA, Canadia, OSK Indochina Bank, and Tong Yang Securities – have been granted licences for diverse roles on the exchange, set to launch by July 2011. Hwang-DBS launched in Phnom Penh in July last year.