South Korea’s Daegu Bank has snapped up a 100 percent stake in Cam Capital, the Kingdom’s second-largest specialised bank in terms of assets, for $63.2 million, Korean media reported yesterday.

Daegu Bank announced the acquisition in a regulatory filing to Korean authorities on October 18, marking the bank’s third overseas investment after expanding into China and Vietnam.

The National Bank of Cambodia (NBC) – the Kingdom’s financial regulator – could not be reached for comment yesterday to confirm if the sale had been given the green light.

Nevertheless, Stephen Higgins, managing partner of investment firm Mekong Strategic Partners, said the price tag for the acquisition was adequate seeing that as a specialised bank, Cam Capital was fairly restricted in its operations and would likely have regulatory difficulties in becoming a commercial bank.

“It’s not clear what the next step for Cam Capital would have been as a specialised bank, so having a commercial bank come in to take it over does make sense provided they can upgrade it to proper commercial bank licence,” he said. “It is unlikely that the NBC would have allowed Cam Capital to upgrade to a full commercial bank licence without a reputable commercial bank coming in as the main shareholder.”

He added that while the Kingdom’s crowded financial sector needs to see more consolidation, few banks are up for sale.

Cam Capital Specialized Bank was established in 2009, and operates five branches with 260 employees. As of the end of last year, the bank’s assets stood at $86.5 million and had earned a net profit of $3.4 million, according the NBC’s annual report.

Meanwhile, according to Daegu Bank’s first-half report for 2017, the bank held $43 billion in assets with a total comprehensive income of $163 million.

This would not be the first time that Korean financial institutions have invested in Cambodian banks. In 2014, the South Korean lender Woori Bank snatched up the Cambodian MFI Malis Finance for $4.9 million. Last year,

Jeonbuk Bank – a subsidiary of JB Financial Group – purchased a 50 percent stake in Phnom Penh Commercial Bank.

Analysts have predicted that mergers and acquisitions in the Kingdom’s financial sector will become more common as foreign banks look to tap into Cambodia’s robust lending growth. This trend, in part, has been triggered by the central bank forcing all financial institutions to meet new minimum capital requirements by March of 2018.