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MFI seeks licence to operate as a commercial bank

Sathapana CEO Bun Mony speaks during the announcement of the MFI’s merger with Maruhan Japan Bank in January.
Sathapana CEO Bun Mony speaks during the announcement of the MFI’s merger with Maruhan Japan Bank in January. Vireak Mai

MFI seeks licence to operate as a commercial bank

Sathapana Ltd, the third-largest microfinance institution (MFI) in Cambodia, has submitted a formal application to the central bank to merge with a local Japanese-owned bank and operate the consolidated entity as a commercial bank, a company executive said yesterday.

“We received policy approval [for the merger] from the National Bank of Cambodia (NBC) last May, and last week we submitted all documents to them,” said Bun Mony, CEO of Sathapana Microfinance Institution.

Sathapana announced plans to merge with its majority shareholder, Maruhan Japan Bank, in January. Mony said the consolidation of the two financial institutions would create a new entity called Sathapana Bank Plc, with combined assets of $527 million, 140 branches and more than 2,650 staff.

“We finished drafting the internal policy, charters, bylaws and business plan already,” said Mony.

“We expect the NBC will approve our application within two or three months.”

Maruhan Japan Bank, which began operating in Cambodia in 2008, acquired a 95 per cent share of Sathapana Ltd in 2012. Sathapana started as an NGO in 1995 before receiving a licence to operate as an MFI in 2003.

The marriage will bring together more than 90,000 deposits and 105,000 loans – the majority coming from the MFI. The integration will help Maruhan scale up its banking operations in Cambodia, while allowing Sathapana to offer its clients more banking options.

“The benefits of becoming a commercial bank are that we can provide services that MFIs cannot, such as checking accounts, transactions abroad and trade finance,” Mony explained.

“We can work both nationally and internationally.”

He said while the conversion to commercial bank would facilitate Sathapana’s work, the micro-lending specialist would not abandon its original goals.

“Our old task as an MFI was to eliminate poverty from the country, and our new bank will continue to do more on that issue,” Mony said.

Sim Senacheert, CEO and president of Prasac Microfinance Institution Ltd, the largest MFI in Cambodia, said the transformation from a deposit-taking microfinance institution to a full-fledged commercial bank is a sensible one – and one that Prasac is considering.

“The MFI will get more confidence from the public, lenders and depositors. And this public confidence will attract more deposits and funding, thus reducing funding costs,” he explained. “Clients will also get more service from the [MFI operating as a] bank.”

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