Lim Hua Min (L), chairman of the PhillipCapital group of companies, and Kredit Microfinance Institution CEO Chan Mach field questions at a press conference in Phnom Penh on Friday, Dec. 21, 2012. Photograph: Heng Chivoan/Phnom Penh Post

PhillipCapital, a Singapore-based integrated financial services provider and a majority stakeholder in three of Cambodia’s micro-finance institutions (MFIs), plans to consolidate the three into a commercial bank.

Executive chairman Lim Hua Min told a press conference on Friday that Cambodia’s MFI sector was in line with improving economic activities.

The company’s decision to invest in the country’s MFI sector is another contribution to the growth of the sector.

PhillipCapital is working with the three local institutions, KREDIT, CBIRD and First Finance.

“We will consider this possibility, as we are open to growing our operations organically or via acquisitions and mergers,” Lim said.

“Although it is not currently on our agenda, we are open to work with other peer MFIs, so that, together, the larger company will be able to maximise its social impact on the community in Cambodia.

“In terms of maximising our social impact on the community in Cambodia, there are obvious synergies among the three MFIs that we have invested in.

“In the longer term, we will consider consolidating our MFIs and perhaps even become a commercial bank at the appropriate time, but we will retain a strong focus on being a banker to the poor.”

KREDIT chief executive Chan Mach told the Post on Monday that PhillipCapital had become the biggest shareholder in his company  early this year.

“PhillipCapital holds the majority stake of about 68 per cent,” he said. “We improved very much when they became our partner, because they bring a lot of expertise and technology to us.”

Kevin Lim, chief executive of First Finance, raised no concerns over the consolidation.

“If they want to consolidate these MFIs, they have to discuss it with all shareholders. But I have not got any information from them – it is no problem for me,” he said.

Lim said PhillipCapital had become a shareholder of his institution in 2011 and owned 40 per cent of it.

Prasac, one of the leading MFIs in Cambodia, told the Post previously it was planning to become a commercial bank by 2014. Currently, the institution is in the preparatory and upgrading stage of transformation.

National Bank of Cambodia director-general Nguon Sokha welcomed MFIs that can upgrade themselves to a higher level. She said, however, they would have to comply with strict commercial bank requirements and criteria.

“We have a lot of terms and conditions [for the] transformation from MFIs into a commercial bank. The terms and conditions are very strict for MFIs because the size of services provided by MFIs is small, so their risk level is low and manageable.

[Even if] they can meet all the terms and conditions, we still have to check their business plan [to become] a commercial bank. We will encourage them if they can provide a new service that other banks don’t have.”  

To become a commercial bank, MFIs have to raise their registered capital to $37.5 million. Presently, Cambodia has 32 commercial banks and 33 MFIs, according to the NBC.

To contact the reporter on this story: May Kunmakara at [email protected]