Woori Bank, South Korea’s second-largest bank in terms of assets, is vying to purchase a 50 per cent stake Cambodia’s largest microfinance institution, Prasac, the company’s CEO confirmed yesterday.

Despite confirming that the two lending giants were close to hammering out a deal, Prasac CEO Sim Senacheert declined to provide further information.

“When the official deal comes through, I will release the details,” he said.

However, Korean media reported on Monday that Woori Bank had already been listed as the preferred bidder after beating out a consortium of other Korean lenders. While a pricetag for the deal has not been announced, according to Prasac’s annual report, total assets reached $1 billion by the end of last year.

Chea Serey, director-general of the National Bank of Cambodia (NBC), told the Post yesterday that the central bank had approved three contenders bidding for Prasac’s stake.

“From these contenders, it is up to the shareholders [of Prasac] to select their preferred one,” she said. However, the deal ultimately rests upon NBC approval.

“We are looking for investors with a good reputation and strong financial position and governance, so that they contribute further to the institution and further promote confidence in the banking system,” she added.

This would not be the first time Woori has purchased a Cambodian MFI, but it would be by far the largest. In 2014, the South Korean lender snatched up the Cambodian MFI Malis Finance for $4.9 million.

Mergers and acquisitions of the Kingdom’s MFIs have become more common as foreign commercial banks look to tap into Cambodia’s robust lending growth.

PhilipCapital Group, the Singaporean backer of Philip Bank, now holds 72 per cent in Kredit Microfinance Institution. Maruhan Japan Bank, which began operating in Cambodia in 2008, acquired a 95 per cent share of Sathapana Limited in 2012 before fully merging into a commercial lending institution earlier this year.

Stephen Higgins, managing partner of Cambodia-based investment firm Mekong Strategic Partners, said that the NBC has taken a very sensible approach towards large deposit-taking MFIs that are looking to graduate into commercial banks.

“The major MFIs are attractive because they have strong distribution networks, good governance, and high return on equity,” he said. “In fact, these factors make them a lot more attractive than most banks in this market.”

Bun Mony, chief executive officer at Sathapana Bank Plc, said that when a microfinance institution gets approval for a commercial banking licence, it allows the lender to bolster its line of products.

He added that for clients of a MFI, foreign partnerships do not change the lenders mission to serve rural areas. Instead, it allows them to expand.

“[MFIs] have been rooting themselves in rural areas by putting branches in all parts of Cambodia,” he said. “So, the focus is still on trying to help poor people move out of poverty.”