The Taiwanese bank Cathay United, a subsidiary of Cathay Financial Holding and a listed company on the Taiwan Stock Exchange, has purchased a 70 per cent stake in the Cambodia-based Singapore Banking Corporation Ltd (SBC), a central bank official said yesterday.
The National Bank of Cambodia (NBC) has given its approval to the plan, which SBC had submitted a while ago, for the Taiwanese Cathay United Bank to acquire a stake in SBC, NBC Director General Ngoun Sokha said.
“We were informed by SBC when they had submitted the plan some time ago,” she said. “And recently we approved it.”
The central bank approved the acquisition because SBC has strong, reliable and committed shareholders, she said.
“[Acquisitions] are required to be approved by [the NBC]. We don’t let them make any changes on their own,” she said.
In late August, Malaysian financial services group RHB Capital purchased OSK Indochina Bank. Such consolidation should be welcomed, Sokha said.
“I don’t think this kind of change suggests that our banking industry is going down,” she said. “What we want is to fully encourage banks to seek a strong partner when they see that we are not strong enough. We encourage them to consolidate to be stronger in the industry as we are at that stage of development.”
Charles Vann, president of the Association of Banking of Cambodia welcomes any acquisition and mergers among local banks, saying it will help the banks by providing them with strong financial resources post-merger.
“If our central bank already approved them, it means the authority already evaluated the background of buyers. It is not bad for the bank itself or the whole industry,” he said. “The industry will get even stronger with a strong player in place.”
SBC was founded in 1993 and has six operational points in Cambodia. Acquiring a 70-per cent stake will position Cathay United as SBC’s biggest shareholder and mark its official entry into Cambodia.
Neither SBC nor Cathay United could not be reached for comment.
According to Taiwanese news reports, Cathay United earns about US$20 million annually through its Vietnamese subsidiary, its most successful of its overseas operations.
To contact the reporter on this story: May Kunmakara at [email protected]