Facilitated by Taiwan’s First Commercial Bank, seven foreign banks provided $35 million in a syndicated loan to Sathapana Bank Plc, a newly formed Cambodian commercial bank, to expand its existing microfinance operations and broaden its commercial lending portfolio.
Signed in Taipei last Wednesday, the loan brings together a host of Taiwanese lenders that previously had not financed banks in the Kingdom, signalling a shift that Asian lenders have become more confident in providing lines of credit to institutions that previously operated as microfinance institutions (MFIs), according to Sathapana’s CEO.
“The Taiwanese have confidence in Sathapana Bank Plc, and this loan will support the bank to expand its commercial operations to more clients and also fulfill its mission as a MFI,” said Bun Mony.
He added that while MFIs previously relied primarily on Western lenders to expand its operations, the Taiwanese banks loan paves the way for more Asian banks to build up Sathapana’s capital.
“First Commercial Bank has previously issued smaller loans, around $5 million, but this is the first time for such a large syndicated loan size to be given to a commercial bank,” he said.
Hout Ieng Tong, president of the Cambodian Microfinance Association and CEO of Hattha Kaksekar Limited, said the loan would allow Sathapana to expand its MFI operations.
“It is good that a former microfinance institution can get this loan,” he said. “With access to a syndicated loan they have enough capital to reach more customers.”
Stephen Higgins, managing partner of investment firm Mekong Strategic Partners, said that for First Commercial Bank, it is a positive sign that it could rally support from Taiwan.
“Being able to get a syndicated loan for a Cambodian MFI is a big deal, and it surprises me that more banks haven’t tried to do it. So far, we’ve really just seen the like of the IFC doing it,” he said, referring to the International Finance Cooperation, a member of World Bank Group.
Higgins added that while international lenders are increasingly reaching their country limits for MFI support, Cambodian institutions have had to diversify their funding.
“From the MFI perspective, a syndicated loan will be used to fund their loan growth just like any other type of loan, and the main benefit is being able to deal with just the lead arranger of the syndicate, rather than multiple banks,” he said.
When Maruhan Japan Bank Plc and Sathapana Ltd finalised their long-awaited merger to form a commercial bank in April, Sathapana Bank Plc had a registered paid-up capital of $120 million and total assets of $722 million. The total loan portfolio amounts to $533 million, while total deposits are $367 million.
