Logo of Phnom Penh Post newspaper Phnom Penh Post - Sathapana Bank secures $50M to scale up

Sathapana Bank secures $50M to scale up

Content image - Phnom Penh Post
A man passes the head office of Sathapana Bank in Phnom Penh yesterday, which was recently stripped of its corporate logo. Pha Lina

Sathapana Bank secures $50M to scale up

Sathapana Bank Plc has received a hefty $50 million bilateral loan from the Bangkok branch of Mizuho Bank, a subsidiary of one of Japan’s largest financial institutions, in a move that banking insiders say will help the newly consolidated bank expand its lending portfolio as it digs deeper into commercial operations.

The loan agreement, billed as the first major offshore commercial loan made by a Japanese megabank into the Kingdom, was signed last week, Sathapana said in a press release. Mizuho Bank is providing the $50 million under a three-year loan term, it said, without disclosing the interest rate.

Sathapana Bank is a newcomer to Cambodia’s crowded commercial bank field. The bank was formed by the merger in April 2016 of microfinance institution (MFI) Sathapana Ltd and Japanese-owned Maruhan Japan Bank. The marriage created a commercial bank with a combined registered paid-up capital of $120 million and total assets of $772 million, according to its financials at the time. The combined loan portfolio amounted to $533 million, while total deposits were $367 million.

The transition from MFI to commercial bank can be an expensive and time-consuming process, say those who have completed the process.

In Channy, president and CEO of Acleda Bank, which completed its own transition in 2003, said Sathapana would need to take on larger borrowers and scale up operations to generate a return on investment. He said fledgling commercial banks typically face insufficient levels of funds when restructuring away from the MFI format and could not rely on existing shareholders for expansion.

“When Acleda first transformed itself from an MFI to a commercial bank, we also had to take loans from other institutions beside our shareholders,” he said.

“We always chose the best option that provided good long-term loan conditions with low interest rates.”

Just a month after completing its merger last year, Sathapana Bank announced that it had secured a $35 million syndicated loan from seven foreign banks and facilitated by Taiwan’s First Commercial Bank.

David Marshall, a partner at local investment firm Mekong Strategic Partners, said Sathapana Bank likely received a favourable rate on its $50 million credit line from Mizuho Bank given its strong standing in the Japanese market.

“[I] suspect that Mizuho is providing a very good rate relative to depositors and perhaps is secured with outside assets in Japan,” he said.

"Strategically it may make sense to borrow offshore if the funding is cheaper than local sources, inclusive of the interest rate Sathapana is being charged, the withholding tax they have to pay on the interest from offshore lenders and taking into consideration the reserve requirements of 12.5 percent they have to hold on borrowed money."

He pointed out that despite Sathapana Bank being owned by Maruhan Group, a large Japanese entertainment company, its parent company could be constrained to lend directly due to country-specific lending limits or bank-specific risk exposure.

Marshall added that the large loan facility from Mizuho Bank, which earlier this month received its own Cambodian commercial banking licence, was a positive sign for the future of the Kingdom’s financial industry.

“Because [Mizuho] is a large Japanese multinational bank lending into the Cambodian banking sector, it is likely to provide an upside by improving the image of Cambodia and bolstering confidence in the financial sector,” he said.

Sathapana Bank representatives were not available for comment yesterday.

MOST VIEWED

  • Kingdom's Covid cluster cases jump to 194

    The Ministry of Health on February 25 confirmed 65 new cases of Covid-19, with 58 linked to the February 20 community transmission. The latest cluster cases include nine Vietnamese nationals, five Cambodians, one each from Korea, Singapore and Japan, with the rest being Chinese. This brings the total number

  • Locations shut, dozens more Covid-19 positive

    The Ministry of Health has closed 23 locations in connection with the February 20 community transmission of Covid-19 and summoned for testing anyone who had direct contact with affected people and places. The number of discovered related infections has risen to 76, including 39 women. In a press release,

  • Cambodia's Covid cluster cases rise to 137

    The Ministry of Health on February 24 recorded 40 more cases of Covid-19, with 38 linked to the February 20 community transmission. Of the 40, two are imported cases involving Chinese passengers. The 38 include two Vietnamese nationals and one Cambodian, with the rest being Chinese. This brings the total cases

  • Covid cluster raises alarm, health bodies urge vigilance

    The Ministry of Health and the World Health Organisation (WHO) in Cambodia have expressed great concern over the February 20 cluster transmission of Covid-19 in the community. Both entities appealed for vigilance and cooperation in curbing further spread of the virus. Ministry spokeswoman Or Vandine said

  • PM confirms third Covid-19 community transmission

    Prime Minister Hun Sen on February 20 announced the Kingdom's third outbreak of Covid-19 community transmission after 32 people tested positive in just over 10 hours. Addressing the public from his residence after an emergency meeting, Hun Sen said: "I dub it February 20 Community Event, in which 32 cases

  • AstraZeneca jabs touch down in Phnom Penh airport

    The first shipment of 324,000 doses of the AstraZeneca/SII vaccine which was provided through the Covid-19 Vaccines Global Access (COVAX) Facility was delivered to Phnom Penh International Airport on March 2. The rest of the COVAX provided vaccines will arrive in Cambodia at a later date.