Logo of Phnom Penh Post newspaper Phnom Penh Post - Acleda bank seeks commercial license

Acleda bank seeks commercial license

Acleda bank seeks commercial license

Acleda, the microfinance institution that began life as a local NGO in 1993, has

applied for a license to become a full-fledged commercial lending bank, Acleda officials

said on September 15. It expects to receive approval by early November.

Chhay Soeun, Acleda's finance department manager, said it had already received "permission

in principle" from the National Bank of Cambodia on June 12. He said if the

new license is granted, the bank will offer a full range of financial services through

its network of 93 offices in 14 provinces. At the moment, Acleda is limited to providing

small savings and loans accounts under its license as a specialized private bank.

Once Acleda gains a commercial banking license, its minimum capital requirement will

increase from $4 million to $13 million. The bank's eight shareholders, which include

the Acleda NGO, the World Bank's International Finance Corporation and several international

development banks, plan to provide additional capital through a share issue, Soeun

said.

The bank's original 400,000 shares, valued at $10 each, have already been split into

4 million shares of $1 each since they were first sold in 2000. The remaining $9

million of capital required will be raised by issuing more shares to the current

investors.

Acleda's management predicts the company will one day be listed on the proposed Cambodian

stock exchange and its shares traded by the bank's customers.

"Because of our success, the [National Bank of Cambodia] wrote to encourage

us to transform into a commercial bank," Soeun said.

Acleda, which received its specialized bank license in October 2000, commands more

than 67 percent of the microfinance market compared to similar financial institutions,

the company stated. Since 1993, it has disbursed more than 758,000 loans totaling

more than $224 million.

Acleda will be required to pay an annual license fee of $17,500 for its head office

and $14,000 for each branch. Soeun said that the bank's management, "depending

on our growth", hoped to expand into five more provinces by the end of 2004.

Acleda grew from a humble local NGO operating as a small enterprise development bank

into a major player in Cambodian banking. The bank has more than 92,000 customers,

a loan portfolio of $34 million and more than 1,100 staff nationwide.

This will make it the largest commercial bank in the country in terms of the number

of branches and customers it has, said Soeun. There are 18 commercial banks now operating

in Cambodia

He maintained the bank would not stray from its philosophy of seeking to help Cambodia's

rural poor. The bank will target lending to small and medium enterprises (SMEs),

he said.

The market for loans to SMEs grew from $162 million in 2001 to $222 million in 2002,

according to a 2002 banking study on SMEs. But Cambodia suffers from chronically

low lending levels from traditional commercial banks. The study pointed out that

70 percent of loans made to SMEs had to be repaid within one year or less. That limits

the ability of SMEs to raise capital.

And the overall lending rate in Cambodia is extremely low. In China, the region's

powerhouse economy, lending runs at 100 percent of gross domestic product. In Cambodia,

it is a mere 8 percent.

"There is a movement to develop the economic sector in Cambodia," said

Soeun. "Better banking will help activate that."

MOST VIEWED

  • Hun Sen: Stop Russia sanctions

    Prime Minister Hun Sen said sanctions against Russia as a result of its military offensive in Ukraine should be stopped as they have produced no tangible results, and predicted that a global food crisis would ensue in 2023 as a consequence. Speaking to an audience at

  • Chinese tourists 2.0 – Coming anytime soon?

    Regional tourism is grappling with the absence of the prolific travellers and big spenders – the Chinese tourists. Cambodia, which has welcomed over two million Chinese tourists before Covid-19, is reeling from the economic loss despite being the first to fully open last November ‘To put

  • PM reflects on shoe throwing: Free speech or act of violence?

    Prime Minister Hun Sen on May 17 questioned whether a man who threw a shoe at him while he was in the US was exercising freedom of expression or if it was an act of hostility. Hun Sen was referring to an incident last week when

  • Siem Reap’s Angkor Botanical Garden opens

    The Angkor Botanical Garden was officially opened on May 19 with free entry for both local and international visitors for the first six weeks. The garden was established on a nearly 15ha plot of land in Siem Reap. “After the first six weeks, Angkor Botanical Garden

  • Pub Street on the cards for Battambang

    The Battambang Provincial Authority has announced that it is considering establishing a Pub Street in the area around the heritage buildings in Battambang town in a bid to attract more tourists. Battambang provincial governor Sok Lou told The Post that the establishment of a Pub

  • Hun Sen: Don’t react to hostility

    Prime Minister Hun Sen urged tolerance and thanked members of the Cambodian diaspora for not reacting to the hostility on display towards him by others while he was in the US to attend the May 12-13 ASEAN-US Special Summit in Washington, DC. In an audio