Cambodia: NBC Approves KB’s Investment in Prasac

Feb 2020
Cambodia, February, 10 2020 - The National Bank of Cambodia (NBC) approved KB Kookmin Bank’s investment in Prasac Microfinance Institution, according to senior official of the Prasac Microfinance Institution.

Prasac President and Chief Executive Officer Sim Sinacheert said the institution received approval from the NBC on KB’s investment in Prasac on Jan 29, 2020. However, the transaction was not completed until now because KB is still awaiting for approval from the South Korean authorities, which it expects soon.

“KB’s investment in Prasac shows a positive sign and the confidence of a foreign investor in Cambodia and Prasac. So far we haven’t discussed further plans in detail yet. We will discuss future plans soon after we receive approval from all authorities and we will let you know later,” Sim added.

“It [Prasac] expected that KB will bring more sophisticated products, modern technology, more funding at low cost, more capital and its banking experiences to Prasac,” he added.

KB Kookmin Bank in late December last year announced that the company agreed to buy a 70 percent stake in Prasac Microfinance Institution, one of the Kingdom’s largest micro lenders.

The Korean bank will spend a total of $603.4 million to acquire the shares from Sri Lanka-based LOL Holdings, which holds a 70 percent stake in Prasac.

KB Kookmin Bank – a subsidiary of KB Financial Group, Korea’s leading financial services provider offering a broad range of financial products and services – will close the deal within three months after it is given the green light from bank regulators of the two countries.

In Channy, president of Acleda Bank and president of the Association Bank of Cambodia (ABC), told Khmer Times that it is good sign that a foreign bank acquires shares from local microfinance insitutions.

“It is to show that the banking sector is in positive growth so that foreign investors build trust in the Cambodian banking sector,” In added. “If the performance of the each banking institution is good there will be more foreign investors looking at them.”

Kea Borann, chairman of Cambodia Microfinance Association, said more than 2 million Cambodian families are currently using the services of micro lenders, borrowing a combined total of $6 billion.

“MFIs’ services are mostly aimed at people living in rural areas, with about 90 percent of all villages in the Kingdom enjoying access to microcredit,” he was speaking at a workshop held at Phnom Penh last October.

Khou Vuthy, National Bank of Cambodia (NBC) deputy director-general for central banking, said at the NBC’s macroeconomic and banking sector update for 2019 and outlook for 2020 that the banking system development continues at a solid growth rate while banking and finance are in good health and other risks have been managed effectively. He also said that there are around 7.5 million deposit accounts and 3 million credit accounts from banks and microfinance institutes. Khou added that the local currency deposit increased 37 percent, currency circulation in the economy increased 33 percent and foreign currency deposits rose 16 percent in 2019.

“The financial stability in Cambodia will remain good as well as the strength of the nation’s economic growth which is supported by the growth of imports and exports. These indicators show the stability of the financial sector. This has been contributed to by enough capital, liquidity, lower nonperformance loans (NPL) and better revenues,” Khou added.

As of December 2019, Prasac’s total assets amounted to $3.11 billion. Outstanding loans amounted to $2.51 billion while total deposits reached $1.78 billion.

By the end of 2019, Prasac had installed 135 ATMs, 509 point-of-sale (POS) terminals and had amassed 16,118 mobile banking users.

This year, he projected; the sector will grow by 25 percent compared with 2018. The NBC’s report showed that at present 43 commercial banks are operating in the Kingdom (15 locally incorporated, 15 subsidiaries, and 13 foreign bank branches), 14 specialised banks (one state-owned and 13 private) and seven micro-development institutes.

Source : Khmer Times

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