ANZ Royal Denied Underwriting License on Bourse

As companies received provisional approvals from the Securities Exchange Commission of Cambodia this week for operating licenses, ANZ Royal Bank was denied the underwriter’s license that it had applied for, ANZ Royal CEO Stephen Higgins said Friday.

Mr Higgins said the decision was not a surprise, however, as it had decided against pursuing the license due to a $9.5 million capital requirement, which would have restricted profitability.

“In terms of where I place my capital it just wasn’t the right time to be doing that,” he said, adding the bank might consider reapplying for a license in a few years. “I’d rather give a loan to a garment factory than let that money sit idle in a security company.”

The bank, one of the largest in the country, was one of 22 companies to apply for a license to buy and sell securities on the up and coming bourse, though it is unclear how many of those companies received provisional approval this week.

At least three companies – OSK Indochina Bank, Seoul-based Tong Yang Securities Company and Canadia Bank – have received provisional approvals for underwriters’ licenses, which would allow the companies not only to buy and sell stock but also to organize initial public offerings.

Acleda Bank also received a stock brokerage license, which requires $1.5 million in capital and does not allow the organizing of public offerings. Final approvals will be announced in a month.

Mr Higgins said his bank entered the application process with the intent to secure a underwriters license, but only if its existing capital could be used as the $9.5 million requirement and if it wasn’t required to create a subsidiary. The SECC ultimately said no and ANZ Royal Bank made clear its intention not to pursue the application, but received a letter about its application anyway, he said.

“We never expected to get a license, because the terms weren’t financially acceptable,” he said.

Considering the limited amount of stocks that will be available on the stock market in its early years, using the required $9.5 million for other ventures such as loans will be far more profitable, he said.

In-Pyo Lee, the Phnom-Penh based project manager for South Korea’s stock exchange, Korea Exchange, said several companies voiced concerns about the high capital requirement, which is intended to attract responsible market players.

“For market players if they put too much money in their bank accounts, it could discourage their business activity,” he said.

SECC Director General Ming Bankosal declined to say how many companies have received a provisional approval, though he said it would be revealed within a month. He would not discuss individual applicants.

Dieter Billmeier, vice president of Canadia Bank, said though the $9.5 million requirement has some drawbacks, having an underwriting license outweighs them.

“To have a license is really good for the future,” he said.

The Malaysian HwangDBS Commercial Bank also did not receive provisional approval for an underwriting license, and rejected an offer for an Investment Advisory Firm license, according to a statement submitted to the Malaysia stock market on Wednesday.

Senior vice president of the bank Han Peng Kwang said his company was not interested in the limited role of an advisory firm, which cannot buy and sell stock.

“We are still interested in the stock exchange,” he said. “In the future we may apply again.”

 

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