Acleda Bank completed its transformation from a microfinance NGO to a full commercial bank when it officially obtained its license from the National Bank of Cambodia on Monday.
Acleda, the 14th bank granted a commercial license by the National Bank, enters one of the weakest financial systems in Asia. Total assets in banks here represent 12 percent of the nation’s gross domestic product.
“Twelve percent is way, way, way low,” Deepak Khanna, country manager for the International Finance Corporation, the private sector arm of the World Bank and one of Acleda’s shareholders, said at a ribbon-cutting ceremony at Acleda’s headquarters Monday.
In the average Asian country, Khanna said, assets represent about 95 percent of GDP.
“But you must keep Cambodia in perspective,” he said. “It’s only been about 10 years since there’s been some form of stability.”
Acleda started in 1993 as an NGO backed by international development agencies that offered credit to micro and small businesses. When donors saw that Acleda could operate at a profit and become sustainable, they concluded it should be transformed into a commercial bank.
In 2000, a range of institutions, including IFC, the UN, and US Agency for International Development, helped the bank receive a specialized banking license from the National Bank, which allowed it to take deposits.
Since 1993, Acleda has disbursed more than $261 million to nearly 900,000 borrowing customers. In December, Acleda ranked third in commercial lending among all banks and was eighth in deposits. It now has branches in every province except Mondolkiri, Ratanakkiri and Stung Treng.
“To Acleda Bank…being awarded a commercial license opens the door to the extension of convenient bank services to a wider public, including the customers of micro, small and medium size enterprises, and furthermore signifies the fuller integration of microfinance businesses into the larger economy,” said In Channy, Acleda’s general manager.
Minister of Finance Keat Chhon thanked Acleda for extending its services into rural areas, and thanked the bank’s shareholders for trusting in Cambodia.
“Cambodia’s financial sector is at an early step of its development and there is still low confidence,” the minister said. “In the framework of a free market economy, Acleda will have to compete with other sister institutions.”
Banking experts say that Acleda, with its large network and technology, is well-positioned to expand its microcredit operations into larger, longer term loans.
“The other commercial banks are realizing they have a very serious competitor in the banking sector,” said a local banking expert. “The main challenge for Acleda is that none of its personnel have experience in long term loans. It will take some time for them to master new activities.”
To help develop the weak human resources throughout the country’s financial sector, several donors, including the Asian Development Bank and the Mekong Private Sector Development Facility, an IFC initiative, recently helped create the Cambodia Institute of Banking to provide bank employees training in international standards.
Some of Acleda’s competitors welcomed it Monday and announced their own new services .
Canadia Bank, which has assets of more than $200 million, plans to open six or seven automated teller machines in Phnom Penh, perhaps as early as April, said Yee Con Long, senior manager of Canadia. By September or October, he said, Canadia plans for those ATMs to handle international transactions.
“When there are more competitors, other banks must be innovative and come up with more services,” Yee Con Long said.
Monday. “It’s good for the customers.”