The Ministry of Finance announced Monday through a print advertisement that it has privatized the state-run Foreign Trade Bank, forming it immediately into a joint venture between the government, Canadia Bank and the little-known firm ING Holding.
Sok Mey, assistant to Canadia Bank General Manager Phung Kheave Se, said ING Holding is part of the AZ group of companies, which is chaired by CPP parliamentarian Ung Bun Hoaw and manages tolls on National Route 4, scans imports in Sihanoukville port and has a contract to install fixed telephone lines from Kompong Cham province to Sihanoukville.
“Canadia Bank and ING bought Foreign Trade Bank. There was no bidding process,” Sok Mey said Monday by telephone.
“Canadia has 46 [percent], ING has 44 percent and the Ministry of Finance has 10 percent,” she said.
Sok Mey added that ING is headed by AZ Director Lim Bunsour. Contacted on Monday, Lim Bunsour said he was too busy to comment. Ung Bun Hoaw could not be contacted.
The Ministry of Finance’s announcement stated that the bank will maintain its corporate name, location, existing staff and banking operations.
Kaing Leang Khan, the former director of the state property department at the Finance Ministry, said the government sold the Foreign Trade Bank sometime in May or June.
Six months ago, he added, he sat on the committee that considered the privatization.
“The Ministry has followed the advice of the [International Monetary Fund] that state-owned enterprises should be privatized,” he said.
“The government sold it for money to put in the national treasury, which is better than running the bank itself.”
Kaing Leng Khan said that the total assets of the state bank, including capital, were sold for $21 million.
Prior to the sale, he said, the National Bank of Cambodia owned a 20-percent share and the Finance Ministry owned 80 percent.
He said that a Chinese company had earlier made an offer for the Foreign Trade Bank, but had failed. “It couldn’t do it because of difficulties,” he said.
One banking expert said on condition of anonymity that the bank was originally offered up for competitive bidding, which the Chinese bank won.
It was unclear what had happened to that reported deal. Jimmy Gao, the head of the Chinese Chamber of Commerce, said he had not heard of such an offer.
Vann Dina, deputy director of the Foreign Trade Bank, said there are no changes planned for its management and staff.
“Everything will be the same as before; we will have the same activities,” she said.
She added that the bank rents its headquarters from the National Bank of Cambodia, of which it was once a part.
Neav Chanthana, deputy director of banking supervision at the National Bank, said the National Bank has relinquished its 20-percent stake entirely.
“The FTB is currently profitable,” she said, adding that the reason for the sale was that the state has agreed to divest itself of state-owned enterprises.
One leading local economist warned that having two banks under the ownership of Canadia could have negative consequences.
“The privatization of Foreign Trade Bank represents progress in terms of efficiency and quality of services: The concern is the market position of Canadia bank,” said Kang Chandararot, the director of the Cambodia Institute of Development Study.
“All this is happening before we have a Competition Law,” he said, adding that having Canadia in charge of the Foreign Trade Bank could affect interest rates.
“With less competition, the concern is that interest rates may not reflect market demand but rather the strategies of the key players in the industry…. Smaller banks may have a more difficult time entering the market,” he said.