Cambodia Post Bank officially opens for business

CHANNEL NEWS ASIA

PHNOM PENH, Cambodia: Cambodia's under-developed banking sector got a US$38 million shot in the arm on Thursday, thanks to a Singapore partnership.

Just 4 per cent of Cambodia's population has a bank account, according to the World Bank.

To help bring banking to the masses, a unit of Temasek Holdings teamed up with a Cambodian lender in a venture to attract savings and provide finance.

The Cambodia Post Bank is a US$38 million joint venture between Canadia Bank, The Cambodian postal service and Fullerton Financial Holdings, which is a 100 per cent-owned subsidiary of Temasek Holdings.

Gan Chee Yen, CEO of Fullerton Financial Holdings, said: "We see that there is potential for growth in this market, and given that we have experience in many other countries -- China, India, Indonesia -- we thought it is timely for us to bring our experience to new markets like Cambodia."

Fullerton will mostly handle the macro-side of the business -- corporate governance and risk management. Canadia Bank, which has been in Cambodia for more than 20 years, will bring its local expertise.

Bank branches will set up shop inside, or next door to post offices, offering basic banking services like loans, withdrawals and deposits.

Michael Lor, CEO of Canadia Bank, said: "We will be in Phnom Penh, but I think there are a lot more business opportunities, more banking needs in the micro-finance segment.

"So we will be endeavouring a lot of our efforts and resources to move out into the provinces to make sure banking services are provided."

The bank is targeting SMEs in rural areas, especially farmers who mainly rely on friends and family when looking for a loan.

Indochina Research said some 50 per cent of Cambodian households that have borrowed money do so from informal sources of credit.

Fullerton said it will take a hands-on approach to get them into the formal banking system.

Mr Gan said: "It is not just going to be people sitting behind a teller. We have customer service people sitting at the front, reaching out to people, helping people fill out application forms. I think over time, we should be able to penetrate these under-served markets."

The bank is also looking to rope in more everyday customers because right now, most people do not have bank accounts. They prefer to keep their money at home or stash it elsewhere instead.

The World Bank said that out of a population of 14.7 million, just 4 per cent of Cambodians have a bank account.

The government puts that number closer to 10 per cent, still far below other emerging markets like Laos and Vietnam.

Mr Lor said: "We are underbanked. There is a lot of room for growth for serious players. We are not looking to be just one of the boys. We have set a target that within the next three years, we hope to be one of the top five microfinance institutions in Cambodia."

The Cambodia Post Bank's headquarters is located in Phnom Penh. It has opened with 11 branches across seven provinces. The plan is to open 20 more over the next five years, making the banking services available throughout Cambodia.

However, the bank's success will partially hinge on how successful it is at roping in the millions of Cambodians who still rely on an informal banking system. 

- CNA/ms