South Korean-based Woori Bank buys lender VisionFund
South Korean-based Woori Bank buys lender VisionFund
South Korean-based Woori Bank has bought out local lender VisionFund (Cambodia) for an undisclosed amount, the bank’s spokesman Daniel Chang said on Monday.
He told The Post that the firm will operate in the Kingdom as a microfinance lender under the name WB Finance.
Chang said the agreement had been approved by the National Bank of Cambodia (NBC) and registered with the Ministry of Commerce.
“Woori is committed to growing with Cambodia and plans to become a leading financial institution in the country, with the ultimate goal of becoming a commercial bank,” he said.
The bank, Chang said, will consolidate the two institutions – Woori Finance (Cambodia) and VisionFund (Cambodia) – in due course.
The NBC’s annual supervisory report said the total assets of VisionFund (Cambodia) amounted to $194 million at the end of last year.
As at the end of last year, VisionFund Cambodia reported an after-tax profit of $3.7 million and employed 1,389 staff.
The NBC’s director-general of central banking, Chea Serey, who confirmed the acquisition on Monday, said Woori is an outstanding Korean commercial bank, so it could bring in new technology and know-how to Cambodian markets.
Michael Mithika, the president and CEO of VisionFund International, the parent company of VisionFund (Cambodia), explained his firm’s reasoning for selling to Woori Bank.
While virtually all of Cambodia’s demand for microfinance providers is being met, he said VisionFund International had a desire to shift to other countries where their products were not widely available.
“Existing clients, including those who are poor or take out small loans, will continue to be served by VisionFund Cambodia’s nationwide branch network under Woori Bank’s ownership,” he said, adding that Woori would carry on the firm’s vision in the Kingdom.
According to Mithika, VisionFund International had already decided to seek a new owner before the 18 percent interest rate cap was announced by the NBC in April last year.
Sean Thornin, an economics lecturer at the University of Cambodia and an expert in Cambodia’s financial landscape, said on Monday that the new deal could represent a worrying trend that the offering of microloans will dry up as MFIs turned into commercial banks.
Thornin predicted that the change in ownership will alter the business model, pushing it towards banking services for SMEs or forcing the commercial loan segment to adjust with the NBC’s loan interest rate cap of 18 percent per year.
“When many MFIs shift their focus from micro and small loans to medium ones, low-income families will be left with less choice for financing.
“Then they may be drawn to the informal sector like private money lenders and loan sharks, where interest charges are higher,” he said.
