24590 - Acleda

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Summary of Proposed Investment

Project Number

24590

Company Name

ACLEDA BANK PLC.

Date SPI Disclosed

Apr 6, 2006

Country

Cambodia

Industry

Financial Markets

Projected Board Date

May 8, 2006

Status

Completed

Sector

Commercial Banking - Microfinance and Small Business

Department

Global Industry, Financial Markets

Environmental Category

Previous Events

Approved : Jun 7, 2006
Signed : Jun 21, 2006
Invested : Dec 29, 2006

Project Description

ACLEDA Bank Plc. (Acleda or the Bank), based in Phnom Penh, Cambodia’s capital, is an existing IFC client, and one of the leading financial institutions in the country, fourth largest in terms of assets, providing a full range of banking services with particular emphasis on micro and small business credit. With 141 branches and offices, the Bank is now active in 22 provinces over the Kingdom of Cambodia. In December 2003, Acleda was granted a new license by the National Bank of Cambodia to operate as a full commercial bank enabling Acleda to launch many new financial services including cash management and trade finance.

With assistance from UNDP and the ILO, the Bank was originally established as Acleda NGO (Association of Cambodian Local Economic Development Agencies), in January 1993, as the national NGO for micro and small business development and credit. Major international development agencies supported the rapid expansion of Acleda. Because of the Bank’s expansion to cover the main provinces of Cambodia and its ability to continually operate profitably, Acleda NGO decided to transform itself into a commercial bank.

The project is to provide a $5.0 million term loan to Acleda to support the Bank’s expansion into SME and on-lending to wholesale traders/financiers or integrators in the agribusiness sector, and licensed microfinance institutions.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	5.0
Equity

Development Impact

IFC''s investment in ACLEDA has been a solid developmental success, and a role model for integrating IFC financial, technical and policy assistance for microfinance sector development. IFC can continue to play an important developmental role at ACLEDA by providing the bank with additional resources to create a pool of longer-term assets, diversifying the Bank’s portfolio, and helping to mainstream new and innovative financial products for micro-enterprise borrowers in Cambodia. IFC has made fundamental contributions over the past six years in support of ACLEDA''s transition from a micro credit NGO to the country''s leading commercial microfinance bank.

ACLEDA''s transition from an NGO to a commercial bank and its steady but prudent growth, profitable business model, innovative product development, sound reporting and MIS system and transparent governance have made it a role model for MFIs in the East Asia region and, increasingly, in other developing countries where there are few successful and sustainable microfinance entities. From this platform, the development impact of additional IFC financing is expected to be high. An additional IFC loan for ACLEDA would provide the funding needed to mainstream the Bank''s pilot program for a new product - wholesale financing for microfinance institutions and SME’s, particularly wholesale financiers, that lack funding. Making long-term financial resources available to micro borrowers through sound MFIs is expected to stimulate business growth and income and employment generation.

ACLEDA Bank is a Financial Intermediary (FI) Type 1 project, according to IFC''s environmental and social review procedures. The bank has met requirements specified in earlier transactions and has committed to compliance with the relevant environmental laws and regulations of Cambodia, and to use IFC''s Microfinance Exclusion List as part of its micro-loan application review procedure. The project has established a satisfactory environment policy and has been submitting annual environmental performance reports to IFC. Based on the annual reports submitted the environmental performance has been considered satisfactory to date and ACLEDA’s ESRR rating for 2003 is F1 (Good). Acleda bank would need to continue its performance of satisfactory implementation of the existing requirements through the currency of the new loan.
Location of environmental documents In locally affected community

Contacts

For Inquiries About the Project, Contact

In Channy
General Manager
E-mail: channy@acledabank.com.kh
Telephone: (855 23) 210 812

This Summary of Project Information (SPI) is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC's activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

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