Set up as a micro finance institution since 1998, ACLEDA has developed into one of the biggest commercial banks in Cambodia in term of asset and network, with 234 offices throughout the country and serves more than 267,000 clients of which over 50% are women. As of November 2010, the bank’s total deposit reached USD 904 million while loan portfolio grew to more than USD 722 million. The Bank continues to serve micro segment and also goes up the market to serves SMEs segment as well, throughout Cambodia. ACLEDA also has a subsidiary in Laos. As of end 2010, ACLEDA Bank has a diversified shareholding structure, with ACLEDA NGO holding 32%, ASA 19% and a number of international development institutions including DEG, IFC, Triodos and JSH Asian Holdings Limited.

The proposed project consists of a subordinated debt of up to USD 6 million with maturity of 7 years (grace period of 2 years) and meets tier 2 capital requirements in Cambodia. The sub debt aims to help ACLEDA: 1) maintain a CAR/solvency ratio of more than 15% as required by the National Bank of Cambodia (NBC), and 2) support its loan growth which has been picking up in 2010 more quickly than they have anticipated and is expected to remain strong in 2011.

6.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	6.0
Equity

* These investment figures are indicative

ACLEDA Bank is headquartered in Phnom Penh and has 234 branches across Cambodia. Investments can be made throughout the country.

Increase access to credit: The proposed investment in ACLEDA is expected to improve access to credit in Cambodia as it will enable ACLEDA Cambodia to provide credit to underserved micro finance and SME and retail borrowers. Improving market confidence: An IFC loan to a bank such as ACLEDA will enhance market confidence in the Cambodian financial sector and its perception in the international markets. The proposed subordinate debt will not only strengthen the Bank's capitalization, but is also expected to enhance prospects of mobilizing additional equity and long term funding from private investors.

Supporting growth of micro finance sector: the project is expected to support growth of micro finance sector in Cambodia through providing capital to the country's largest MFI to enable its growth plan. Facilitate the raising of long-term funding: This project provides long-term funding which is scare in Cambodia, and expected to facilitate further long term raising by Cambodian MFIs Demonstration effects: as a result of the global financial crisis, capital becomes scare in Cambodia. IFC's investment in Acleda is expected to have demonstration impacts that enable other well managed and better performing banks to raise needed capital from foreign investors.

This is an investment with a repeat client which has an existing Social and Environmental Management System (“SEMS”), has appointed staff to oversee the SEMS implementation and has submitted annual reports to IFC. The review of the client’s 2009 annual environmental performance report and the recent supervision visit by an environmental specialist in March 2011 have indicated that the client has implemented the SEMS in a satisfactory manner. The current ESRR rating is 2 (moderate).
This new project has been classified as a Category FI project according to IFC''s Environmental and Social Review Procedure. Considering the nature of activities supported, the client will be required to continue to ensure that its lending activities will comply with IFC Exclusion List, applicable Cambodian E&S laws and regulations and other requirements established in the existing SEMS. It will commit to take action to remedy any gaps in implementation on an ongoing basis and will continue to submit an annual performance report to IFC. The bank will also be required to continue to follow the principles established by the IFC Performance Standard 2: Labor and Working Conditions in its HR practices. IFC will continue to monitor the bank’s SEMS implementation and E&S performances.