[Banking Southeast Asia Expansion] "KB Cambodia Competing to Separate Wheat from Chaff... Merging with Prasac to Transition into a Commercial Bank"

KB Kookmin Bank Targets Cambodia
'About Half of the Population is Under 25' Young Country
Unlimited Potential for Financial Market Development

South Korean banks have primarily expanded overseas into Southeast Asia. While advanced countries with developed financial sectors leave little room for entry, Southeast Asia offers significant growth potential and a favorable perception of Korea. Employees dispatched locally are struggling through challenging life abroad. We examine the current status of banks' expansion into Southeast Asia and hear their stories of market development. [Editor's note]

KB Cambodia Bank building view

In Cambodia, a Buddhist country in Southeast Asia, several global banks are fiercely competing behind the scenes to expand their market share. KB Kookmin Bank from Korea has also joined this race. Recently, KB Cambodia has begun the process of merging with Prasac Microfinance Institution, which it acquired last year, to convert it into a commercial bank.

Kim Hyun-jong, Vice President of Prasac Microfinance, told Asia Economy in a recent interview, "Unlike Korea, Cambodia has financial institutions from various countries competing, leading to a sorting out of the market," and added, "Many foreign investors enter Cambodia after seeing its potential." Before moving to Prasac Microfinance as Vice President, Kim served as the CEO of KB Cambodia. Notably, in Cambodia, the local currency 'Riel (KHR)' and the US dollar are officially used concurrently. This allows foreign investors to invest without bearing exchange rate risk.

Kim Hyunjong, Vice President of Prasac Microfinance

Unlike Korea, which is an aging society, Cambodia is a young country with half of its population under 25 years old. Of the 10 million economically active population, only half, 5 million, have bank accounts, indicating vast potential for financial market development. KB Kookmin Bank believes there is great potential if financial services that include the financially marginalized in rural areas grow in the future. This is why KB Kookmin Bank acquired the microfinance institution Prasac.

KB Kookmin Bank acquired a 51% stake in Khmer Union Bank in 2009, renaming it KB Cambodia Bank, which it has operated since then, and acquired the local Prasac Microfinance Institution last year. Microfinance institutions provide financial services such as loans to the poor in developing countries. They offer small loans to customers without initial capital. Although interest rates are somewhat high due to lack of collateral, as customers' incomes rise and businesses expand, they borrow more funds, and the microfinance institutions grow alongside them. Prasac is the second largest in Cambodia, operating 182 branches and employing about 9,000 staff, conducting loan operations in rural areas and selling time deposits in urban areas like Phnom Penh.

Vice President Kim stated, "We are currently discussing with the National Bank of Cambodia the 'conversion to a commercial bank through merger' and preparing internally," adding, "We plan to complete all procedures within the next two years, with personnel dispatched from KB headquarters, Prasac, and KB Cambodia working together." He further said, "We will seek additional growth through deposit and loan operations targeting corporate and middle-class customers."

KB Kookmin Bank plans to use Prasac to explore further entry into ASEAN (Association of Southeast Asian Nations) countries. Vice President Kim emphasized, "Following the acquisition of a major microfinance company and conversion to a comprehensive commercial bank, we will create Cambodia's leading bank," and added, "Prasac Microfinance will play a key role in KB's global business."

This content was produced with the assistance of AI translation services.