Phnom Penh, September 22, 2004 — The International Finance Corporation, the private sector arm of the World Bank Group, today signed an agreement to provide Canadia Bank with a loan of up to $5 million to expand its mortgage operations. The IFC loan will support lending by Candia to families purchasing property. Canadia is Cambodia’s largest private sector bank.  

The transaction is accompanied by a $600,000 technical assistance project funded by IFC from the Japanese Technical Assistance Trust Funds and Canadia aimed at enhancing its practices and position in the market. IFC plans to work closely with Canadia to establish sound operating guidelines and support its overall growth.

“Improving financial institutions is at the core of IFC’s strategy for promoting private sector development. IFC can help ensure best practices in operations and corporate governance are followed within the Bank, thus promoting a model that other institutions can follow,” said IFC East Asia and the Pacific Director Javed Hamid. "Introducing mortgages as a standard product promotes home ownership among a growing middle class in Cambodia, but also helps diversify the loan portfolio of the leading local bank. IFC’s loan will allow Canadia to match the maturity of its longer term assets and liabilities,” said Jyrki Koskelo, IFC’s director of Financial Markets.

Mr. Pung Kheav Se, CEO of Canadia Bank, said, “This initial financing between IFC and Canadia Bank is a new benchmark for establishing confidence in the Cambodian banking sector and will further help to develop a better Cambodia.”

Canadia had total assets as of June 2004 of $195.6 million, equity of $21.5 million, and net income of $3.5 million.  With over 300 employees, Canadia offers a range of financial services through its network of eleven branches across the country. Canadia Bank was established in 1991 as Canadia Gold & Trust Corporation Limited, a joint venture between Mr. Pung and other overseas Cambodians and the National Bank of Cambodia. In 1998, the NBC sold its shares and the bank was fully privatized.

IFC’s relationship with Canadia Bank began through the Mekong Private Development Facility, an IFC-managed, multidonor facility supporting small and medium enterprises in Cambodia, Lao PDR and Vietnam. In 2000 MPDF undertook a review of Canadia’s operations to aid in strategic planning and since then has been doing hands-on training to improve credit officers’ skills in assessing and structuring medium and long-term loans. “Such capacity development is critically needed in Cambodia in order to increase the availability of the longer-term credit that enterprises need for expansion”, said Adam Sack, MPDF’s General Manager. “With over 200,000 young people joining the labor market every year, private sector expansion is crucial both to create jobs and to alleviate poverty.”

The mission of IFC is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through 2004, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC's worldwide committed portfolio as of 2003 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.