The International Finance Corporation (IFC), a member of the World Bank Group, has proposed to invest up to $40 million in Cambodia’s Hattha Bank, formerly Hattha Kaksekar Limited (HKL), to support the bank’s financing to MSMEs.
The investment, in the form of a seven-year subordinated loan, aims to help strengthen the bank’s resilience amid the ongoing COVID-19 pandemic and support Hattha Bank’s long-term strategy of providing lending to MSMEs in Cambodia, with a good portion of the financing targeted at women-owned businesses.
The proposed loan comes nearly a year after IFC invested $25 million in the bank in the form of a senior loan. IFC has been investing in Hatta Bank since 2015.
Hattha Bank, the second-largest microfinance deposit-taking institution in Cambodia, has been operating in the country for over 26 years as HKL. It obtained a licence to operate as a commercial bank from the National Bank of Cambodia in August 2020.
The bank currently has a total asset of about $1.6 billion and gross loan portfolio of about $1.3 billion. The Bank has a nationwide presence with 177 branches in 25 cities and provinces, the second-largest network in Cambodia.
IFC said the proposed sub-debt consists of IFC’s own account investment of up to $10 million and mobilisation of up to US$30 million, to primarily support the bank’s financing to MSMEs and WMSMEs.
The project will contribute towards narrowing the MSME financing gap by providing additional loans to MSMEs including WMSMEs during the tenor of the loan, IFC said in its disclosure.
“This is expected to increase economic activity and job creation in Cambodia to expedite post-crisis recovery,” it added.
Cambodia has more than 450,000 micro-entrepreneurs and about 27,500 SMEs, generating about 1.6 million jobs.
The proposed loan to Hatta Bank is part of IFC’s $8 billion facility that seeks to fast-track financial support to existing clients to help sustain economies and preserve jobs during this global crisis.