FDI inflows into banking sector rises on new banks and higher caps

The inflows of foreign direct investment (FDI) into the Kingdom’s banking sector nearly doubled in 1H17 as two heavyweight players entered the local market and lending institutions responded to revised minimum capital requirements, a central bank official said yesterday. According to Chea Serey, director general of the National Bank of Cambodia (NBC), FDI into the banking sector amounted to $439mn during the first half of 2017, an 89% increase YoY.  She attributed the jump to the launch of local operations by France’s BRED Bank and Japan’s Mizuho Bank, and international investors injecting more capital into Cambodia-based institutions to bring them in line with the NBC’s revised minimum capital requirements. Chou Ngeth, senior consultant at Emerging Markets Consulting, said the revised minimum capital requirements had increased the inflow of foreign capital into the banking sector, but would also likely lead to more consolidation in the sector—generally seen as a positive trend that would make the sector more commercially viable and increase financial inclusion. He expects that consolidation activity and foreign capital inflows to pick up as the 2018 deadline approaches. (Source: Phnom Penh Post)