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ACLEDA Bank is Recognized Worldwide for its Success and High Standards

June 07, 2006

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Technical assistance from the Mekong Private Sector Development Facility and financing from IFC have both contributed to the phenomenal success of ACLEDA Bank in Cambodia. Since 1993, ACLEDA has gown from a small non-governmental organization micro-finance provider to the country's second largest commercial bank. With 136 branches and offices nationwide, and 140,000 borrowers, almost 70% of whom are women, ACLEDA has the widest reach of any financial institution in Cambodia. It is also the only bank specializing in loans to poorer people.

MPDF's assistance to ACLEDA began in 1999 and 2000, when the Facility helped ACLEDA start the transition from NGO to a full-service bank. MPDF helped ACLEDA establish international standard banking procedures and practices, and also improve managerial systems. In 2001, MPDF trained ACLEDA's customer relations staff in financial services marketing skills, and in 2002 credit officers were trained in debt recovery and loan management. Thanks to the latter training, the percentage of loans that were more than 30 days overdue fell from 6.2% in 2002, to less then 1% in 2003. More recent MPDF training has covered small and medium enterprise (SME) lending and on-going technical assistance has trained loans officers to appraise the businesses of would-be SME borrowers.

In 2001, IFC and other international investors took equity in ACLEDA. In 2003, IFC led ACLEDA's five shareholders in increasing their equity by another US$8.0 million–the final step in ACLEDA's transformation to a commercial bank. In 2004, IFC provided ACLEDA with a US$6.0 million credit line to increase its small and medium enterprise lending.

Thanks to years of good management and the hard work and integrity of its 2,300 staff, ACLEDA is now widely regarded as Cambodia's best managed bank. It is the first and only bank in Cambodia to be rated by Moody's Investor Services or any international rating agency, and Moody's gave ACLEDA a financial strength rating that is higher than all the banks in Indonesia, and better than most in Thailand.

ACLEDA has also brought important banking services to people who previously had none. Nearly 80,000 small savers now entrust heir money to ACLEDA, and deposits have grown from almost nothing four years ago, to US$62 million in late 2005.

The bank also enables customers to transfer funds easily throughout the country, and between other countries and Cambodia–both very important when so many Cambodians are migrant workers who support extended families in rural areas.

The bulk of ACLEDA's loans go to micro entrepreneurs selling basic commodities such as rice, fish, produce and handicraft supplies, but thanks to MPDF and others, SME lending and services are growing quickly. For example, ACLEDA offers payroll accounts to factories and businesses so they no longer have to make cash payments. This alleviates both the burden and risk of cash transactions and makes it easier for employees to save. As part of ACLEDA's efforts to raise living standards, the bank offers financing for small power producers who supply electricity in remote districts, and it has invested in communications infrastructure to support money transfers between rural branches.

ACLEDA is held in high regard both locally and internationally. In September 2005, in recognition of the high standards ACLEDA sets for itself, IFC awarded ACLEDA its Client Leadership of the Year Award. This world-wide honor recognizes an exemplary IFC client who, in line with IFC's mission, has made a significant contribution to sustainable development.

At the award ceremony in Washington D.C, Assaad Jabre, then Acting Executive Vice President of IFC, praised ACLEDA for its evolution to a first-tier commercial bank. "ACLEDA is a role model for any business, not just microfinance institutions. The winner of IFC's Client Leadership Award is a company that sets the standard for leadership in corporate governance, community involvement, environmental and social sustainability, and commercial success. ACLEDA has truly earned this award."

Mekong Private Sector Development Facility IFC-MPDF is a multi-donor funded initiative set up by the International Finance Corporation in Vietnam, Cambodia, and Lao PDR, to reduce poverty through sustainable private sector development. The Facility's goal is to help small and medium-sized enterprises solve common operational and management problems and compete more successfully in the global economy. IFC-MPDF works through six interrelated programs that seek to improve the business environment, develop the financial sector, improve managerial capacity, and increase sustainable business practices in three sectors that are central to economic growth and poverty reduction — tourism, agribusiness, and garments. IFC-MPDF's donors are the Asian Development Bank, Australia, Canada, Finland, IFC, Ireland, Japan, New Zealand, The Netherlands, Norway, Sweden, Switzerland and the United Kingdom.

www.mpdf.org