South Korean financial giant Woori Bank, widely seen as the preferred bidder for a 50 per cent stake in Cambodian microlender Prasac, is out of the running as it was not presented to the central bank as an official bidder, local banking officials have said.

Chea Serey, director-general of the National Bank of Cambodia (NBC), said Prasac never presented the South Korean commercial bank for approval, a move that nullified its proposal to acquire half of the micro-lender shareholding.

“As a procedure, Prasac should present to the NBC the [list of] potential investors for approval,” she said, adding that this operation must be done before negotiations can officially begin. “In this case, Woori was never mentioned in the proposed list of candidates.”

Serey said Prasac, Cambodia’s largest microfinance institution (MFI) by assets, required “big and strong institutional and capital support” to ensure the sustainability of its growth.

Prasac had over $1 billion in assets as of end-2015 and earned $46 million net profit last year, according to its audited 2015 financial statement. The MFI has over 180 branches, with about 321,000 borrowers and 450,000 depositors.

Serey said the NBC would consider approving a financial institution in the existing pool of three pre-approved investors, which include strongly regulated players. However, she did not name the investors.

In June, South Korean media reported that Woori Bank, the country’s largest bank in terms of consolidated assets, had beaten out a consortium of Korean financial institutions and was waiting for the NBC’s seal of approval to purchase the 50 per cent stake.

A local financial industry source said that all of the remaining bidders hail from overseas, including Sri Lanka’s Lanka ORIX Leasing Company (LOLC) – which already holds a 22 per cent stake in the MFI – and Hong Kong’s Bank of East Asia, with the potential of a combined bid through a partnered financial agreement.

“A major reason for the sale is for Prasac to become a commercial bank,” the source said. “The NBC has consistently said they can only do that if a large commercial bank comes in as a major shareholder.”

Sim Senacheert, chief executive of Prasac, declined to comment on the failed Woori bid and said that all negotiations must remain confidential until officially approved.

Bun Mony, CEO of Sathapana Bank Plc, said while Prasac already easily meets the minimum requirements to graduate into a commercial bank, with over $100 million in registered capital, the deposit-taking MFI was seeking a partner that could smooth over the operational changes.

“Prasac has the right strategy in looking for a large bank to acquire a stake in the company, and I think that is what the central bank prefers,” he said.

Additional Reporting by Kali Kotoski