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Excess liquidity rises to $900m as loans stall

ANZ alone has $200m deposited with central bank, CEO says

HESITATION to lend during the global economic crisis has led to a US$900 million liquidity excess in Cambodia’s banking sector, the minister of finance has said.

At a seminar on credit quality enhancement, held Thursday, Keat Chhon said that commercial and financial institutions have been reluctant to finance long-term loans during the economic crisis. However, he predicted that the large excess of liquidity in Cambodia’s banks could aid the Kingdom’s development during 2010.

“The excess of liquidity provides huge possibilities to support investments in Cambodia. Especially if we could push commercial banks to use the $900 million surplus to invest in infrastructure projects with high productivity,” he said.

Representatives from leading banks said Monday that they are either seeking to lower excess deposits or are expecting to lend more this year as the economy improves.

Stephen Higgins, CEO of ANZ Royal bank, wrote in an e-mail that his bank would like to operate with lower liquidity.

“We have over $200 million sitting with the central bank,” he added.

In Channy, president and CEO of ACLEDA, said that his bank’s liquidity at the end of last year was $80 million – much lower than ANZ’s – despite customers’ tendency to deposit money into institutions as a low-risk option during the economic crisis.

He put the liquidity disparity between banks down to the fact that the number of ACELDA’S loans grew by 16 percent to $538 million last year, despite sector-wide loans rising by just 3 percent.

He predicted that the surplus would be lower at the end of this year, compared to 2009, due to expected growth in the agriculture, production, trade and services sectors – where many bank loans are made.

Phan Ying Tong, country head of Cambodian Public Bank, said that it is his bank’s policy not to talk to the press without approval from the head office in Malaysia. Central bank officials were not available Monday.

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