Kuala Lumpur-based lender becomes 28th commercial bank to launch in the Kingdom with official opening of new branch in Phnom Penh
THE nation's 28th commercial bank - Malaysia's HwangDBS - launched in Phnom Penh on Thursday. Chea Chanto, the governor of the National Bank of Cambodia, told attendees at the opening ceremony the new entrant reflected increasing confidence by Malaysian and Singaporean investors in the banking system.
"HwangDBS Commercial bank is the fourth Malaysian bank to have invested in Cambodia so far, and its equity is 100-percent held by Hwang-
DBS Berhad, composed of Malaysian and Singaporean shareholders," said Chea Chanto.
The NBC is Cambodia's central bank and also acts as the banking regulator.
"The central bank continues to support a culture of free and fair competition to ensure reasonable interest-rate levels on loans for both borrowers and lenders," he said.
Alex Hwang, the CEO of HwangDBS Investment Bank, told a press briefing after the launch that the bank would target loans to individuals and small and medium-sized enterprises. The bank has US$20 million of initial capital.
Other bankers said the increasing number of foreign banks was bringing tough competition, as they typically have access to large amounts of capital.
Pung Kheav Se, president of Canadia Bank, told the Post on Thursday he does not expect the influx of foreign banks will affect local banks to a great extent, but agreed loan rates would be dragged lower.
"Most importantly, [foreign banks] bring in fixed capital, and Cambodia lacks capital for economic development. Cambodia's economy is still emerging," he said. "[Foreign banks] don't expect to earn money at the present time - they are just building up their positions and envisaging future potential."
Chhay Soeun, the executive vice president and chief financial officer of ACLEDA Bank, said foreign banks see the Kingdom as a good opportunity.
"Economically speaking, interest rates are low in their own countries with few opportunities to invest. But in Cambodia, an emerging market, businesses and investors need capital to expand, and interest rates here are high compared to developed countries, so they can make more profit," he said. "Also, they see political stability, and that boosts the confidence of foreign investors."
Chhay Soeun said ACLEDA raised its annual fixed-deposit rate to 7 percent from 6.5 percent last year, while cutting loan rates by 2 percent to between 10 and 14 percent for large and medium-sized loans.
"Competition means we need to lower our loan rates," he said.