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Logo of Phnom Penh Post newspaper Phnom Penh Post - Depositors lose money

Depositors lose money

Depositors and creditors of the defunct First Overseas Bank (FOB) will get back some

of their money from the bank's liquidated assets but stand little chance of a full

refund, the liquidator said.

"We're hoping to make the first payment [to depositors] in the second half of

May," said Michael Young, the liquidator who is currently evaluating the assets.

"However it's pretty unlikely they'll get it all back."

Under liquidation regulations, all depositors are guaranteed to have returned to

them a maximum of 2 million riel (around $500). Young was confident the liquidator

would be able to cover that.

FOB closed on March 18 after failing to meet the increased capital requirement of

$13 million stipulated in the 1999 Banking Reform Law. The following day the National

Bank of Cambodia, effectively the country's central bank, ordered FOB's assets liquidated.

The bank's collapse has hit several cash-strapped local NGOs hard. Poung Sith of

human rights NGO Vigilance said his organization lost $20,000 when the bank closed

its doors. It has since got back only $800, forcing it to slash its operations from

12 provinces to only three, and diverting core funding to maintain staff salaries.

A similar crisis in 1999 saw staff at the NGO working on reduced salaries until funding

was restored.

Young said the liquidator was aware of the problems caused to local NGOs, but said

none would receive special treatment.

One depositor, Adam Behm, said he was still hopeful of getting the last of his money

returned. After hearing about the imminent crisis the Australian electrician went

to the bank looking to close his account containing $5,500.

"They asked me why, and said there was basically nothing to worry about,"

said Behm. "They said: 'We're having a few troubles but we're working through

them'."

Only after he insisted on getting back his money was he allowed to extract a series

of payments totaling around $4,000. That took him five days. Other depositors have

until May 3 to register claims with the liquidator.

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