Cambodia's nascent financial services industry will take a step forward in August

with the launch of home loan mortgages from ANZ Royal Bank.

Beginning next month, customers of the bank will be able to borrow up to 60 percent

of the purchase price of their home and spread the repayments over a period of up

to 15 years.

This, according to its Chief Executive, Dean Cleland, will bring home ownership to

those that could only have dreamt about it before.

"When we opened our doors in September last year we did so with the promise

that we would bring new and innovative products and solutions to the market,"

Cleland said. "By launching a range of home loan products with an ability to

spread repayments over a term of up to 15 years we believe we are keeping to our

promises."

Other banks operating in Cambodia do provide home loans but they are either tied

to in-house property developments or are of a short tenor and have to be repaid over

a much quicker period, making repayments often unaffordable. With initial interest

rates set at 9.9 percent per annum variable rate, ANZ Royal aims to expand options

for buying a home.

The bank's criteria stipulate that borrowers must have been in continuous employment

for a period of two years and that repayments do not exceed more than 35 percent

of their monthly gross salary. Land must be registered by the local Cadastral Office,

responsible for issuing registered land certificates. The bank will not lend against

unregistered properties.

Cleland concedes that the lack of registered land titles in Cambodia will hamper

the efforts to provide home loan mortgages.

"We have little choice, since the land title is the only document which provides

proof of ownership and this is a must if we are to safely lend into this market,"

he said "That said, the number of registered land titles is growing daily and

there's nothing to stop sellers applying for a land certificate at any time to help

them sell their home to an ANZ Royal customer."

The bank currently pays 4 percent interest on a 12-month term deposit. The bank says

its interest rates are linked to US Federal Reserve rates (currently 5 percent for

overnight cash). Cleland says this means interest rates can go up as well as down

- something his front-line sales staff will be required to communicate to applicants.

"As a responsible bank with an international parent [ANZ Banking Group] we have

no wish to find ourselves with the unenviable task of having to sell someone's home

because they are unable to afford to make repayments," he said. "For this

reason we are at pains to make sure that an increase in global interest rates isn't

going to cause too much discomfort to our borrowers."

The availability of long-term mortgages could well give an added boost to what is

already viewed by some as an overheating housing market. But Cleland disagrees.

"By spreading home ownership across a much wider market we believe that this

is likely to bring more realistic and sustainable values to the housing market. At

present home ownership is restricted to a very few wealthy Cambodians - we're simply

giving everyone else an opportunity to build a stake in their future too."

ANZ Royal Bank is 55 percent owned by ANZ Banking Group and 45 percent by the well

known locally incorporated Royal Group headed by Okhna Kith Meng.

The bank has four branches in Phnom Penh and two in Siem Reap. Next month will see

the opening of its Sihanoukville branch office, which is to be followed by a further

branch in Battambang scheduled to open before the end of the year.