Logo of Phnom Penh Post newspaper Phnom Penh Post - Cambodian banks seen as safe from SVB fallout

Cambodian banks seen as safe from SVB fallout

Content image - Phnom Penh Post
Silicon Valley Bank. AFP

Cambodian banks seen as safe from SVB fallout

Prime Minister Hun Sen on March 16 urged the public not to panic-withdraw funds from their bank accounts amid concerns following the recent bankruptcy of two major US lenders, as industry insiders assured that the Cambodian financial sector would be largely unscathed by fallout from their demise.

Earlier this month, Silicon Valley Bank (SVB) and then Signature Bank were taken over by regulators after collapsing under the weight of billions of US dollars in withdrawal requests made around the same time, triggered by fears of the lenders’ insolvency, in what is termed a “bank run”.

On March 13, President Joe Biden assured that the US banking system remains “safe”, explained how his administration is responding to the situation, and called for more stringent regulations to protect banks against failures.

Speaking at a graduation ceremony in Phnom Penh, the prime minister argued that the fall of the two banks does not pose a significant risk of contagion in the Cambodian banking system, nor will it have a severe impact on the global economy.

“I urge anyone who has deposited money in a [local] bank not to panic,” Hun Sen said, underscoring that doing so would be contrary to the common good.

“We call on the people to place their trust in [regulators’] abilities to manage the Cambodian banking and financial sector – banks have enough reserves to resolve any issues,” the premier stressed.

Although the 1997 Asian financial crisis caused some chaos among Cambodian banks, the adverse effects of the 2008 global financial crisis were minimal in the Kingdom, which at the time raised the reserve requirement ratio (RRR) from seven to 12 per cent to prevent more damaging consequences, he recapped.

RRRs are central bank regulations that set a minimum amount of cash which financial institutions must hold in reserve. The Cambodian RRRs for foreign and domestic currency deposits currently stand at 12.5 per cent and eight per cent, respectively, according to the National Bank of Cambodia’s (NBC) website.

ACLEDA Bank Plc president and group managing director In Channy claimed to The Post on March 16 that Cambodia’s “strict” financial regulatory frameworks, managed by the NBC, would make certain that these developments in the US have negligible bearing on the Kingdom’s banking and financial system.

“It’s isolated from our business environment. And it’ll never impact our banking system and industry at all, since we’re in a very different market environment. The banks here are under Cambodian laws and regulations, and we are supervised and regulated by the NBC.

“Cambodia is a small country, but our regulator [the NBC] is full of experience. They are conservative, but proactive when it comes to risk mitigation. Banks here are in the economic environment of Cambodia. We don’t have anything to worry about, because in the banking business, we’re always cautious at every step we take.

“And of course, we must comply at all times with both local and international regulations. We always keep in mind that there are two important sources of risks – among many – apropos of which, banks must take cautious action all the time: liquidity and credit,” he said.

Cambodia Post Bank (CPBank) CEO Toch Chaochek told The Post on March 16 that the two US banks in question were not large enough to pose systemic risk to the global economy.

He explained that while SVB was indeed large, its tech and start-up focus may have been too niche and risky, and its collapse followed a spate of layoffs in the bank as well as among its clientele, resulting in the closure of a considerable number of accounts.

At least at CPBank, there have been no signs of panic withdrawals, he affirmed. “The financial sector is chugging along as usual, as are lending operations.”

With almost all loans in the Cambodian financial sector secured against collateral, and local sources accounting for a sizeable share of domestic bank capital, “we are 100 per cent secure”, Chaochek stated.


  • Ministry orders all schools, public and private, to close for SEA Games

    From April 20 to May 18, all public and private educational institutions will be closed to maintain order and support Cambodia's hosting of the 32nd SEA Games and 12th ASEAN Para Games, said a directive from the Ministry of Education, Youth and Sport. Cambodia will host the

  • Almost 9K tourists see equinox sunrise at Angkor Wat

    Nearly 9,000 visitors – including 2,226 international tourists – gathered at Angkor Wat on March 21 to view the spring equinox sunrise, according to a senior official of the Siem Reap provinical tourism department. Ngov Seng Kak, director of the department, said a total of 8,726 people visited Angkor Wat to

  • Angkor Beer strengthens national pride with golden new look and fresher taste

    Angkor Beer – the "Gold of Angkor" – has a new look, one that is more stylish and carries a premium appeal, as well as a fresher taste and smoother flavour, making it the perfect choice for any gathering. Angkor Beer recently launched its new design, one

  • Newest horror film showcases unique Khmer culture, identity

    At first glance, the trailer to new horror sensation The Ritual: Black Nun looks like a western-produced feature film. As the story reveals itself to the viewers, it becomes clearer that this is a Khmer film, with a strong Cambodian identity and close links to

  • Water supply authority assures public shortages over early ‘24

    The Phnom Penh Water Supply Authority (PPWSA) asked for understanding from Phnom Penh residents in some communes where water pressure is weak. They assured residents that all supply issues will be resolved by early 2024, but have suggested that residents use water sparingly in the meantime.

  • Khmer ballet documentary debuts April 1

    A new documentary, The Perfect Motion, or Tep Hattha in Khmer, will premiere to the public on April 1. The documentary film follows two intertwined storylines: the creation of a show called Metamorphosis by the late Princess Norodom Buppha Devi (her very last production) and the