Logo of Phnom Penh Post newspaper Phnom Penh Post - Credit war

Credit war

Credit war

LEADING bankers are concerned that a new offer from Cambodia’s largest lender will undercut market rates, raising the possibility of a price war that could hit profitability.

Cambodian Public Bank (Campu Bank) is set to offer 6 percent interest on loans for customers now financed by other institutions, according to documents obtained yesterday. The offer would not be available to its current customers.

A Campu Bank document said that under the deal a borrower refinancing a US$100,000 loan would save $25,561.34.

Company officials claim the programme is both financially sustainable and common in other countries.

But competitors said yesterday the action could unleash a situation in which banks offer reduced rates in a bid to win back customers. The market rate for loan interest is now 10 to 12 percent, bankers say.

Hwang-DBS country head, Han Peng Kwang, said: “This is definitely below what the market is charging now. If there is a lot of activity, lending rates will be affected.
“Other banks will take protective action to retain customers, and lower interest rates will put pressure on profitability.”

Stephen Higgins, CEO of ANZ Royal, said: “I don’t see how it is sustainable to be lending at rates that are not much higher than they are offering on deposits. Banking is not like the airline business, where price discounting is a viable long-term strategy.”

Higgins also raised questions about why Campu Bank’s existing customers would not be offered the rate.
Canadia Bank vice president, Dieter Billmeier, called the move “a concern”.

“We cannot lower to 6 percent because it’s against market price. Customer deposit rates are high, from 3 to 5.5 percent already,” he said.
He speculated that Campu bank had access to funding from its Malaysian headquarters.

However, a Campu Bank official, speaking on condition of anonymity, said the offer would only be available to select customers, and that although the programme was a new initiative in Cambodia, it was widespread in other countries.

The firm’s 6 percent interest rate was “definitely sustainable”, he claimed, adding it was intended as compensation for those suffering losses incurred by moving banks.
National Bank of Cambodia director general Tal Nay Im said yesterday the central bank did not restrict lending or deposit rates. “It’s a free market,” she said.

MOST VIEWED

  • Government denies claims former Thai PM Yingluck issued Cambodian passport

    Government officials on Thursday denied claims that a Cambodian passport was issued to former Thai Prime Minister Yingluck Shinawatra, who reportedly used it to register a company in Hong Kong. The Hong Kong-based English language South China Morning Post (SCMP) on Wednesday reported Hong Kong

  • Diplomatic passports issued to foreigners to be annulled

    The Ministry of Foreign Affairs and International Cooperation will move to annul diplomatic passports issued to those not born in Cambodia. Analysts say the move may be in relation to reports that former Thai prime minister Yingluck Shinawatra used a Cambodian passport to register as

  • Hun Sen warns Irish MP of EBA ‘mistake’

    Prime Minister Hun Sen on Saturday told former Irish premier Enda Kenny, still a member of the EU nation’s parliament, that the 28-nation bloc should not make a “third mistake” regarding Cambodia by using the preferential Everything But Arms (EBA) agreement to “take 16 million

  • The hairy little heroes saving many lives in rural Cambodia

    IN RURAL Siem Reap province, rats dare to tread where no person will, as these hairy little heroes place their lives on the line each day for the good of the local community. The rodents are the most important members of a special team, leading