A SECOND bank is shutting down after its owners lost $5 million in just four
National Bank Deputy Governor Tioulong Saumura confirmed the
impending closure - though the bank was not named - saying: "I am sure that with
a massage parlour they would have made $5 million in four years."
million dollars is the minimum capitalization required for a bank in
National Bank officials said that the owners of a small bank
had just decided to give up running it after its losses. They said it was one of
the nominal banks that was licensed a few years ago.
"It is one of those
that doesn't make loans," said Saumura.
The National Bank officials
apparently hadn't decided yet whether a conservator would need to be appointed
to oversee the demise of the second bank. It wasn't clear whether the bank had
debts or creditors.
The National Bank's inexperience in shutting down a
bank has become painfully obvious with the government ordered shutdown of Credit
Bank on May 6. The independent auditors were refused access to the bank's books
and money was withdrawn by the government from the closed bank. There is still
no accounting of the bank's assets and liabilities.
The closing of more
banks has been widely expected since the shutdown of Credit Bank, owned by
Cambodian Canadians, put a spotlight on Cambodia's renegade banking community.
Credit Bank became engulfed in difficulties in March when some of its major
shareholders were sued by their Canadian stock brokerage for $1.5 million they
lost in currency trading.
International bankers and businessmen are
hailing the government crackdown which they say is needed to build confidence in
the banking system.
"It shows the National Bank has decided to firmly
handle the problem of the capitalization and the security of the depositors and
the creditors," said Didier Odin, senior vice president at Banque Indosuez. Odin
said: "I see here it is construed as a scandal. I see it as a strong signal.
Maybe it will incite banks not to take unreasonable risks."
Some of the
banks in Phnom Penh appear to be inert.
At Phnom Penh City Bank a
spokesperson said although they had been open since 1993 they had only about
five accounts and they didn't do business with the public. "We have a few
customers we know very well." When foreigners wander in to cash travelers checks
"we have to tell them we have no system," she said.
Business is no more
brisk at some of the other banks. The Thai-owned Cambodia Development Bank had a
"Closed" sign hung on the door one afternoon last week. A manager who opened the
door said the bank wasn't conducting any transactions that day because they were
Down the street at Global Commercial Bank, the situation was
much the same. Armed guards sat in chairs by the lobby and three or four
employees stood behind the counter, but a spokesman said "the bank is not in
operation." Global Commercial just opened a foreign office in Burma, according
to a report in the Bangkok Post.
Still, Saumura said that there had been
progress among the banks as a whole and a few of the older banks were making a
profit. She said there were too many banks for the size of the current market in
Phnom Penh, but if the banks were willing to wait a number of years for a return
they may make out fine.
In the meantime, more bank closures could be
expected. Some may voluntarily go out of business. Saumura said some of the
remaining 27 banks were undercapitalized and they had been told to get their
finances in order. Will they be shut down? "If they don't have the financial
strength to recapitalize, yes," she said.