Concerns about the success of the government's banking reforms were heightened this
week, with one bank announcing it was quitting the country and another blocking most
The moves come two months after the government's deadline of December 31 for banks
to comply with the 1999 Banking Reform Law. That stipulated they must lodge a deposit
of $13 million with the National Bank of Cambodia (NBC), effectively the country's
central bank. The previous capital requirement was $8 million.
Staff at NBC were unwilling or unable to comment on the developments or to provide
a list of banks which have not yet been provided with licenses under the law.
UK-based Standard Chartered, which was one of the first to satisfy the requirements
of the law, released a statement March 6:
"The bank is currently in discussions with the [NBC] on its proposal to restructure
the bank's business to that of a representative office." In a letter the bank
advised customers to look into alternative banking arrangements.
Standard Chartered maintained the move came as a result of a "strategic review"
of its operations in emerging markets in a "very challenging global business
environment". The move means only three large foreign banks now have branches
in Cambodia: Maybank and Cambodia Public Bank (both Malaysian-owned) and Credit Agricole
Meanwhile First Overseas Bank (FOB) temporarily suspended the opening of new accounts,
and limited cash withdrawals early March. A staff member told the Post that people
holding balances of less than $500 could withdraw the entire amount.
"If you have more than that you can withdraw perhaps $100 or $200 dollars,"
the staff member said "Negotiations are in progress but we do not know the outcome."
FOB's three branches countrywide remain open, but there have been angry scenes as
customers try to get back their money. The bank's managing director, Bernard Lee,
is currently in Malaysia, and the Post was unable to contact him at press time.
French daily Cambodge Soir reported FOB's Siem Reap director March 5 as saying that
the bank could not pay the $13 million increased capital requirement. He said only
$5 million had been deposited with the NBC. He said there was a possibility the bank
would be taken over by Taiwan-based Royal Group, but if that failed, customers would
receive their deposits from the money lodged with the NBC.
The difficulties at FOB have fuelled speculation of further restructuring in the
banking sector. In a letter to the International Monetary Fund dated December 2001,
NBC noted that: "Three banks have not made satisfactory progress and are likely
to be closed with liquidation procedures in early 2002." NBC officials refused
to comment on which three banks were involved.
Rumours abounded throughout the week, with unconfirmed reports that the NBC was refusing
to cash the cheques of at least one bank. Another unconfirmed report was that Cambodia
Asia Bank may have satisfied its capital requirements at the last minute.
Further rumours March 11 spoke of Credit Agricole Indosuez ready to quit, but the
bank has dismissed these reports. Director Bernard Pardigon rejected that, but declined
any official comment. There were suggestions that reports were being circulated to
encourage its customers to switch banks.
By March 13 Phnom Penh's banking world appeared to have closed its doors with senior
investors, bankers and government officials all refusing to comment on recent events.
Customers are advised to seek information from their branches, but none of the banks
contacted by the Post were in any doubt they would be able to repay customers deposits.