Original report from Phnom Penh
18 March 2009
The World Bank and International Monetary Fund both warn that three of Cambodia’s nine largest banks are at risk of succumbing to the global financial crisis and a national recession.
Neither institution will name the banks in question, but both say new economic conditions in global finance have weakened Cambodia’s highly dollarized banking system.
Cambodia’s banks are at risk from a liquidity shortage, the slowdown of deposit growth and a rise in non-performing loans.
Since September 2008, shortly after the global financial crisis, bank deposit growth slowed significantly, turning negative, the report says, while large withdrawals have reportedly been made by firms concentrated in the property sector.
John Nelmes, IMF’s representative in Cambodia, told VOA Khmer in an interview Thursday that several of Cambodia’s banks are at risk. The banks are among the country’s nine largest, which together control nearly 90 percent of deposits.
“The risk in the banking system is now higher than previously,” Nelmes said. “The banking system is coming under increasing strain.”
The World Bank’s report shows similar concerns.
The report, received by VOA Khmer on Thursday, points out that growth in credit has been largely directed at consumption, working capital and real estate, but less at fixed investment.
“The rapid growth of credit for real estate development and construction represents even more risks,” the World Bank report says. “A fall in property prices could create problems for the involved banks, some of which already have high NPLs [non-performing loans].”
“The concentration of NPLs in two banks is also a major concern,” the report warns, without naming the banks.
“Our recent report indicated our general concern about non-performing loans in the financial sector,” Stephane Gimberk, senior economist expert of the World Bank, told VOA by email. “We feel it is critical for the central bank to deepen its efforts at bank supervision.”
Tal Nay Im, Director of the National Bank of Cambodia, agreed with the concern. But she claimed that the central bank has been paying much attention to all financial institutions. She said she was optimistic that Cambodia’s banks are in a good standing.
Some of Cambodia’s top banking executives say they remain in good shape.
Acleda CEO In Channy, ANZ Royal CEO Stephen Higgin and Canadia Bank Vice President Chhor Vann all claimed their banks were stable.
Neither institution will name the banks in question, but both say new economic conditions in global finance have weakened Cambodia’s highly dollarized banking system.
Cambodia’s banks are at risk from a liquidity shortage, the slowdown of deposit growth and a rise in non-performing loans.
Since September 2008, shortly after the global financial crisis, bank deposit growth slowed significantly, turning negative, the report says, while large withdrawals have reportedly been made by firms concentrated in the property sector.
John Nelmes, IMF’s representative in Cambodia, told VOA Khmer in an interview Thursday that several of Cambodia’s banks are at risk. The banks are among the country’s nine largest, which together control nearly 90 percent of deposits.
“The risk in the banking system is now higher than previously,” Nelmes said. “The banking system is coming under increasing strain.”
The World Bank’s report shows similar concerns.
The report, received by VOA Khmer on Thursday, points out that growth in credit has been largely directed at consumption, working capital and real estate, but less at fixed investment.
“The rapid growth of credit for real estate development and construction represents even more risks,” the World Bank report says. “A fall in property prices could create problems for the involved banks, some of which already have high NPLs [non-performing loans].”
“The concentration of NPLs in two banks is also a major concern,” the report warns, without naming the banks.
“Our recent report indicated our general concern about non-performing loans in the financial sector,” Stephane Gimberk, senior economist expert of the World Bank, told VOA by email. “We feel it is critical for the central bank to deepen its efforts at bank supervision.”
Tal Nay Im, Director of the National Bank of Cambodia, agreed with the concern. But she claimed that the central bank has been paying much attention to all financial institutions. She said she was optimistic that Cambodia’s banks are in a good standing.
Some of Cambodia’s top banking executives say they remain in good shape.
Acleda CEO In Channy, ANZ Royal CEO Stephen Higgin and Canadia Bank Vice President Chhor Vann all claimed their banks were stable.
12 comments:
This is very dangerous. If one or two banks failed and people lost their money, there could be a run- on-the-bank for the rest of them, even the good banks.
Withdraw your money now while you can before the back file chapter 11 for bankrucy.
I mean bankruptcy.
ACLEDA is the most stable one...
Trust the bank, it means we help our country. Withdrawing money is a very crazy idea.
The government must act like an guarantor to prevent manic; similar to FDIC in the US the sooner the better. This industry needs to be protected as Cambodian economy depends on banks to continue growing.
yes but 7:41 i dont want to lost all of my hard earned money, if it is from corruption money i not really care that much, anyone know the name of these banks, please share the info i can withdraw my money out too..:(
if a bank can't meet the gov't requirement, why even bother to go into business in the first place? you have to obide by the rule and gov't regulation anywhere, not just in cambodia! hello! stop thinking that cambodia is an exception to the rule in your home country because we are not! god bless cambodia.
The interesting thing in this world wide crisis is how a loss of confidence impacts a highly dollarised but poorly supervised financial system such as Cambodia's. If those dollarised banks are somehow exposed to the international banking system, chances are that there will be a domino effect. i'm also concerned about the NGO's that have their accounts in those banks and how their activities may be in jeopardy. What's happening to the many micro loan schemes? Ironically had we de-dollarised years ago (right after UNTAC left), and with a capable prudential supervisor it might be a different story.
Hohoho.....let me guess of those 3 bank names....but i think more than 3 affected: Canadia bank, Vattanac bank, ANZR bank...possibly...one more is Campu bank....those bank customers mostly tied up with real estate, even its owners are also hold a big portion of its own real estate investment. Some customers loan pretended to be for import-export and other liquid trading, but in fact they borrowed to buy land and back up by their name as trading....some bank don't know and they think their customers is honest in what they report for lending. Some customers even cheating their trading activities and screw up their financial statement with bank and the bank is stupid....don't really know. hahaha
So, if im a depositors i will not trust those bankers....who always said they performed by the rule with dignity, integrity.....shit...
They are lier....
If customers lied in their report and screwed up their financial statement to get the bank loan, what should be the consequences and action from the bankers to punish those lier customers? Comment please.....
1:59pm - the question is how much supervision has been done by the regulators. But even assuming we have the best regulators in the world, they cannot check all accounts/deals/transactions every day,every week or every month. and the banks that want to hide will do it real easy no sweat.People who believe they can safely bank in Phnom Penh are pathetically naive. When the people in power talk about opening a stock exchange in PP (when you can't have faith in banks and banking practices) it makes me want to shout "are you guys chhkuot or what?"
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