The International Monetary Fund has claimed the oversight responsibilities of Cambodia’s central bank “clearly outstrips its capacity and resources” and believes it should consider a temporary halt on licensing new banks.

Human resources, crisis management and enforcement were marked as concerns for the National Bank of Cambodia (NBC) in the IMF report, which called Cambodia’s financial system “relatively shallow”.

“[IMF] staff strongly recommended that a moratorium on new bank licensing be formally placed as long as supervisory capacity and resources are inadequate,” today’s 2010 Country Report stated.

“Robust financial sector oversight is a precondition for a more resilient financial system that would enable Cambodia to meet its economic potential.”

New NBC director general Nguon Sokha said today that there was an ongoing effort to strengthen the central bank, adding it would take a better approach to licensing rather than considering a freeze.

“We need to strengthen the competition in the banking sector,” she said.

The NBC was addressing its constraints through measures such as adding more staff and improving its approach.

Internal changes to improve the effectiveness of its Banking Supervision Department had been made, she said, and the bank was working with the IMF on training.

Representatives from the banking sector remained supportive of the NBC today, but raised some sector concerns.

Canadia Bank vice president Dieter Billmeier said he felt the NBC generally did well in terms of oversight.

“As far as we are concerned, so far so good,” he said today.

But with more than 30 banks operating in the Kingdom, he said a lack of human resources was a concern for both public and private industry players.

One suggestion to alleviate the problem was to make the definition of a financial year more flexible, he said.

Currently, the financial year for banks and companies must coincide with the calendar year, meaning oversight bodies as well as independent overseers are annually overworked for a short period.

Billmeier said a more flexible definition for the end of the year – such as allowing the end of a financial year to coincide with the end of a quarter – would help to alleviate this.

Kookmin Bank Cambodia chief executive officer Jang Ki-sung said that tightening the criteria for a banking licence would also strengthen the players in the sector.

The NBC had also taken policy positions to improve the sector as of late, such as tripling the minimum amount of registered capital for banks to 150 billion riel, or US$37.07 million, at the end of 2010.

As a result, Angkor Capital Bank shareholders changed the firm from a commercial to a specialised bank.

“I think they [the NBC] were going the right way,” said Jang Ki-sung today.

The IMF added in its report that five banks constituted nearly 80 percent of total credit in Cambodia.

The economic recovery was an opportunity to clean up bank balance sheets and reduce vulnerabilities while maintaining sector confidence, it said.

Meanwhile, the IMF projected GDP growth for 2010 would be 6.8 percent, and 6.5 percent in 2012.

“Cambodia was hit harder than comparator countries by the global recession, given vulnerabilities that are in part a legacy of a generation lost by civil strife,” it said.

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IMF hits out at banking oversight

The office of Branch of Bank of China is located on the first and second floor of Canadia Tower after the bank signed a rental agreement in September 2010.

After granting in-approval from the Central bank in November, All officials from the Industrial and Commercial Bank of China have also voiced ambition to run its business in the Kingdom of Cambodia. And the Bank of China received Central Bank approval this year after the Bank of Agriculture and Rural Development of Vietnam and Malaysia’s CIMB Group.

So far, there are 30 commercial banks operating its banking business in Cambodia.

Yang Yun Xia, Head of the Corporate Business Department of the Bank of China, said that customers can open bank accounts and do business at the bank from today on.

There are six branches in Phnom Penh, located in Kramoun Sar, Teukthla in March 2008, Mao Tse Toung in January 2009, Olympic, Chbar Ampov and Toul Kok. Maybank, which is the commercial bank, was established in Cambodia since December 1993 with the opening of its first branch in Phnom Penh.

Abdul Farid Alias, Maybank Head of Global Wholesales Banking, said that “we have been on an aggressive expansion trail in Cambodia with eight branches opened in the last two years and are targeting to open two more branches by the end of 2011.”

He also added that there was a pent up demand for financial services in Cambodia with its economy enjoying a rebound and diversifying from traditional industries such as textile production to tourism and oil exploration.

Maybank expanded its branch because of Cambodia’s economic growth and political stability which are main factor to attract foreign investors to invest in Cambodia. By the way, most of Cambodian people also trust the bank system.

The branch adds to Maybank’s international network, which now spans over 1,750 offices in 14 countries, namely Indonesia, the Philippines, Singapore, Pakistan, Brunei, Vietnam, China, Hong Kong, New York, London, Bahrain, Labuan, Uzbekistan and Papua New Guinea.

Maybank Cambodia has expanded its customer base to include local businesses by providing the full range of banking services for the mass market, local SME and the commercial and corporate sectors. With the aim of expanding the reach and market share in Cambodia, Maybank has embarked on a branch network expansion plan.

Since mid-April, Cambodia’s currency goes down nearly 2 percent against dollar but it has held steady after the NBC has taken immediately action to stabilized Riel by purchasing the riel in a bid to create artificial demand for the notes and raising its value against greenback.

Tay Nay Im, The National Bank of Cambodia’s Director General, said that in general, appreciates staring October. She added that “the riel depreciates seasonally. We do not see anything abnormal.”

The NBC will auction the next $5 million in five separate $1 million lots from September 01 to 10 at the Central bank’s headquarters in Phnom Penh.

Last year, NBC purchased $54 million.

Initially, offering fund is for civil servants in Phnom Penh and it will be available through the banks a standalone bank account with its own ATM card. Having the account accessible through the bank would allow the correct funds to get to the end-users in a timely manner.

Chou Ratanak, the director for the Fund, was quoted by the Post as saying that the new NSSFCS fund aims to manage and insure a social security fund for when a civil servants retires or becomes handicapped, pregnant or is involved in an accident at work resulting in disability or death.

“Moreover, they can save their money through the fund, which will also have an interest rate with Canadia Bank,” Chou Ratanak said.

This year, NBC approved three foreign banks to operate in Cambodia, including the Bank of Agriculture and Rural Development of Vietnam (Agrbank), the CIMB Group and Malaysia and the Bank of China.

Thai Saphear, head of the NBC governor’s office, was quoted by the Phnom Penh Post as saying that a courtesy call from China’s new ambassador to Cambodia, Pan Guangxue, resulted in NBC Governor Chea Chanto giving the green light for the BOC to establish itself in Cambodia as early as the end of this year.

He added that “it’s a positive sign for the bank because they have the green light from the NBC already.” “It’s up to the bank if it wants to open its branch soon or not, but if they want to open soon, it could be done this year.” said he.

Following the in-principle approval, the bank has six months to prepare the required documentation to obtain the full operating licence, he said.

A total of US$ 3 million was to be auctioned off to purchase riel in separate lots Monday, Wednesday and Friday of this week. The first, NBC auctioned US$ 4 million late last month and the second is US$ 3 million last week but NBC’s intervention failed to stop the decrease of riel.

Kang Chandararot, Cambodia Institute for Development Study President was quoted by the Post as saying that the depreciation of the domestic currency is not unique to Cambodia, as the US dollar has strengthened against many foreign currencies, including the euro.

“It’s good the NBC releases US currency to appreciate the riel,” he said. “The riel will likely rise as euro currency recovers in value.”

Mobiles phone will have access to Unity’s SMS-based banking service, including balance inquiry, mini-statements and mobile top-ups, but the phone must be capable of operating a web browser or hosting Unity’s phone application to be able to transfer funds between separate ACLEDA accounts, or to complete bill payments.

It is expected that bank will cut operational costs and reduce queues at its branches by offering mobile banking. It is also able to gain some revenue by charging for fund transfer and balance inquiry and other transactions/

Customers are required to pay its registration service fee of $5, 20,000 riels or 200 baht, and all currencies will be supported by Unity. In addition, there will be also associated fee for each transaction performed.

Phan Ying tong, the bank’s country head, was quoted by the Post as saying in press release Thursday that the opening of the branch is part of its long-term strategy of organic growth to expand its branch network and provide excellent customer service.

Cambodian Public Bank Plc commenced its business in Cambodia on May 25, 1992. Presently, it has 19 branches including 7 in Phnom Penh, 1 each in Preah Sihanouk, Siem Reap, Battambang, Kampong Cham, Takmao, Pol Pet, Bavet, Kampot and Phnom Penh Special Economic Zone and a Service Branch each in Monivong, Phsar Doeumkor and Toul Tom Poung.

According to Campu Bank’s website, as December 31, 2009, Campu Bank’s paid-up capital of USD90 million is the highest among the commercial banks in Cambodia while its shareholder’s funds and asset size amounted to USD176.6 million and USD43.3 million respectively.

Campu Bank is a wholly-owned subsidiary of Public Bank Group which is one of the largest and strongest domestic banking groups in Malaysia.

“Sustainability is a vital vision of ACLEDA bank. It was founded with such sustainability for 17 years ago to provide exclusive financial services for all- both private and public. This continues to be our guiding principle today throughout the 248 branches and offices in the Kingdom of Cambodia and the Lao PDR,” In Channy, president and CEO of ACLEDA bank, said during the grand occasion.

ACLEDA bank has 76 standard offices to provide the most comfortable and efficient facilities for its customers to conduct their financial transactions.

Recently, the bank has launched a top-up service suing mobile-mobile technology and service which allows customers to pay bill via mobile phone.