Clients Clamor For Cash in Bank Closings

Thai Farmers Plans To Close its Branch

A top National Bank official said Monday the bank is committed to strengthening the country’s banking sector and will ensure that the liquidation of recently closed banks is done by the law. But depositors at those banks still do not know when, if ever, they will get their money back.

Tal Nai Im, director-general of the central bank, said the new banking law, which follows international standards, will improve the health of Cambodia’s banking sector. “Now we’re trying to clean up the banking system,” she said.

The bank recently closed 11 of 31 existing commercial banks because they could not meet new minimum capital requirements. The central bank has issued a new license to only four banks and given provisional licenses to 16 others. “Only good banks—which comply with the law—will stay in the country,” she said.

Some depositors at the closed banks, however, say the government has not done enough to protect them.

Several dozen clients of the Agriculture and Commercial Bank sent a complaint to the bank Monday saying the bank should have given the depositors advance warning that their business was in bad shape financially and could close. The complaint demands that the National Bank guarantee that Agriculture and Commercial Bank will pay money back to clients within 20 days.

“The National Bank is entirely responsible for the repayment to the customers,” the complaint states. “The repayment should be done without waiting for the legal procedure.”

But Tal Nai Im said the central bank should follow the liquidation process stated in the law without any exception. “We’re responsible to make the process go according to the law,” she said.

According to the Banking Law, each closed bank must select a provisional administrator to take measure of the bank’s assets and liability, and another agency needs to be put in place to liquidate the assets, collect loans and pay back depositors. The assessment of a bank’s financial situation must be done within three months.

“We have contacted shareholders of the Agriculture and Commercial Bank to inject more money [to increase its assets],” Tal Nai Im said. “We try our best to protect our depositors.”

But the new law, she said, requires that a liquidating bank pay only up to $500 to each depositor if the bank’s liability is larger than its assets.

Officials at Thai Farmers Bank, which was not one of the 11 closed, said the new banking law is making it to difficult to do business in Cambodia. The bank plans to close its Phnom Penh branch and pull out of Cambodia.

Branch Manager Chatchawan Meuangern said his office has informed the National Bank of Cambodia that it will close the Cambodian branch by the end of January. The office was opened in 1992.

A Thai Farmers Bank official said it is hard to make a profit in Cambodia when banks do not have enough loan activities but must pay interest to depositors. In addition, he said, Cambodia’s central bank has changed its banking policy many times, this time increasing the minimum capital requirement from $5 million to $13 million.

“We can not run business…It’s hard to follow the regulations,” the officials said.

He said his bank would rather strengthen its business in China or Vietnam.

The Cambodia branch office has more than 10,000 accounts, and all of the clients will recover their money, he said.

The Bangkok Bank, one of the 11 closed banks, is also leaving Cambodia. The branch office is now in the process of liquidation and expects to close all accounts by March, officials said.

Tsewakun Chanakun, local branch office manager, said his bank has enough capital to settle accounts with all of its clients, but no longer wants to work in Cambodia and chosen to leave voluntarily.

“We’re strong enough and we can get along with up-coming economic growth,” Tsewakun Chanakun said. He said his bank has enough money to operate according to many other countries’ banking laws.

But, he said, Cambodia’s new banking requirements are too tough and staying here is no longer worth it.

“You can not do business here,” the manager said. “The Bangkok Bank has never been sick, but we are asked to take the same medicine as other sick children.”


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