With three weeks left before the year-end deadline, it remained unclear how many commercial banks would meet new minimum requirements for capital deposited in the central bank, a National Bank of Cambodia official said yesterday.
By the end of 2010, commercial banks must deposit minimum capital requirements of 150 billion riel, or about $37.5 million, with the central bank, tripling the previous amount of $12 million.
But locally incorporated banks whose international shareholders include a financial institution rated by a reputable credit agency will not have to increase their capital requirement.
At least one bank said yesterday that this provision would allow them to delay increasing their capital deposits until next year.
Tal Nay Im, director general of the NBC, said yesterday that the central bank had not finished processing capital deposits from banks in the sector and declined to say which banks had met or would meet the requirements.
“You have to wait until the end of the year,” said Ms Nay Im.
The decision taken by the National Bank of Cambodia in 2008 to raise capital requirements is designed to tighten and strengthen the banking sector by filling it with more heavyweight financial institutions.
Although Cambodia’s top four banks–Acleda, ANZ Royal, Canadia and the Cambodian Public Bank–already far exceed the new capital demand, some of the banking sector’s smaller members will not reach the requirement.
Kim Yang-jin, CEO of Phnom Penh Commercial Bank, said his bank currently only has $15 million held as a capital requirement at the central bank and would not reach the desired $37.5 million until the end of next year.
Mr Kim explained that because Japan’s SBI Holdings has a 40 percent stake in Phnom Penh Commercial Bank there was no immediate obligation under the law to reach the new capital requirements.
“We have to take time for the preparation for paying up the capital,” he said adding that the bank’s strategy was to gradually increase the amount of capital held at the central bank over time.
He said that his bank had agreed with the NBC to reach the capital requirements by the end of 2011.
“At the end of the next year we have to increase paid up capital to $39 million dollars,” he said.
To date Phnom Penh Commercial Bank has accumulated a loan portfolio of $30 million and deposits of $40 million since launching in September 2008.
Dieter Billmeier, vice president for Canadia Bank, said many foreign banks would not be obliged to pay the new capital requirements and placed doubt on the ability of all 30 commercial outfits operating in the country to compete in the long term.
“You might as well think or imagine that all banks from outside like the State Bank of India, the Vietnamese and ANZ, for example, are definitely not required to increase their capital,” he said.
He added that he would be very surprised if all 30 commercial banks made the new capital requirements and persevered in the long term.
“I think there will be a consolidation and the big ones will pull away,” he said.