Customers of Pacific Commercial Bank are complaining that they cannot withdraw money from their accounts and Cambodia’s banking regulatory body acknowledged Tuesday that Pacific is short of cash.
Officials with National Bank of Cambodia—which oversees banks throughout the country—said Tuesday that Pacific is struggling to repay its customers.
The problem stems from a 1998 cash shortfall suffered by Pacific in the wake of the region’s financial crisis and political instability inside Cambodia, bank officials said.
Though Pacific was able to gradually repay most of its customers, it remains indebted to others and, according to one customer, has tried to make up for lost funds with offers of land.
“It’s like a robbery….I don’t need any land. Give my money back,” said a Pacific customer, whose $5,000 deposit with Pacific is apparently frozen while the bank tries to find outside funding.
Phan Ho, director of the banking supervision department at National Bank, confirmed Tuesday Pacific’s offers of land to disgruntled customers.
The customer, who lives in the US and didn’t want to be named, tried recently to withdraw his money at Pacific’s main branch on Monireth Boulevard but was told he could not close the 18-month-old savings account.
“He saw the high interest rates on newspaper advertisements. That’s why he put the money into the Pacific Bank before moving to the US,” said the customer’s uncle, Khmer Solar Co-President Ford Thai. “Now he’s found the bank just doesn’t have money.”
Phan Ho said other Pacific customers have complained of similar problems, but said the bank could easily refinance and increase its capital by selling some of its significant land holdings.
Pacific’s management claims the bank will soon be able to increase its capital and solve disputes with customers.
“We’re expecting to receive funds from three sources soon,” said bank manager Teng Danee, whose Thai father, Som Chai, is a partner with prominent Cambodian businessman Kong Triv.
“We try to our best to satisfy our customers,” Teng Danee said.
Countering allegations of bankruptcy, Pacific’s management said the bank has $7 million in capital. Pacific’s problems come amidst a scramble by Cambodia’s banks to increase their holdings in order to make them eligible for a new license.
A banking law passed last year by the National Assembly now requires banks to have at least $13 million in capital by the end of 2001, and the National Bank is now evaluating license applications for 28 of Cambodia’s 33 banks, including Pacific’s, based on their ability to reach that mark.
So far, three banks—the Cambodia Farmers Bank, the Cambodia International Bank and the Cham Sovan Bon Bank—have been forced to close because of low capital, Phan Ho said.
Teng Danee was confident Pacific would be able to meet the $13 million cutoff in the next 17 months, based on its current holdings, and repay its customers.
But Lonh Hay, deputy director general for National Bank, questioned Pacific’s claims of $7 million in capital, saying the bank should not be suffering its current problems if it is in such good financial shape.
“If they have $7 million in capital, this kind of problem shouldn’t have happened,” he said.
(Additional reporting by Van Roeun)