Thai-owned Siam City Bank plans to close its branch here next month because of economic problems at home and sluggish business in Cambodia, a bank official said Sunday.
“Any local branch that cannot earn profits must close down,” said Siriporn Reinvetch, an accountant at the Siam City branch, located on Kampuchea Krom Boulevard.
The closure, scheduled for Nov 1, will put 10 local staff members out of work, Siriporn said.
Siam City opened its Phnom Penh branch in 1992, one of the first foreign banks to open a branch here, according to National Bank of Cambodia records.
But business has decreased significantly due to Cambodia’s political instability and economic slowdown since last year, Siriporn said.
The bank, already hindered by a financial crisis at home, cannot afford to maintain its Phnom Penh operations. Siam City banks in Burma, China and Vietnam also will close, she said.
This is not the first bank in Cambodia to experience financial problems this year. National Bank of Cambodia officials have said that several of the country’s 30 banks, including Pacific Commercial Bank, owned by local businessman Kong Triv, have experienced cash flow problems in recent months.
NBC officials on Sunday blamed Siam City’s problems on both the regional crisis and Cambodians’ tendency to avoid banks.
One central bank officer described the problem as the “domino effect,” as many banks are saddled with heavy losses because customers are unable to pay back loans so they close down foreign operations.
But the officer also said many banks operating here have been unable to attract large numbers of customers because of Cambodians’ ongoing mistrust in the banking system.
The majority of bank clients, he said, are large businesses. Many Cambodian people still keep their cash under their mattresses and inside their pillows, he said.
Chea Sok, who recently retired from the NBC as its economic research director, said the closure of Siam City would have little effect on Cambodia’s economy.
