With Banking Transformed, NBC Stalwart Retires

The longstanding director general of the National Bank of Cambodia, Tal Nay Im, has entered retirement, which is mandated under Cambodian law at the age of 60.

Ms Nay Im, who had held the position since 1998, said yesterday she had stepped down at the end of December and would retain a role within the central bank as an advisor to its governor, Chea Chanto.

Officials at the NBC said yesterday that a replacement for Ms Nay Im has still not been chosen but that the bank’s secretary general Sum Sanisith would temporarily assume her responsibilities.

Known as a disciplinarian with a fiery temper, Ms Nay Im presided in her 12-year tenure over the proliferation of foreign banks operating here and won plaudits for the modernization of Cambodia’s commercial banking industry.

But key questions, such as how and when to de-dollarize the economy, the ability to manage inflation through interest rate policy and the modernization of bank transactions, remain unanswered after her departure.

“I have had a lot of achievements,” Ms Nay Im said yesterday after a career that saw her work in senior positions for state and private banks, as well as the NBC, over four decades.

Ms Nay Im, who joined the NBC for the second time in 1995 at the head of the banking supervision department, is largely credited by those in the industry with playing a central role in helping rebuild Cambodia’s banking sector in the aftermath of the Khmer Rouge.

She was often characterized as the NBC’s technician having helped to draft much of the central bank’s regulatory reforms in the past ten years.

Ms Nay Im said she had helped “reorganize the banking supervision department” and that she had assisted in “restructuring the banking system” as the economy started to grow in the late nineties.

After the Khmer Rouge regime came to an end in 1979, Ms Nay Im joined the Foreign Trade Bank, which was then state-owned, the following year and helped the government manage the exchange rate of the riel, which was only brought back into circulation on March 20, 1980.

From 1991 to 1994 she worked as managing director at Cambodian Commercial Bank, which was then a joint partnership between the government and Thailand’s Siam Commercial Bank.

During the UN peacekeeping mission of 1992 to 1993, Cambodia’s banking system was under UN control ahead of the 1993 elections, after which Ms Nay Im took up a position at the head of the central banks’ supervision department.

It was here where most say she made a name for herself, in helping to draft the Law on Banking and Financial Institutions, which laid down the regulatory framework for banks operating in the country.

Soon after she took up her position she helped bring in new minimum capital requirements, which dictated that banks increase the amount of capital held at the central bank to $13 million from the previous amount of $5 million.

In the aftermath of the decision 14 banks were forced to close their doors, culling the number of banks in the sector at that time from 31 to 17.

The hasty closure of some of the banks caused depositors to lose their money. Those who lost money staged a series of protests around in Phnom Penh and many blamed the central bank for causing the panic because it had failed to inform the public that banks would close.

That is not the only criticism the NBC has had while Ms Nay Im has been present.

In February 2009, the International Monetary Fund accused the NBC of weak supervision, saying it needed to do more to dissuade banks from risking lending.

And in October last year the credit ratings agency Standard & Poor’s called the NBC too lax in enforcing compliance with regulations which S&P said could lead to high credit risk.

Nevertheless, Ms Nay Im’s legacy will be felt for years to come. Not only has she called for the de-dollarization of the economy, she also helped lay the foundations of an inter-bank lending market scheduled to come online at some point in 2012.

She was also a driving force in drafting legislation on licensing micro-lenders and specialized banks and is credited with growing confidence in the banking sector through policies such as requiring banks to submit a quarterly reports of their 50 biggest high-risk loans.

More recently she encouraged new entrants into the banking sector, despite receiving criticism from those in the banking sector for over saturating the market, and has again upped the minimum capital requirements to $37.5 million.

“I would put her high up,” said Dieter Billmeier, vice president at Canadia Bank. “She is a highly respected expert.”

Mr Billmeier said that Ms Nay Im’s role in drafting the Law on Banking and Financial Institutions meant she had helped create “one of the few laws that helped the country to advance.”

He added that her decision to stay behind the scenes as an advisor was a good one that would allow the central bank to feed off of her experience and draw on the contacts she has made over the years.

Privately, bankers admit that Ms Nay Im is a strict individual who takes no nonsense. But bankers also say she has tirelessly battled to correctly implement the law and has taken out much time to help the banking community understand the law.

“She is known for her technical expertise,” said In Channy, CEO of Acleda Bank, which has gone from an NGO to a specialized bank to a commercial bank in the space of a decade to become one of Cambodia’s market leaders today.

Despite some of the uproar caused by new capital requirements established in 1999, Mr Channy said hard decisions such as this one had helped strengthen the sector.

“The central bank made a good decision,” he said. “Without strengthening the system then, we would not be able to have some of the bigger banks that are coming today.

Indeed the past two years has seen a string of international banks open branches in Phnom Penh, the most recent of which being Malaysia’s CIMB Bank and the Bank of China.

Ms Nay Im’s temporary replacement Mr Sanisith could not be reached yesterday. But other officials at the bank made it clear that she would be sorely missed.

“We regard her as our senior, as our teacher,” said Thai Saphear, an administrative assistant at the NBC Cabinet. “She is still very helpful to the junior people.”

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