130531-Banking & Finance

BANKING &Finance Wing and FTB team up for Angry Birds VISA cards

a Phnom Penh Post Special Report Written and prepared by Stuart Alan Becker and Moeun Nhean

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Knuckey suggests voluntary code t t

HE CEO of ANZ Royal says he’d like to see banks in Cambodia adopt a voluntary code of banking practice to raise industry standards and improve the banking system for customers at every bank.

Grant Knuckey, who serves on the executive committee of the Association of Banks of Cambodia (ABC), said that unlike in the case of “the strong survive” evolution of the telecommunications companies, the same formula wasn’t an optimum paradigm for the banking system.

“For a banking system the optimum is to make sure everyone is strong. Failure in the banking system is not the same as in telecoms. Failure in the banking system can create potential systemic risk for an economy,” he said.

“At present I don’t see any particular risk, but the key is to make sure it doesn’t get there.

If you continue to have a large number of providers targeting a relatively small target population, it is unlikely to lead for a healthy economic outcome for all those banks.”

In Cambodia where only about 12 per cent of the population use banks, Knuckey says it would be difficult to describe the country as generically “overbanked”,

but at the same time, the 35 commercial banks here constitute a crowded marketplace for the amount of available customers, he says.

“When you look at the target space that commercial banks are occupying in Cambodia, the true ‘bankable’ population for commercial banks is not that large, and is in my view over banked, even though the population of the country overall is not overbanked. There are too many providers all targeting

With the Association of Banks in Cambodia, he is taking the lead in the development of a code of banking practice.

“This is a hallmark of any good mature banking system.

You’re attempting to impose good standards on yourselves. It means things like setting baseline standards of the way that customer accounts will be operated, the minimum obligations of banks and the way complaints are dealt with.

“I think the time is right now for Cambodia to look at something

“There are too many providers all targeting the same customers – which in the short-term is good for the customers, but in the medium-term is unhealthy for investment and the system” the same customers – which in the short-term is good for the customers, but in the mediumterm is unhealthy for investment and the system,” he said.

While some people would look at regulation as a way to address the issue of so many banks operating in a relatively small market, Knuckey says the Cambodia banking industry needs to move toward greater selfregulation in terms of standards.

like this and personally I’m quite determined to lead the charge on that because everyone will be a beneficiary,” he said.

He said there’s a supervisory challenge among the large number of banks in Cambodia, which banks must take some ownership of.

“It is increasingly difficult for customers to make an informed choice. If you put a code in place that all banks must sign up to and

ANZ Royal CEO Grant Knuckey.

adhere to, you’ll raise the bar for the entire industry, and I think that’s important.”

With the recent development of a National Arbitration Centre, Knuckey said that organisation

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to benefit entire banking industry could develop and provide an industry-level dispute resolution mechanism.

Some examples of what Knuckey suggests should be targeted are the imposition of penalty fees in a non-disclosed way, in cases where an unaware customer suddenly gets charged a banking penalty.

“This is the obligation of disclosure. You’re trying to ensure full disclosure so that the obligations of a bank to its customers are well articulated and understood”.

Asked to differentiate ANZ Royal from other banks in Cambodia, Knuckey said its point of difference in consumer banking was the level of customer service, and in corporate banking it was the relationship-based approach of the bank.

“I believe we have the market leading level of customer service in Cambodia. It is about the quality of the interaction you have and that ultimately comes from having the best trained people in the market. We put a huge amount into training,” he said.

Knuckey says ANZ Royal is on a strong growth trajectory, but not by opening more branches because he believes 10 years from now a great deal more of banking transactions in Cambodia will be electronic.

“In our view in the medium term, the best delivery channel for our customers won’t be more and more branches, particularly as Cambodia transforms from a cash economy to more electronic economy,” he said. “Increasingly the preferred and channel for consumers and business, as well as the economic channel for banking provider, will be electronic. For us, and it’s not the same for every bank, over-investing in physical branch infrastructure would be

10 years and it will be toward greater use of electronic channels.

I would think Cambodia will do that in an accelerated way.”

Knuckey said ANZ Royal’s overall strategy is based on “primary customer segments” including institutional clients, the top end of Cambodian corporates and the international community.

In the mid-market commercial segment, the focus is on working with local Cambodian corporate customers and using ANZ’s regional relationships to support

The other important segment, he says, is consumer banking where ANZ Royal is targeting what it describes as the “emerging affluent” customer.

“These are people who are building their wealth. They may be young professionals or business owners, but the common element for all of them is they are looking to build their wealth. That’s the target for us in consumer banking.”

ANZ opened an office in Yangon in April, an office which, along

“For a banking system the optimum is to make sure everyone is strong. Failure in the banking system is not the same as in telecoms. Failure in the banking system can create potential systemic risk for an economy” inconsistent with our strategy and not likely to be economic.”

Knuckey says Cambodia is not going to transform from a cashbased to an electronic economy overnight.

“But equally we are not setting our strategy for next week: we are setting it for the next decade.

We have to set that strategy with a view to where Cambodian banking is heading over the next

the supply chain.

“Our target and positioning is around customers who are part of the supply chain of larger customers, and they may be suppliers to or buyers from large multinationals who are already our customers.”

Knuckey said there are also industry-specific areas of focus such as agriculture that are the focus of attention.

with ANZ’s significant presence in Laos, is under Knuckey’s leadership.

“We’re in the beginnings of what will be a long term process of learning as much as we can about that market and looking for ways we can monetise our presence in Myanmar,” he said.

“What I’ve found very pleasing so far is the sheer amount of interest from ANZ’s customers around the

world in Myanmar and various opportunities there. I don’t think by any stretch it will be a straight line trajectory, but it is still clearly a positive trajectory and the amount of customer interest is a pleasing sign.” he said.

From the current small representative office in Yangon, Knuckey plans to eventually have a full-scale operation in Myanmar.

“We will scale up at the pace the regulator allows us to. If you look a decade in the future, Myanmar should be a substantial part of ANZ’s presence in the region and we‘re willing to take the time to get us there.”

In addition to his executive committee role at the Association of Banks of Cambodia, Knuckey also serves as president of the Australian Business Association of Cambodia (ABAC) and is working on a plan to work together with other Australian business associations in Vietnam and Laos to create regional integration between the chambers.

“We’d like to get a blueprint in place for taking these three Australian business chambers to the next level, more professional organisations,” he said. “They won’t be one entity, but we’re going to work together on what will be a relatively common blueprint for the future strategies BF of these chambers.”

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FTB and Wing partner to bri

Topping up a VISA card can be done by mobile phone or internet

T

HE new agreement between Wing and FTB will enable people all over Cambodia to buy prepaid VISA cards and get them topped up electronically through Wing’s mobile payment system.

The agreement means that it is going to get much less expensive for people to send money to people even in rural Cambodia from anywhere in the world through Wing’s existing Cambodia-wide network by topping up the VISA cards from anywhere.

When Wing CEO Anthony Perkins needed to add Cellcard to the list of mobile operators that could be topped up through Wing’s service, he contacted Dan Felsing, who was then working for Cellcard and they became friends.

Since then, Felsing joined FTB, saw an opportunity and got in touch with Perkins about a possible agreement that has now come to fruition.

According to Perkins, Wing’s first phase of the project is to help FTB by making it possible for Wing customers to top up prepaid VISA cards and launch the VISA card offer to all 440,000 existing customers.

“Our customers can get a prepaid visa card that they can top up anytime through our Wing distribution,” Perkins said. “You’ve suddenly got access to 7,000 outlets nationwide. And the third part is a virtual VISA card. We are working directly with VISA, and FTB, which is the issuer of the card.”

Perkins says the advantage to the public is they don’t have to pay for the overhead of an international bank and decisions are made right here in Cambodia.

“This helps the National Bank of Cambodia which have requested Wing to get involved in international remittance,” Perkins said.

“Phase 2 is for Wing and FTB to launch a

Wing CEO Anthony Perkins.

mass market prepaid VISA,” Perkins said.

In order to differentiate the Wing VISA from the FTB VISA, both of which will be able to be topped up by Wing, Perkins made an agreement with Rovio of Finland, the owner of the Angry Birds franchise.

“In Thailand, one card issuer did it with Angry Birds and ran out of cards,” he said.

Wing is targeting August for the launch of its Wing “Angry Birds” FTB VISA card. Meanwhile, they’re helping card issuer FTB with the added advantage of customers being able to top up their FTB VISA cards via Wing’s service.

With the hearty support of the National Bank of Cambodia, Perkins says the service will make it easy, especially for overseas Cambodians to send money back home to their relatives, even in rural areas.

“The National Bank of Cambodia is keen for us to do international remittance especially for migrant workers. There are Cambodians struggling to send money home

and existing methods are so expensive.”

Perkins says Wing is talking to multiple partners like Western Union and smaller players to be involved.

“The end game is once you’ve got a VISA card it opens you up for international remittance from one VISA card to another which effectively gives you an international remittance.

“One of the key things about Wing is the ability to be dynamic and innovative,” Perkins said. “A lot of banks are slow moving technology-wise, particularly the international banks, because they use the same platform and the same processes in numerous countries that don’t necessarily accommodate the nuances of individual nations. Wing can move much faster on technology because of our local team, whether it’s mobile or online payment, enabling people to pay for goods online like a PayPal.” Perkins said Wing is working with multiple banks on becoming the clearing system for any card payment through a Point of Sale (POS) terminal.

“In some cases banks might want to extend their POS network, so how about bank customers being able to use Wing outlets? The POS effectively becomes a mobile ATM that we can use for the banks.”

Perkins said ACLEDA, Canadia and ANZ have the biggest bank POS networks in Cambodia, consisting of credit card machines that banks issue to restaurants, hotels, supermarkets and other businesses that need to offer credit card payment facilities. He says Wing has as many POS devices as all the banks in the nation put together with some 7,000 machines now in operation for printing pre-paid phone top up vouchers.

“We are looking to take on bank POS networks either to run it for a bank, or to extend it for a bank,” Perkins said, adding that at least two banks have already expressed interest.

He believes the mass market VISA card with low fees will be winning strategy.

“By making it mass market we can harness our very large customer base and make our fees very microscopic and only five per cent

of the country has a bank account. There is still a massive opportunity for people who are currently unbanked, and that’s what we are here for is to bank the unbanked, and give services to everybody in the country.”

Perkins said Wing strategy was set up to help the Cambodian people easily move money around, even in small amounts and for ordinary rural citizens, but that the same strategy applies to larger players.

“We were set to look after the little guy, but also by doing that, we are developing such cool products that they are actually relevant to the big guy as well.”

Perkins said people can open a Wing account for $2.50 and after that can have a zero balance and zero monthly fees, yet with the same security as a bank.

“Wing has the same security as a bank because the money does sit in a bank. You’re getting the security, and if you don’t use it, you don’t pay. It is safer than keeping it under the mattress.”

Perkins said Wing has already signed a deal with Tiaxa, a Chilean company that offers credit risk based on historical mobile phone top up records to issue small amounts of phone top up credit and is also looking into the possibility of small short term unsecured loans to its existing customer base in the future.

Even though ANZ sold Wing in November 2011, ANZ still holds the license and holds all of the Wing customer deposits, Perkins says the current agreement with ANZ is not exclusive, enabling Wing to also work with other banks.

“The current agreement with ANZ is not exclusive, so we can work with other banks,” Perkins said. “The National Bank of Cambodia has oversight of Wing, and we send the NBC figures every month, but we work very closely with the ANZ compliance team. We can be a bit more creative and dynamic and we have the ability to create new products and adjust to the market quickly is crucial to Wing. We are effectively a technology company and we employ our own Cambodian technology team. We’ve got a team of about 20 technology BF developers.”

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ing VISA cards to the masses FTB issues first VISA cards in Asia that can be topped up via mobile phone

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OREIGN Trade Bank of Cambodia’s deal with Wing marks the first time in Asia that people will be able to top up their VISA cards with a mobile phone, making the transfer of money to Cambodia easier and less expensive than ever, from anywhere in the world.

The deal is an example of innovators in Cambodia being able to leapfrog to the latest technology, unhindered by existing systems – similar to the way cellular phones leapfrogged past land line telephones here.

Already an issuer of prepaid VISA cards for the last two years, FTB teamed up with Wing two months ago to take advantage of Wing’s distribution network to make prepaid VISA cards easier than ever to get in Cambodia, according to FTB General Manager Guy Anvanith.

“What’s powerful is for the first time we are connecting VISA, FTB and Wing, the whole of Cambodia will be connected to the financial services of the rest of the world,” Guy said. “Without Wing we would never have been able to reach a thousand outlets in a short period of time. That’s why we found this opportunity to work with Wing very timely,” Guy said.

“We are bringing a product that makes service accessible across the world to Cambodia through a formidable system which has developed over the years,” he said.

According to the agreement, FTB and WING will sell co-branded VISA cards through all 1,000 Wing Cash Express outlets and FTB branches across Cambodia.

Cardholders will be able to top up their VISA cards at any of 6,000 total Wing outlets, just like they top up their mobile phones.

Wing will start distributing the FTB-WING co-branded VISA cards to the 1,000 Wing Cash Express outlets in August.

Guy says that FTB wanted to offer prepaid VISA cards that students, businessmen and travellers could get easily. He hopes Cambodia will soon be flooded with VISA cards.

FTB’s Project Director for Cash Card Distribution & Mobile Payments Dan Felsing, who has been working on the project with FTB’s Senior Manager for Card and E-Banking Ros Sokha since he joined the company three months ago, says you don’t even need a bank account or collateral to get the VISA card.

“This project puts Cambodia as a trailblazer of new technologies,” Felsing

said. “It is FTB and Wing who are also both front runners in their respective spaces as market leaders. This puts Cambodia in first place.

Even the US doesn’t have this. It is brought to you by a bank that is an innovator and a mobile money service that is also an innovator.”

The least expensive pre-paid VISA card can be obtained for $3 and can be topped up with any amount.

Personalised cards come in two levels, blue for a minimum initial load of $500 and gold for an initial load of $5,000 or more.

“The $3 prepaid card is good for gifts and online purchases. You can also withdraw money for free at FTB ATMs,” Felsing said.

Currently, customers can purchase an FTB prepaid Visa for a minimum of $23.

The $23 card comes with a balance of $20, with a $3 charge for the plastic, and is available in a few minutes at FTB branches or with select merchants. The blue and gold cards are available the next day, or in two hours if purchased at the FTB office where they’re produced on the corner of Streets 214 and 63.

To top up the FTB/WING co-branded cards using a Wing account, a customer needs to have balance in their Wing m-wallet.

Customers then have the option of topping up their Visa from their mobile phone or with any Wing CashXpress agent using their 16 digit Visa card number and 4 digit WING pin number.

FTB’s Project Director Felsing had earlier worked with Wing CEO Anthony Perkins when Cellcard Cash became part of Wing.

“We had a close relationship and because of mobile money exposure, I knew what was possible,” Felsing said. “One of the things I thought of was why

bank to back these cards and be the issuer. We knew that FTB was the only bank with prepaid Visa cards, which exactly matches our target customers,” Perkins said.

“We’ve managed to throw all this together in two months.”

FTB’s General Manager Guy Anvanith gave Felsing the green light to make the link with Wing because both Wing and FTB shared the common purpose of reaching people who don’t yet have bank accounts.

“We are like two brothers that are targeted to the unbanked population. Just like Wing, we are trying to reach the unbanked by linking up Wing’s clients. That means this population has a possibility to do banking if they choose to and there are millions of people who can step up to do traditional banking. The other feature, in addition to accessibility to the rest of the world, is that you have a trust and safety feeling because you have a solid bank behind it,” Guy said.

FTB already has ATMs with biometrics technology, enabling people to access cash just with their fingerprint, as well as internet banking.

“In terms of technology with our product portfolio, we have ATMs with biometrics technology, we have internet banking and we have cards. What we were missing was a mobile link.

By hooking up with Wing we have the fourth leg. The next step would be to make everything much easier to use. No other bank would have all these products,” Guy said.

“One thing that is really great about this is the minimal investment. It is just hooking it up. It is amazing, and all the systems are in place. Up until now, you have had plastic only confined within Cambodia. Visa makes it accessible to the rest of

VISA partners, from left, Wing CEO Anthony Perkins, FTB General Manager and board member Gui Anvanith, FTB Senior Manager for Card and E-Banking Ros Sokha and FTB Project Director for CashCard Distribution and Mobile Payments Dan Felsing.

fee is $1.50 currently and Perkins says the fee for topping up the VISA cards is likely to be between $1.50 and $2, but is still being discussed.

An estimated $1 billion per year comes to Cambodia by transfers, with an estimated one-third of that amount going through banks and Western Union, according to Perkins.

“People also bring in bags of cash. Our vision is to replace cash wherever it is and the more electronic transactions we can do, the better. Fees for transfer from overseas to Cambodia will be way below existing

‘What’s powerful is for the first time we are connecting VISA, FTB and Wing, the whole of Cambodia will be connected to the financial services of the rest of the world’ not partner with Wing if possible, and said hey, are you guys interested in doing something?” Felsing sent Perkins an email and the deal was done two months later.

“This was a case where FTB already had the product and in my mind it seemed like a very good fit, with what FTB had already built, and with what Anthony had already,” Felsing said.

Perkins meanwhile had already been talking to VISA, thinking along similar lines.

“We had been working with Visa as to how to do this and VISA said we needed a

the world. From Long Beach California, somebody can top up somebody’s card in Ratanakiri and you can use all the ATMs in Cambodia,” Guy said.

Fees charged will be different at various ATMs, depending on the bank.

Guy said the philosophy was “pay per use”. Both FTB and Wing will make money by charging small fees on the transactions.

“Our conversations have been focused on not making the fees cost prohibitive,” Felsing said.

Wing’s largest transaction

channels,” he said.

FTB’s Guy says technology is moving very rapidly.

“This is a very power tool for us to reach a population we would not have dreamed of reaching without technology, which differs from brick and mortar branches. We are hooking up different distribution channels apart from the traditional. No one from the banking system here has cooperated from a nonbank institution. A lot of it has to do with trust, the understanding of technology, and how to control it.”

The Cambodian Government’s Ministry of Economy and Finance owns 10 per cent along with a local company called Ing Holdings which is related to the AZ group of companies that holds the toll road franchise to Sihanoukville and large real estate developments and has a 44 per cent of FTB and the rest is held by two private individuals.

“We want to open up banking to everyone, no longer a niche player,” Guy said. “We have seven branches, going to 10 by the end of this year. We completed an internal reorganisation last year and we have a retail structure in place,” Guy said.

New FTB branches will open in Central Market as well as Tuol Kork. Further branches are planned in Battambang and Kampong Cham.

Guy said a key for FTB was a very conservative way of managing the bank. Of the $400 million in deposits, $220 million is kept in cash.

“You can be sure that if you are a depositor, that you can get your money back anytime, in any amount.

We provide safety to our customer and we have maintained a very strong capital base with more than $65 million in shareholder equity.”

Guy said FTB posted a 1.7 per cent return on assets and a 14 per cent return on equity, with 1.4 per cent of non-performing loans.

“We are one of the most

solid banks in the country,” he said.

In an interview last week with Guy, Felsing, Ros Sokha from FTB and Perkins from Wing, Perkins said if a Cambodian is in Singapore and has children who need health care in Cambodia, he can top up a VISA card with his mobile phone with roaming, enabling his wife to pay the hospital bill.

“You can do transfers while you’re on the move,” Perkins said.

Guy said people don’t need to keep cash at home, but can just have a card.

Another part of the deal is Wing’s Point of Sale (POS) network, the largest in Cambodia with 7,000 terminals and plans for another 10,000 next year, for a total of 17,000 POS terminals Cambodia-wide.

“Wherever we can get people to accept a VISA card payment, we can provide more places where people can use these cards. One thing is keeping the money safe, but there is also giving them the opportunity to spend the money.”

FTB and Wing plan to issue the Angry Birds Prepaid Visa designs when the project launches in August.

FTB and Wing will share revenues on transactions.

“You’ll be able to use this card immediately and reload it immediately. We’re working on a merchant aggregator where their terminals are also Visa BF certified.”

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HwangDBS bank bullish on Cambodia t

HE General Manager of Hwang DBS Commercial Bank, Han Peng Kwang, says the Malaysianbased bank’s rapid growth since 2009 has made him optimistic about the economy in Cambodia.

“We are bullish about this country in terms of growth in the economy,” Han said.

“That’s why the chairman set up this bank four years ago and that’s why we are in the process of expanding our branches. We want to capture more of the market share and assist more people to improve their businesses and livelihood. ,” Han said in an interview last week.

HwangDBS first opened in Cambodia in July 2009 and now has four branches and 80 employees.

Han intends to grow HwangDBS into a mid-sized commercial bank, on a gradual, step-by-step basis in the medium term.

“Our main target is small and medium sized enterprises (SMEs), but specifically focused on medium sized

customers such as retailers, wholesalers, businesses in the construction sector, service sector, manufacturing sector, hotels and other industries.

As long as they are bankable we will support them.”

Han says HwangDBS offers business loans, retail loans, individual loans, and retail mortgage or housing loans.

“We are giving housing loans for all types of landed properties, apartments and condominiums. However, the properties to be purchased must have a ‘Hard Title’ issued by the Land Management Office, not by chief of the Sangkat or commune,” he said.

The loans and accounts are in US dollars “because at this time the country is still very dollarized”, Han said.

“We are catering to all types of business but not certain discouraged businesses like karaoke and casino.”

HwangDBS Commercial Bank Plc is a 100 per cent foreign owned bank established by financially sound and leading integrated financial specialist group, Hwang-DBS (Malaysia)

Berhad. One of the major shareholders of Hwang-DBS (Malaysia) Berhad is DBS Singapore. DBS is the largest bank in Southeast Asia by assets and the bank’s strong capital position, as well as “AA-” and “AA1” credit ratings that are among the highest in the Asia-Pacific region, earned it Global Finance’s “Safest Bank in Asia” accolade for five consecutive years, from 2009 to 2013.

For business strategy, Hwang DBS gives loans to all kinds of local businesses such as retailers and wholesalers of consumer goods, electronics equipment, machines, spare parts and other medium sized business such as car washes, garages, hotels and restaurants, contractors, manufacturers and businesses linked to the agriculture sector.

The Bank provides our depositors with ATM cards for their convenience. We have plans to introduce internet banking and phone banking in the future, Han says.

The bank has an ATM expansion plan, with five now in place.

General Manager of Hwang DBS Commercial Bank, Han Peng Kwang.

“We are also in the process of putting in more ATMs in Phnom Penh City to provide more convenience to our customers,” he said. “We also want to open more branches going forward, venturing out into the larger provinces including Battambang, Siem Reap and Kampong Cham.”

Han said the bank also plans to launch a trade service product to complement their existing services.

“We currently have Term Loan, overdraft and housing loans, and we want to expand that to provide more services to our customers.”

Han hails from Malaysia, from the state of Perak located just below Penang.

Formerly with a commercial bank for over 14 years before he joined HwangDBS, Han first came to Cambodia in 2005 and has seen the landscape change considerably since then.

“Now there are so many high-rise buildings throughout the city and the country has received lots of foreign investment particularly from Korea and China,” he said.

As for operations, Han said HwangDBS has a team of

marketing officers who go out and introduce the bank in the neighbourhoods.

“Our branch managers also go out and introduce our bank to all the people in the street. Moreover, satisfied customers will also start recommending their friends and relatives to bank with us. ” HwangDBS intends to recruit as many Cambodians as possible to fill up the positions in the Bank.

“Maybe one day, one of them will be able to take over my position as well,” Han BF said.

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Maruhan Japan Bank focuses on service Q and A with General Manager Onishi Shizuo What segment of the marketplace is MARUHAN Japan Bank going for?

We are currently focusing on a customer base of mainly small and medium sized, local Khmer businesses who have taken out personal (mainly savings) accounts.

The areas of the marketplace that we are currently working for are: Students and other young people - for loan products to finance their education of their first bank account, agricultural business: predominantly rice millers, importers and exporters as well as loan and business products, clinics, hospitals and medical business products, manufacturing, hotels and construction. The owners and staff of these kinds of businesses are our customers, often with commercial loans.

How long have you been in Cambodia?

We opened on May 22, 2008.

What currency accounts do you offer?

We have a comprehensive range of accounts in USD, KHR, JPY, EUR, GBP, AUD and other major global currencies for personal and business customers. For personal customers we have everyday accounts that allow day-to-day money management efficiently and securely and these accounts include an ATM card and a passbook.

Our premium saver accounts are interest¬bearing accounts with the option of a savings passbook and an ATM card. We also have checking accounts. With our tiered investment accounts, the more customers save, the higher the interest we give them. This is great for maximizing interest returns on money held for short periods.

We also have term deposit accounts which are fixed-term deposits that offer a low-risk way for investors to earn a competitive, guaranteed rate of interest on deposits. We also have personal loans which can help people finance special purchases or cover essentials such as children’s education fees. There is no minimum or maximum size of loan and all loans are subject to discretion. We work hard to ensure we lend responsibly and one of our “relationship officers” helps people make the best financial decisions based on their particular circumstances by providing effective advice on how much they can afford to borrow based on an assessment of their

disposable income.

For business customers including sole proprietors, limited companies and organisations we have checking accounts, tiered investment accounts, term deposit accounts with terms from one to 36 months and a “Term Deposit Certificate” can be used to secure credit facilities such as letters of credit, bank guarantees, shipping guarantees, overdrafts and other requirements.

Maruhan Bank also offers corporate and commercial loans which are appropriate for starting, managing or growing businesses of any size. We provide quick decisions and appropriate and flexible repayment terms and we accept a range of collateral types.

Interest rates are competitive and flexible (fixed or variable). The application process is designed to be simple and easy to understand is supported by our dedicated and highly trained Relationship Management Team.

Our overdrafts provide short term support for a business in times of cash flow difficulties, when additional working capital is required for business development or to help consolidate existing debts. Interest is only paid on the amount drawn.

We issue bank guarantees which are guarantees issued by us for an account holder where we agree to pay a beneficiary up to a guaranteed sum when a valid claim, as dictated in the terms of the bank guarantee, is received. These are usually issued in lieu of advance payments or cash deposits. This guarantees a customer’s capability to meet payment obligations and makes them a more credible and attractive trading partner. It also removes the necessity for a customer to raise cash to meet deposit requirements and allows funds to be used to support working capital requirements.

Our private banking is our unique elite banking and wealth management service provided by a dedicated private banking team who commit to providing customers with a personalised and integrated service based on unique, long term relationship that allows us to partner with them to provide unparalleled quality advice and unprecedented levels of our customer service.

For example, private banking customers get a waiver of minimum balance and other fees, offsite account opening and management

at their home and/or office, free account opening and waiver of maintenance fees, preferential interest rates, specially designed personal and business passbook(s), increased daily ATM withdrawal limits (up to US$5,000), prioritised customer service, a fully cashsecured overdraft facility on request, unlimited over-the-counter deposits and withdrawals.

We also have interest bearing deposit accounts for financial institutions, a unique range of interest bearing deposit accounts that offer highly attractive and preferential returns on investments made by financial institutions.

These targeted, customercentric accounts are serviced by a dedicated relationship management team, who are specially trained to serve banking professionals.

What would you like the public to know about MARUHAN Japan Bank?

We have superior and unprecedented levels of service.

We classify ourselves as experts in ‘relationship banking’. This means we focus on providing our customers with unparalleled standards of service, performance and global reach. We take the time to know customers and tailor everything to their individual needs.

Each customer has an experienced member of staff to take care of their needs that they can contact at any time and who will be familiar with their financial and banking history, financial aims and needs and who is ready to deal with whatever they need immediately. We have already set new industry standards in this area since entering the market and are committed to continuing to drive up standards of customer service.

ASEAN Strategy – In the last 12 months we have launched our ASEAN FINANCIAL BUSINESS NETWORK with MARUHAN Group overseas network offices in Myanmar, Lao PDR and Singapore. We now have a strong presence as a sophisticated financial services provider across the ASEAN region and are the only international banking group to have this kind of financial business service network in ASEAN. We see ourselves as an industry pioneer and are serious about continuing to deliver on the promise we have made to revolutionize the ASEAN banking industry. By 2015, when the ASEAN member nations have

fulfilled their commitment to improve economic integration between the member countries, we plan to serve the new, interconnected ASEAN region as the established leader in its financial sector.

We are the first ever Cambodian commercial bank to have a microfinance business partner (Sathapana Limited) within our Group of companies, and we believe this represents a significant step towards the breaking down of long standing barriers between the commercial banking and microfinance sectors and are proud to be the bank taking that first step.

Is the Cambodian branch part of a larger MARUHAN Japan Bank in Japan? How big is it, and what is its main business?

We are not a branch of Japanese Bank; we are a 100 per cent local Cambodian-licensed bank and our head office, in Phnom Penh, is staffed by expert Japanese and Khmer banking professionals.

MARUHAN Japan Bank is part of the Japanese MARUHAN Corporation Group.

What sectors of the Cambodian economy do you see as interesting and exciting?

We are encouraged that Cambodia’s economy continues to record solid growth and that GDP continues to accelerate. Garment exports and the tourist, real estate and construction sectors are all causes for optimism. We also expect to see increases in agricultural product exports; especially rice, rubber and maize, following the high priority put on the agricultural sector by the government.

Do you have an extensive loan portfolio and if so, what sectors do you like to lend into?

As well as personal loans to our private customers, we lend extensively to a wide range of industrial sectors and we work hard to ensure we have balance of sectors across our loan portfolio (i.e. the educational, agricultural predominantly rice millers/ importers/exporters), medical, manufacturing, hotel and construction sectors.

How many people work at MARUHAN Japan Bank in Cambodia?

There are approximately 100 people working directly for MARUHAN Japan Bank and an additional 1800 officers at MFI

Maruhan Japan Bank General Manager Onishi Shizuo.

Sathapana which is a member of the MARUHAN Group.

What plans do you have for expansion?

ASEAN Strategy – Through our ASEAN FINANCIAL BUSINESS NETWORK, we plan to continue the expansion of our commercial banking and MFI networks throughout the ASEAN region; so that, by 2015, when the ASEAN member nations have fulfilled their commitment to improve economic integration between the member countries, we are ready to serve the new, inter-connected ASEAN region as the established leader in its financial sector.

What kind of customers are you seeking and what kind of services you can do for them? In other words, how do you differentiate from other banks?

We are targeting commercial clients from the educational, agricultural (predominantly rice millers/importers/exporters), medical, manufacturing, hotel and construction sectors for business products and are also targeting the owners and staff of the same businesses as personal banking customers as well as students to offer them first bank accounts.

As well as the superior (unprecedented) levels of serviceand relationship banking strategy that we have in place, and which I outlined earlier, we are industry innovators and have committed to revolutionising ASEAN banking industry. In another step towards delivering on this promise, we are now on the way to launching our groundbreaking, highly sophisticated e-banking services – which I am proud to say will be the first internet banking system in Cambodia to offer full global functionality! This will be rolled out alongside the most sophisticated, global foreign currency (FX) BF services in Cambodia.

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CIMB features special pref A

SEAN-focused CIMB Bank is offering special “preferred customer” status for depositors of $50,000 or more, according to Head of Strategy and Finance Heng Vuthy.

As a preferred member, Heng Vuthy said, the customer will get exclusive services and benefits locally and regionally such as a dedicated Relationship Manager, free access to airport lounges in ASEAN, pre-arrival account opening in ASEAN countries, special discounts at high end hotels, shops and restaurants in ASEAN, access and same recognition at all CIMB Preferred Centres in ASEAN, and more.

“Our preferred centre serves our preferred clients differently from the normal client and you also have a relationship manager; you’re served first and you have privileged rates and other benefits.”

Heng Vuthy says the idea is to target the affluent people in the marketplace.

“We would like high profile people like the CEOs of

the companies and so on.

Expats are also our target here, who travel in the region and we are also looking for Cambodians of a high profile, who may be sending their child to study in Singapore or Australia. We also have an office in Australia.”

A local Cambodian, who has been given big responsibility in the Malaysia-headquartered CIMB Bank, he was born in

Southeast Asian platform while preserving aspects which identify us to the local population,” Heng Vuthy said.

“If you look at the banking landscape of Cambodia, a lot of banks will have a lot of ATMs. For us we also try to see something we can bring to Cambodia for regional leverage of ASEAN. One of the keys is a wealth management product,” he

“Our preferred center serves our preferred clients differently from the normal client and you also have a relationship manager; you’re served first and you have privileged rates and other benefits” Phnom Penh in 1981 and has worked for a number of qualifications including a master’s degree in finance, previously worked at ACLEDA Bank for eight years before joining CIMB in August 2010.

“One of our key differentiators for CIMB is our multi local business model. Our regional model enables us to fully leverage the reach and scale of our

said.

CIMB has linked ATMs in five countries as a regional network so far in Cambodia, Thailand, Malaysia, Singapore and Indonesia.

“Next will be Philippines and Vietnam and then ultimately all 10 ASEAN countries,” Heng Vuthy said.

“With this regional ATM link, CIMB customers can access to more than 5,000 ATMs across the five countries free

of charge and they can get the local currency as they withdraw the money. The conversion rate will be better than at the counter.”

Other differentiators for CIMB are that they were the first bank to launch a dual currency investment (DCI) services and a service whereby customers deposit in US dollars and they have a passbook that records the amount they have according to the price of gold.

CIMB also offers foreign currency accounts in Australian dollars, Euros, Japanese Yen, New Zealand dollars, British pounds, Singapore dollars, Thai Baht and Cambodian Riel.

“For DCI the customer can choose whether they want good conversion rate or high interest rate for this pair of currency. With this product we need at least $25,000 to start with. That’s why we target a more affluent client,” he said.

CIMB has 1,100 branches in 17 countries including China, the UK, India, Sri Lanka, Taiwan, Korea, Brunei and Bahrain. Here in Cambodia, CIMB has 11 branches, with seven in Phnom Penh and

CIMB Head of Strategy and Finance HengVuthy.

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ferred customer privileges branches in Siem Reap, Sihanoukville, Battambang and Kampong Cham.

There are also 11 offsite electronic banking centres – consisting of ATM, Cash Deposit Machine, and Cheque Deposit Machine, 10 in Phnom Penh and one in Siem Reap.

As for expansion plans, CIMB in Cambodia has already created 11 branches since 2010 and has a strategy of growing those offices first before adding additional branches, but they will add some electronic banking centres.

CIMB also offers tier rate savings accounts, mortgage

financing, interest-paying current accounts, business loans, and overdraft and trade finance facilities.

“In the near term we are looking to capitalise on this and building our customer base and growing them. For the near term we are looking at especially focusing on SMEs, the mass affluent market and the growing of the massaffluent-to-be. And in the long term, we are looking at deploying investment banking.”

Heng Vuthy says CIMB has “investment banking blood” owing to the bank’s background,

something to watch for in the future.

“The CIMB group acquired a lot of commercial banks in Indonesia, Thailand and Malaysia and quite a number of commercial banks.”

CIMB Bank PLC has 170 employees, grown from 30 when Heng Vuthy joined in 2010.

“We focus on the sales organisation, training and sharing sessions.”

The CIMB view for the Cambodian economy is very upbeat, he said.

“There is still a lot of op to grow in Cambodia. As reported from World Bank,

only less than 10 per cent of the population has a bank account. Cambodia is a very young population, mostly under 30 years old and we can see a mass affluent growth in the market.”

For the banking industry, Heng Vuthy thinks the National Bank of Cambodia’s annual report tells the story.

“For last five years in the NBC annual report the growth rate has always been 30 per cent and above.

You can see also with the ATMs and cash deposits, the population is not shy to accept these new technologies.”

CIMB’s Heng Vuthy answers questions about products, currencies and interest rates How many branches does CIMB have total?

CIMB Group has more than 1100 branches across 17 countries (Malaysia, Indonesia, Thailand, Singapore, China & Hong Kong, Vietnam, US, UK, Brunei, Bahrain, Myanmar, Cambodia, India, Sri Lanka, Australia, Taiwan, Korea) How many branches in Cambodia?

There are 11 branches in Cambodia; 7 in Phnom Penh and 4 more in Siem Reap (Tourism Area) city, Sihanouk Ville city (International Port), Battambang city (Rice Mill Area), and Kampong Cham city (Rubber Plantation Area) and 11 offsite selfservice terminal and continue growing.

When did CIMB first open in Cambodia?

CIMB Bank PLC commenced operation in Cambodia in November 19, 2010 with the opening of a first branch of commercial banking in the heart of Phnom Penh city.

What currency accounts can people have at CIMB? USD, EUR, JPY, AUD, NZD, SGD, GBP, THB, and of course KHR. How do you differentiate CIMB in the marketplace from other banks?

One of our key differentiators is our multilocal business model – which we have successfully implemented across our ASEAN franchise and which we do the same in Cambodia. Our regional model enables us to fully leverage the reach and scale of our Southeast Asian platform while preserving aspects which identify us to the local population, allowing us to understand and cater for their specific needs. For example, we strongly believe in the empowerment of local leadership and the development of products and services which are

familiar to local cultures and practices. In doing so, we hope that the population will treat us not as a foreign bank, but as a local bank with regional resources.

In term of products; on top of our basic deposits, loans, and trade facilities we are continuing introduce wealth management/ investment products for our growing affluence customers. Eg DCI (first bank) and GDA. In term of services; in 2012, we invested in our corebanking system for trade finance module; which has the ability to enhance our customer service capacity, thus improving value for customers. We launched our preferred banking and regional ATM service, which is another regional benefit for our existing and potential customers, enabling them to enjoy our CIMB Group’s ASEAN network and regional ATM network of more than 4,800 ATMs across the region with no service fee charged.

Recently early 2013, CIMB Bank PLC became the first bank certified by ISO 9001:2008 for its customer services. The evaluation process on our customer service process including account management, counter operation, business continuity plan other processes have been conducted by Guardian Independent Certification (GIC), a United Kingdom Certification Body. This is to ensure that we have a proper as well as consistence procedure in place for our customer services and business continuity plan across our 11 retail branch networks.

What are your expansion plans for Cambodia?

Our commitment to and investment here as reflected by our rapid deployment of branches speaks for our confidence in the growth prospects in Cambodia. We rolled out 11 branches in our first two years of operation complemented by a network of offsite self-service

terminals and continue growing.

With our infrastructure, human capabilities and branch network in place, complemented by the full range of products and services [from tiered rate savings, mortgages, Preferred Banking, interest paying current account and business loans and overdrafts to trade finance], we are now in a position to grow our customer base as well as better understand their banking needs.

What kind of loans do you provide? Property?

Automobile? Business?

• Business term loan to finance business capital investment (CAPEX) as we as OPEX. • Personal term loan to finance personal needs including automobile and so on.

• Housing loan to finance residential property (which offering with more flexibility for our client in term of security, repayment etc).

• Overdraft for our customers’ working capital financing, and • Trade finance facility to facilitate across border trading activity.

What kind of customer is

your target customer?

For the near term, we will focus on building up our commercial banking franchise focusing on SME and mass affluent and mass affluent ‘to be’ individuals.

In the longer term as the Cambodian economy developed, we will explore other financial services e.g. investment banking, etc in line with and as part of CIMB’s universal banking platform.

Do you have any new products and services you would like to talk about?

DCI product – to facilitate our customer who need foreign currency in the future to save with us and as of yesterday USD-JPY DCI we pay 26 per cent pa.

FCFD – is another alternative saving/ investment for customers who holding or using currencies other than USD; we pay AUD 5.5 per cent pa.

Trade Finance – We have deployed TF module in our core-banking system to smoothen our customer service.

Flexible Housing Loan: three options for customers to maximize their needs with a high margin of financing, fast approval process, lower costs and they will be

CIMB is offering special treatment for preferred customers.

able to get a bigger house with gradual incremental repayments.

What’s your opinion on the Cambodian economy? Does the future look good? Why? We are positive on Cambodia in view that it is relatively under-banked as per a recent World Bank report which states that only 4 per cent of the population has a bank account, has a very young population averaging less than 30 years old and most importantly, a rapidly developing economy facilitated by open and

progressive government policies.

Growing acceptance of banking services and products as reflected by the rapid growth in deposits and loans averaging over 30 per cent annually over the last 5 years in the banking industry; in addition, Cambodian consumers are not shy to adopt new products and services as reflected by amongst others the rapid expansion and adoption of selfservice terminals. This is further facilitated by a very progressive and supportive National Bank of Cambodia. BF

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Success factors for Campu bank reflected in its leadership style O

NE of the reasons Cambodian Public Bank has been successful is the strong corporate governance and policies advocated by Public Bank Group chairman, Tan Sri Dato Sri Dr Teh Hong Piow, who just celebrated his 83rd birthday on March 8 in Kuala Lumpur.

Campu Bank Country Head Phan Ying Tong says the chairman is beloved by both employees and the public, a sentiment he says has enabled the bank to grow over the years.

“We love a boss like him: generous and always rewarding.”

Another of the chairman’s contributions is a culture of rewarding people who turn in good performance, according to Phan.

“One very important quality of Tan Sri’s leadership is he rewards people who can perform; who achieve results.

So that shapes the culture of the bank.”

Phan says that the culture goes right through Public Bank and its Cambodian subsidiary, Cambodian Public Bank, also known as Campu Bank.

Phan says a good culture will ensure that any organisation will go in the right direction and consistently perform.

“We are talking about our responsibility. This is a culture that has been inculcated into the staff.

Everyone takes up their own responsibility and is happy doing their job responsibly. Everyone has a goal to be efficient and achieve the goals set by the chairman, and at the end of the day, they are handsomely rewarded,” Phan said.

“We inculcate a performance-based culture where rewards are correlated to the delivery of superior performance and we pay good bonuses, grant overseas trips for all levels of staff and we offer career paths and advancement.”

Phan said the meritocracy-

driven career progression coupled with priority accorded to internal filling of vacancies by existing well-trained, qualified and experienced staff have created a workforce that is passionately performance driven.

“Our people are seeking career paths and advancement within the bank. This is evident from the low staff attrition rate of 7 per cent in 2012 and 100 per cent of our managerial appointments were promoted from within Campu Bank.”

In 2012, Campu Bank earned $35 million in beforetax profit, up more than $5 million from 2011.

Phan thinks that the trend will continue because of the good fundamentals of the Cambodian economy.

“I think Cambodia’s economy will continue to do well with GDP growth of not less than 6.5 per cent in 2013. A lot of foreign investors continue to come in possibly because doing business elsewhere is getting more costly like in China and also due to the favourable conditions and incentives offered by the Government” Phan said.

“We also see in Cambodia more Japanese-owned manufacturing companies coming in a big way. May be Cambodia is beginning to see a change from the traditional garment and textile based economy to a more technology based economy.”

He gave the example

technology-based direction and not so much a labourintensive base economy in the long term.”

Phan said the development of a technology-driven manufacturing base is complimented by the parallel development in the construction and real estate sectors as well as the agriculture and rice sector.

“The prime minister is now talking about rubber and I think this is a very good choice to promote the economy given the suitable climate of the country. We don’t just rely on just one agriculture product to grow the economy.”

Phan says there is more and more competition in the banking sector which is getting keener than other sectors today.

Phan says bankers need to maintain a high degree of professionalism to ensure that loan borrowers make a more informed decision. For example, borrowers should be advised as to how much they should borrow based on the actual business needs or private investments required and not to over or under lend to the borrowers.

With more competition coming into play through entry of new banks and opening of new branches by existing banks, bankers should not sacrifice asset quality for quantity otherwise they would be saddled with bad asset quality which will translate into bad debts.

Campu Bank has 25

“ For us we say this is our job, we will finish it no matter how many hours it will take.” of the Japanese-owned Minebea Company which manufactures small motors at the Phnom Penh Special Economic Zone.

“I think Cambodia is starting to move into a more

branches throughout Cambodia and Phan says there are plans to open more branches in strategic and viable locations.

“We will continue to expand and of course, we

Campu Bank Country Manager Phan Ying Tong.

will continue to enhance our human capital which is still a challenge in the industry.

When you want to open more branches, you need to have the right managers, skilled and experienced staff especially in credit and marketing and so on.”

Some of the coming plans are introducing children’s savings accounts to inculcate savings habit for parents on behalf of their children and also to launch “Customer Care Campaign” to create greater awareness on the importance of good customer services this year as well as ongoing introduction of more promotions for credit card products from time to time.

“For example, we will continue with our tie-up programs with merchants to offer special discount to our cardholders,” Phan said.

“For example, at Almond Hotel you can get 10 per cent discount for food and beverages spent at the restaurant.”

Another of Campu Bank’s

plans is to roll out instalment plans for purchase of consumer and household goods including computers and electrical items but card holders only need to pay by instalments with no interest being charged for the instalments.

Campu Bank will announce the “Merchant of the month” on their website to inform customers where they can get more value for their credit or VISA debit cards.

Another deal is with Sime Darby Medical Centre from Malaysia whereby a very special discount on medical fees will be offered to its Platinum card holders.

Campu Bank employs more than 600 people and is among the top three banks in Cambodia in terms of asset size, business and performance, Phan says.

In 2012, Campu Bank was awarded “Domestic Retail Bank of the Year in Cambodia” for its management excellence by Asian Banking & Finance.

Also in 2012, Deutsche Bank awarded Campu Bank the “USD Straight-ThroughProcessing Excellence Award” for exceptional quality in the processing of payment messages.

Phan expresses optimism in Cambodia’s economic growth for the next few years for a number of reasons, including increasing interest shown by Cambodians to own affordable homes.

“We are seeing more developments in the Special Economic Zones especially in Phnom Penh, Preach Sihanouk, Koh Kong and Bavet, infrastructure developments in the construction of hydro-power dams and stations and bridges, reconstruction of railways and rehabilitation of the roads linking the key

routes for transport and export of goods.

Phan says he’s optimistic about the health of Campu Bank subsidiaries Campu Lonpac Insurance and Campu Securities which he says will also benefit from the favourable economic conditions and development.

“We see more business activities, more flights coming into the country by new carriers, more tourists, and more investors. We hope that the government will continue to promote its liberal business policies and improve the investment climate to make Cambodia one of the most “business friendly” countries in the region which would enhance employment opportunities and improve human capital in the long term.”

Phan complimented the National Bank of Cambodia for regulating the banks efficiently and also for implementing sound monetary and fiscal policy prudence to promote macroeconomic stability, as well as the CDC. “We appreciate the Council for the Development of Cambodia for their active role and competence in promoting competitive and attractive tax incentive program to attract new foreign investments into the country,” he said, citing the granting of tax exemptions for three years each time for a total of nine years.

Another factor in the improvement of Cambodia’s financial landscape, Phan says, has been the introduction of the capital market under the supervision of the Securities Exchange Commission of Cambodia in 2011.

“The capital market has provided opportunities for business enterprises to raise capital for their business expansion in Cambodia. Campu Securities is principally involved in securities trading and underwriting,” Phan said.

One of Cambodia’s challenges today, Phan says, is to nurture and strengthen human capital.

“Human resources make a difference in productivity if you have skilled and knowledgeable staff in every sector of the economy. It is a priority for all sectors of the economy to intensify efforts to build up a strong human capital in Cambodia.”

Phan was happy to have recently completed the Masters degree in Banking from the University of London, with the support of his company and his family.

He said it was an example of the importance of training for people at all levels.

“Learning is the spring board an employee stays abreast with new skills and knowledge, embrace the inevitability of change as well BF as sustain its relevance.”

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ACLEDA CEO helps Myanmar create microfinance association F

OLLOWING a trip to Yangon to attend a microfinance conference sponsored by the Myanmar government and UNDP, ACLEDA Bank CEO In Channy was happy to learn that his suggestion to set up a microfinance association had been taken up a few days later in the capital city of Naypyidaw.

Attending a conference sponsored by the Myanmar Ministry of Finance and the UNDP on May 9 and 10 earlier this month called Emerging Microfinance Sector in Myanmar, Regional Lessons on Selected Issues, In Channy suggested that in order to have good regulation in Myanmar, they could open direct dialogue between the public and the private sector, like Cambodia had done.

“I said they should form an association of microfinance so they could bring the issues to their counterparts,” In Channy said. “The idea is that Cambodia has good regulation on microfinance, because NBC opened direct dialogue between public and private sector, so we can talk and debate.”

After obtaining a microfinance license for Myanmar in February, ACLEDA Bank now has 448 micro business customers and US$57,000 equivalent in outstanding loans, with 338 accounts and a deposit balance of $16,000 in savings, according to In Channy.

The Myanmar office of ACLEDA Microfinance employs 45 people, including 35 Myanmar staff and 10 Cambodians.

“Next month we plan to send 20 people from Myanmar to train in Cambodia. We will do a six week training, with three weeks in the field,” he said.

There are 142 licensed microfinance enterprises licensed in Myanmar which are local, and two foreign: one ACLEDA and the other Aeon Microfinance.

The Myanmar Microfinance Supervision Enterprise (MMSE) operates under Myanmar’s Ministry of Finance and Revenue which oversees the Central Bank, which in turn regulates commercial banks. MMSE is also under the same ministry, but in a different department.

In Channy sat down for an interview last week, having just returned from his threeday trip to Myanmar.

“My suggestion for microfinance in Myanmar was that to have good regulation we should have direct dialogue with private sector, and I said you should form an association of microfinance, and they can bring issues to their counterparts,” Channy said.

Within Cambodia, In Channy says ACLEDA Bank has grown into the position

of market leader because of listening carefully to customers and implementing their suggestions when possible.

“ACLEDA is the largest because we listen to our customers. The customers have provided good suggestions and we care about them and focus on what they need. They advise us to have more financial products, and we introduce new products and services based on customer needs,” he said.

In 2000, ACLEDA had 14 branches and has since expanded to 238.

“The customers asked us to expand to the district level and some districts are remote, so we needed more branches at the commune level. Then we added ATM machines that function 24 hours so people can access their accounts on a daily basis,” In Channy said.

The next service introduced was ACLEDA Unity whereby account holders could use their mobile phones from home to perform funds transfers, check balances, pay suppliers and bills.

“This is the product of listening to the customer and implementing it. In our case we listen, especially if the customer suggests it. We know our customers are working with other banks, and they have ideas and experiences,

up capital of $72.5 million earmarked to finance growth expansion.

“This is to make our ATMs able to accept cash deposits and do inter-account transfers from the ATM machines. The idea is that we want electronic infrastructure to substitute the physical branches especially on public holidays. We have increased the capital to finance our growth.”

ACLEDA has $1.6 billion in deposits, 12.5 per cent of which is foreign currencies reserve which can’t be touched.

“The more you increase your savings, it can help on the liquidity side, however you need to increase your paid up capital to improve your solvency so you can grow.

“We are doing a lot to finance our growth domestically and internationally in Laos and Myanmar,” In Channy said.

“We have expanded our ATM machines to a total of 162 and we will increase that number to 220 by the end of the year.”

He’s pleased that the 220 ACLEDA ATM machines will outnumber the total 196 districts of Cambodia.

Also expanding are ACLEDA’s Point of Sale (POS) terminals, which now number 900 and will expand to 1,000 by the end of the year.

“In our long term plan we want to have 8,000 POS

ACLEDA Bank CEO In Channy.

sent eight Cambodian experts already and by the end of this year, only three ACLEDA staff members in Laos will be Cambodian because our transfer was handled successfully.”

In Channy said ACLEDA’s Laos operation very profitable both in monetary terms and in the training of experts through technology transfer. There’s also a good relationship with the regulator in Laos, because of a dialogue through a banking association, just like in Myanmar.

When the ACLEDA team met with Myanmar officials

“This is the product of listening to the customer and implementing it. In our case we listen, especially if the customer suggest it.” so they come to us and ask for something. If they can do many things with one bank, rather than deal with more banks, it saves them time.”

There are some suggestions, however, that are not accepted and ACLEDA policy is to offer an explanation.

“Listening to the customer and following the suggestion is key to success. What we can accept we accept, what we cannot, we explain why. Our service is quick, convenient and secure. Time is money for us and the customer understands that,” In Channy said.

In Channy said ACLEDA would launch internet banking before the end of the year. Also in the works are VISA credit cards which the bank will begin to issue in the coming weeks.

“Currently we have VISA debit card, but customers want to go international and it is more convenient to use the VISA credit card.”

The strategy is to issue the VISA credit cards to ACLEDA staff first, so they can understand the whole process and then do the public launch.

“At the launching we will issue VISA credit cards to about 300 of our customers.”

In Channy said ACLEDA had injected additional paid

terminals,” In Channy said.

In Laos, ACLEDA now has 700 people, 32 branches and offices, with an expansion plan for an additional 10 branches this year, bringing the total to 42.

“As a private bank, we are the biggest in Laos and we have achieved more than we expected, especially in the area of capacity building. We built a strong team with 12 Cambodian experts to help our colleagues there. We have

at the first microfinance meeting, they shared experiences of how they became successful in a meeting with people from Bangladesh and Indonesia along with the Myanmar people.

“Myanmar is open to suggestions and they like to listen. We explained what we wanted to do in Myanmar and I could see that in Myanmar was open to debate. When I returned to Cambodia, I got

feedback from colleagues who got invited to meet in Naypyidaw to establish the microfinance association. This is a big step for them. It was after just one meeting and they did that,” he said.

In his speech to the Myanmar microfinance officials, In Channy said microfinance should not be limited in terms of loan size, but would grow with the customer from the first cycle of $100, the second $200 and the next one maybe $1,000.

In Channy told the Myanmar group that microfinance should be regulated by the central bank, which has professional expertise and that the government should open a dialogue with the private sector, through an association of microfinance institutions so they could improve the laws and regulations.

He was delighted to learn that just such an associate was created by that weekend.

“Myanmar agreed to establish an association of microfinance at the meeting of May 23 in Naypyidaw,” In Channy said.

Here in Cambodia, ACLEDA has 320,000 active borrowing customers, the majority of whom are Cambodians. The total Khmer Riel currency holdings of all the banks in Cambodia

amounts to US$270 million, of which ACLEDA holds US$56 million, making it the largest depositor of Khmer Riel in Cambodia, according to In Channy.

“We have more Khmer Riel than anybody because we have offices and branches in the rural areas, and normally their income is generated in local currency and they place their deposits in local currency.”

Khmer Riel deposits at ACLEDA Bank earn 7.5 per cent interest while US dollar deposits earn five per cent.

In Channy said the future looks very positive for Cambodia and ACLEDA Bank.

“Loans and deposits grew 7 per cent during the first quarter of this year,” he said.

As for challenges in the marketplace, In Channy said there’s increasing competition among commercial banks on bigger loans.

“Many bank come and all of them work in the upper segment, so it is challenging, but challenging on the bigger loans.”

In addition to his position as CEO of ACLEDA Bank, In Channy also serves as cochair of the working group on Banking and Finance, with his counterpart from the National Bank of Cambodia.

“So far there is an interbank facility and we are working with the NBC to develop the interbank market and the NBC expects to have it done by June.”

In Channy said the importance of the interbank facility and market is to enable bank banks to deposit their surplus liquidity in other banks.

“The importance of this is to use the surplus liquidity in individual banks, so if the other bank has surplus liquidity, they can place with other banks. Now they can do it, but we want the law to regulate and protect when we place it with the other bank. The working group discussed this with NBC and they said they expected to have it done in the first half BF of 2013.”

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Largest MFI sees increasing marketplace competition Q and A with Sim Senacheert, President and CEO, PRASAC Microfinance Institution When did Prasac start in the business and what are some milestones along the way to your present situation?

PRASAC was a credit component of the former PRASAC (Programme de Rehabilitation et d’Appui au Secteur Agricole du Cambodge) project started in 1995 as a support program for the agricultural sector in Cambodia, covering six provinces around Phnom Penh which was a rural development project in Cambodia, funded by the European Union. The whole PRASAC project was phased out in December 2003, except its credit component continues operations under the name PRASAC Credit Association (PCA) and was finally transformed into a licensed MFI in December 2004 under the name of PRASAC Microfinance Institution. The followings are the milestone: • 1995-1999: PRASAC I, EU-funded three rural development projects in six provinces, with three different credit components.

• 2000-2003: Extension as PRASAC II combined to one project, one credit component.

• 2000: First strategic decision to create a sustainable institution beyond the closure of PRASAC II project.

• 2001: HO and branch offices separated from PRASAC II, with separate management but still under umbrella of the project management.

• 2002: The establishment of PRASAC Credit Association (PCA) registered with the NBC in March 2002 as Rural Credit Operator.

• 2003: Two initial shareholders were created, a Trust Fund called CRDF created by PRASAC II and

PRASAC Staff Company created by staff members to facilitate the transformation process.

• 2004: Registered as PRASAC MFI Ltd with Ministry of Commerce as a private limited liability company and received license from NBC. • 2006: The commercialization process was to seek for equity investment participation from commercial and social investors.

• 2007: PRASAC completed its transformation with new five international shareholders, BIO, DCG, FMO, LOLC, and Oikocredit.

• 2008: PRASAC increased its capital to 15 billion Riels from six shareholders. PRASAC was rewarded for extending its financial services throughout the country.

• 2009: PRASAC selected Oracle Flex cube to modernize its core system to build competitive advantages, offer more diversified ranges of products and prepare for the next level.

• 2010: PRASAC obtained a Microfinance Deposit Taking Institution (“MDI”) license to conduct deposit taking business from the National Bank of Cambodia.

And PRASAC increased its registered capital from 15.4 billion Riels to 80 billion Riels.

• 2011: Launch of 5 additional branches.

• 2012: Launch of ATM service and become the first MFI offering ATM to clients in the country.

What interest rates do you offer for savings accounts in Cambodian Riel?

The followings are our current interest rate of Cambodian Riel (KHR) offered to the depositors: How is the growth during 2012? Do you expect more

A Prasac Microfinance team delivers a show during a product launch event last year at Sofitel.

growth in 2013?

The deposits grew above 800 per cent from US$5.9 million to $56.7 million at the end of December 2011 and December 2012 respectively.

We expected that deposits will grow as per our projections at 200 per cent. As of April 2013, our deposit grew about 74 per cent compared to December 2012.

PRODUCTS

Are you seeing more competition in the marketplace?

Yes, we see that there is more competition in the marketplace. The competition comes from expansion of the existing MFIs, new established MFIs, and commercial downscale the operations. More competition is good for the end-users (clients). But, it is

Annual Interest Rate 1 Mont 3 Mont 6 Mont 9 Mont 12 Mont

Demand Deposits Term Deposit (Monthly Interest)

2.50% 5.25%

6.25%

7.25%

7.75%

9.50%

Term Deposit (Interest at Maturity) 5.25%

6.50%

7.50%

8%

9.75%

What are the challenges in the microfinance marketplace in Cambodia?

Microfinance marketplace in Cambodia faces some challenges including the increase of competition, limited funding sources and high cost of funds.

not a concern for us because we have large operational area (nationwide coverage), big office networks, diversified products, more than 15 years’ experience in the sector, and strong branding in the sector as well.

How many total staff do you have and how many branches

around Cambodia?

As of April 2013 PRASAC has 2,507 staff and 170 office networks operating in all provinces of the country.

How many ATMs do you have?

Where are they?

As of April 2013, PRASAC has 29 ATMs. 13 ATMs are located in Phnom Penh and 16 ATMs are located in provincial branches. This year, we planned to add another 30 ATMs. What’s your percentage of bad loans?

Non-performance loans are very stable during the past quarter of the year. As of April 2013, the NPL rate was 0.21 per cent.

What’s your average loan size and what’s a typical business you loan to?

As of April 2013 the average loan portfolio or outstanding loan was US$1,844. The main typical businesses are agriculture represents around 30 per cent of total loan portfolio; business loan portfolio represents 45 per cent, personal loan 23 per cent, and other activities 2 per cent.

How do you see Cambodia’s future unfolding in the microfinance sector?

I think that the Cambodia’s microfinance sector is still good and strong because of economy growth; clients have more business activities, increase of the professional and high standard of the all MFIs, supportive regulations Do you see people starting to have better lives in the provinces?

I think that we see people starting to improve their living standard. To some extent I think that MFIs

also contribute to this development.

Are you now the largest Microfinance institution in Cambodia?

In the MFI sector, we are the largest in term of total assets, loan portfolio outstanding, office networks, savings and deposit balance, and we are also the best performing MFI in terms of portfolio quality, productivity and efficiency, and profitability in the country as well.

To what do you attribute your success?

A. I think that there are many factors, but can be summarized as follows: • Support from the government, and especially local authorities • Enabling regulation environments, strong and supportive regulators • Loyal and discipline clients • Strong governance structure, good and supportive shareholders and the Board • More professional and high commitment staff and management • Strong institutional capacity ie, internal control, policies, procedures.

What are the long term prospects for microfinance in Cambodia?

I think that after gone through all the difficulties and challenges in the past, microfinance in Cambodia is now on the right track and right direction, therefore, I think that it will continue growing in the sustainable manner and continue to contribute to the development of the country by providing access of the banking services to the unbanked people, especially, in the rural area.

The Prasac website may be viewed at www.prasac.com.

BF kh.

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BANKING&FINANCE

THE PHNOM PENH POST • MAY 31, 2013

Canadia Bank CEO articulates strategy of ‘truly local’expansion Q&A with Canadia Bank CEO Michael Lor Michael Lor was appointed the CEO of Canadia Bank Plc, Cambodia, in July 2011.

In leading the Bank’s senior management team, he is responsible to key areas of competitive business transformation including business expansion, process enhancements and optimisation, customer experience, risk management, corporate governance and complaints and leadership development.

Lor sat down with the Post’s Moeun Nhean for an interview.

Our readers want to understand Canadia Bank’s secret for success. Can you give us an overview of Cambodia’s banking industry today where 35 banks serve a population of more than 14 million people?

Canadia Bank is leveraging our strong pedigree and reliable history to transform and build a comprehensive financial services provider.

For over 20 years the bank has grown steadily and expects continued steady and sustainable growth for years to come. Equal importance is placed on growing revenue and profits as well as on strong liquidity and capital position.

Canadia Bank recognises that to remain the leading bank in Cambodia, it is imperative that the bank respond appropriately and decisively to new market conditions and realities.

Much of this has entailed leveraging our strong brand and experienced management to embark on ambitions but realistic goals.

We devote great attention and resources to ensure that we streamline operations and become more efficient in how we conduct business with and for our customers.

Today, Canadia Bank remains the safest bank in Cambodia. Local and global customers and banking partners are assured that Canadia Bank balances growth aspirations with a strong and stable balance sheet.

Despite significant growth ratios, we have maintained our loans to deposit ratio conservatively at 69 per cent and our regulatory liquidity ratio at 17.3 per cent. Our total capital adequacy radio remains among the highest in the industry at 21 per cent and our solid total shareholder’s equity position of US $204 million, which is comfortably above the minimum regulatory requirement, augurs well for the continued business expansion of Canadia Bank in the near future.

Canadia Bank is truly a local Cambodian Bank with its growth, culture and existence completely entwined with the Cambodian people and economy; simply put,” we are here to stay”.

How many branch offices does Canadian Bank have nationwide?

By the middle of this year our distribution network will comprise 48 branches and more than 80 ATMS located nationwide across Cambodia.

Our aspiration is to be in every single province where our customers are located.

Very shortly, we would also be announcing the launch of our internet banking services for both our individual and corporate customers.

What is Canadia Bank’s recent financial performance?

Canadia Bank Plc reported financial performance for fiscal year ending 31 December 2012, with growth of total deposits by 22 per cent to US$1.28 billion, and also grew loans book by almost 20 per cent to US$880 million. Amidst very competitive environment, Canadia Bank grew loan its portfolio in a disciplined manner placing priority on credit quality. With improved efficiency, total operating income jumped more than 35 per cent compared to 2011, to reach US$70 million. The Bank’s total assets continue its upward path and grew by 23 per cent to reach almost US$1.56 billion.

The year 2012 resulted in impressive financial gains and standing. Our total income increased by 35 per cent. A total of $70 million, and driven by net interest income, accounting for 52 per cent, and net fee income, accounting for 25 per cent; Our cost to income ratio improved by seven per cent; Thanks to effective action on delinquent loans, NPL ratio improved to 4.5 per cent as compared to 5.3 per cent prior year; Our solvency ratio continues to be solid, which at 17.3 per cent we are above NBC’s solvency requirement; Our return on equity increased to almost 19 per cent, which is higher than target, and also higher than our prior two years; During 2012 net profit for Canadia Bank grew by 63 per cent as compared to 2011l.

What is Canadia Bank’s recipe for success?

Canadia Bank is building a strong and resilient organisation; with sustainable business franchises and a

CEO of Canadia Bank Plc​ Michael Lor.

long term view, and we are well positioned and prepared for competition.

In keeping with a history of disciplined growth, the Bank will continue to grow and strengthen existing core business line and grow its core commercial banking business.

In due course we will also announce the consummation of our respective partnerships with two significant regional partners with strong reputations and brands, and standing in their respective markets, to start two new business franchises, which will transform Canadia Bank

into a Universal Banking Group; capable of delivering a complete range of financial services from commercial banking, microfinance, life and general assurance, and investment banking to our existing and potential customers. Strategically, Canadia Bank will become a clearly diversified and successful Cambodian financial institution, able to stand strong and tall amongst the regional banks within ASEAN. Meanwhile, we also continue to receive requests and invitations from large and

established financial institutions with strong global presence expressing their keen interest to partner with Canadia Bank and to partner their respective customers’ intentions to invest into Cambodia.

These recent developments point to and provide clear indication of strong growth, and continued financial strength and leadership Canadia Bank’s reputation and standing amount financial institutions globally is a direct result of our disciplined approach to growth, financial soundness and fidelity to our customers,

shareholders and employees.

Having built a strong and successful banking franchise in Cambodia, we have now, a clear and logical aspiration to grow our franchise into the region. We are presently evaluating an opportunity to enter a neighboring country, partnering with a strong and establish institution in the region and we hope to be able to make an announcement within the next quarter.

In addition, we are also watching the exiting developments in Myanmar as well as in China with a keen BF interest.

BANKING&FINANCE

THE PHNOM PENH POST • MAY 31, 2013

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Maybank rated13th strongest ba m

Maybank was ranked number 13 in Bloomberg Markets Magazine’s third annual ranking of “The World’s Strongest Banks” in the June, 2013, issue.

The banks were ranked based on several ratios including capital to riskweighted assets, nonperforming assets to total assets, loan-loss reserves to non-performing assets and costs to revenue.

Here in Cambodia, Maybank’s CEO Lee Tien Poh was pleased to hear the news. In Cambodia for over a year now, Lee previously held various portfolios at Maybank’s International Division and has been the Head of Overseas Operations, Head of Strategy & Business Development and Head of International Strategy & Operations, with Cambodia as one of his oversight responsibilities even before he was appointed as CEO just over a year ago.

Maybank Group, which employs 47,000 people, is Malaysia’s largest in terms of total assets with more than $162 billion and $25 billion

in market capitalisation. A public listed company, it is also the largest company in Malaysia and the major shareholder is Permodalan Nasional Berhad, the investment arm of the Malaysian government.

Maybank has been operating in Cambodia for two decades now, and will be celebrating its 20th anniversary this year.

“It all started in 1993 with only one branch in Phnom Penh,” Lee said.

“Back then, our business model was to support Singapore and Malaysia businessmen. In 2007, we changed our business model as we decided to adopt a long haul strategy to also serve the local community and started to expand our network.”

From 2008 to 2011, Maybank added 10 more branches and by 2012, had a total of 12 branches.

“By the end of 2015, we are projecting to operate more than 20 branches, with 80 per cent of them in Phnom Penh and 20 per cent throughout Cambodia,” At the moment, the eight branches in Phnom Penh are complemented by four

outside, with one each in Siem Reap, Battambang, Kampong Cham and Sihanoukville.

Maybank has also expanded its ATM network with three offsite ATMs, one at the Bayon Supermarket, one at the Phnom Penh International Airport and one at the Siem Reap International Airport.

Lee says Maybank intends to have a total of 40 ATMs in Cambodia, onsite and stand alone by 2015.

“These are regionally linked ATMs which means our customers can transact at Maybank ATMs in various regional locations including Malaysia, Singapore, the Philippines, Brunei, Vietnam as well as Papua New Guinea at no extra cost.

The bank is set to further entrench its presence in Cambodia, expanding its reach to serve its customers nationwide over the next few years. Following local incorporation of its operations in Cambodia last year, it is now in the midst of building its capability and introducing new business channels. Its total staff strength is expected to reach 300 by end of this year. In

Maybank’s CEO Lee Tien Poh.

addition, the bank launched its internet banking portal M2U last December 2012 and has set up various new departments to support its growth for example, a credit and risk management department.

Lee says there are signs in the marketplace that the demand for consumer banking products and services are on the rise because of an emerging middle class segment.

“People now have more disposable income which is in tandem with the country’s strong economic growth. There are a lot of development plans in the pipeline, including shopping malls for the middle income families. For convenience, people from this income group will need credit cards and this is where the usage of credit cards will pick up.”

Lee says this growing segment of young working adults will need housing loans, transaction banking services, ATMs and children’s accounts.

He also sees growth coming specifically from sectors like agriculture, education and medical services. It is the country’s agenda to see

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BANKING&FINANCE

THE PHNOM PENH POST • MAY 31, 2013

ank in the world by Bloomberg

these productive sectors grow especially agriculture where the focus is on the higher value chain.

“Efforts are being directed to manufacture finished food products from the produce of the land, for example noodles and rice crackers from rice. This is to ensure that value is added within the country. The other important growth sector is infrastructure development, the improvement of roads, highways and railway lines.

Generally, at Maybank, we support the productive growth sectors of the country,” Lee said.

Maybank now offers consumer and business loans.

Lee says that granting trade

financing facility to support local businessmen is also among Maybank’s agenda.

As at end December 2012, Maybank Cambodia’s loan portfolio surpassed the US$200 million mark and its growth outpaced that of the banking industry.

“We deal in US dollars at the moment, and we are already having an initiative to offer Khmer Riel accounts,” he said.

Back when he was overseeing the Cambodia operations from Kuala Lumpur in 2008, Lee saw a need for local banking talents to support the expanding growth there.

“I was initially puzzled why we couldn’t attract local

talents. The market probably at that time did not know us well and felt we were not expanding our operations aggressively.”

Since then, Lee has headed an effort to hire talented people who have more than five years experience in banking and let the word of mouth spread around that Maybank has changed its business direction and expanding aggressively.

“We hired some key talents and this started to change people’s perception of Maybank. Since then we received overwhelming requests from people wanting to join us. There are many young Cambodians who were educated overseas, and to this

group it is not so much about compensation and benefits but our compelling vision and mission and how they can grow with us. They are young and they want to make progress,” he added.

One of the key differentiators for Lee in a market of more than 32 commercial banks is Maybank’s mission of humanising financial services in Cambodia. Humanising would mean providing people with convenient access to financing with fair terms and pricing, advising customers based on their needs and being in the heart of the community they operate.

“In order to illustrate being in the heart of the community, apart from been a socially responsible corporate citizen, when we develop products and services we think of customers needs first and that the products and services will bring value to them. The profit element is the consequence of our effort to serve the community.”

Maybank Cambodia’s vision, according to Lee is to be the first-choice financial services provider in the country.

“First choice would mean whenever an existing and potential customers look for banking products and services, Maybank is a first choice as we walk the talk on our mission. We treasure long term business relationships and promote a win-win situation for us and the customers.

“It is common to hear people say that the customer is number one. We always tell the customer that we need to win together in order to sustain our relationship.

When we share this with many of our customers, they firmly acknowledge it and confirm that we are the bank they want to deal with in the BF long term,” Lee said.

BANKING&FINANCE

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Banking most transparent industry in the Kingdom HE Deputy Director General for banking supervision at the National Bank of Cambodia says the banking industry is the most transparent of all the industries in Cambodia.

The NBC’s Chea Serey, who has participated in the evolution of Cambodia’s banking system since 1999, says she’s proud of that transparency because the stewardship of the monetary system is part of the public trust.

“This is the money of the general public and it is our money, yours and mine” Chea Serey in an interview on Wednesday at NBC headquarters on Norodom Boulevard.

“All of our families and friends deposit money in the banks. It is our strong interest to make sure the banks are playing safe. And banks have the obligation to be transparent to the general public. In fact you can walk into any bank and even if you don’t have an account there, they are required to provide

t

you with their annual audited report,” she said.

The transparency required of all banks operating in Cambodia as mandated by the NBC means it is difficult for illegal activity to take place.

“When all your numbers are audited, you can’t embezzle.

NBC is also audited by an external auditor as well. All banks have to justify where this money’s coming from and where it is going to,” she said.

Born in Phnom Penh in 1981, she attended Batuk School until the sixth grade and then carried on her education in France for middle and high school and finally Singapore at the French International School.

Chea Serey joined the NBC in 1999 following her graduation from Victoria University in Wellington, New Zealand. In 2002, she joined the NBC’s banking supervision department and has risen through the ranks since then.

Chea Serey’s banking supervision department employs more than 100 people.

NBC is an independent regulatory and supervisory

organisation, not under any ministry.

She remembers back in 2000 when she first joined, NBC ordered the liquidation of 17 banks that were unable to meet the minimum requirement of $13 million in paid-up capital.

“We closed them down,” she said. “We can close down banks if they don’t comply with our regulations and it is also in our power to change the management of a bank if they are not doing their job.

We have the right to approve or disapprove their members of the board,” she said.

Today, the minimum requirement is $37 million in paid up capital, but even with that amount of money, being a bank in Cambodia is regarded as a privilege.

“Banking is not like any other business. That’s why they are strictly regulated.”

More than 1,200 people are employed by NBC and many of them women, a unique and arguably beneficial feature of Cambodia’s financial landscape.

She says it is amusing when all-male delegations

arrive from the World Bank or IMF and they are met with colourfully dressed Cambodian women on the opposite side of the room.

When she started work at the NBC, there were 16 banks and now there are 38, seven or which are specialised banks and 32 commercial banks.

“Those are mostly foreign banks, and I think it is a good sign. When a country is able to attract more banks says something about the country’s potential.”

Chea Serey is acutely aware that political stability of paramount importance for any financial system.

“You can talk about any other factor, but if you don’t have political stability nobody will come. You have to have predictability if not certainty when you do business by investing in a country. Therefore when you see investors coming in, it is a good sign that they trust in us and that they would also bring along a lot of capital.

If you consider one bank bringing in $50 million, you do the math, that’s a lot of

National Bank of Cambodia Deputy Director General for Banking Supervision Chea Serey

money,” she said.

She cited a study by the World Bank that showed a strong correlation between access to finance and economic growth.

That’s why she’s happy so many banks are coming to Cambodia. Yet, she is watchful of competition in the marketplace and what that means for the financial system, which can be good and bad at the same time.

“Banks coming in provide finance and create competition which lowers interest rates. Interest rates on loans have come down if you read our annual reports from 16 per cent to 10 to 12 per cent. Yet at the same time, if too much competition is injected into the marketplace, it can be detrimental for the whole financial system,” she said.

“Banks need to make a profit. If the competition is too fast and too stiff it can also be bad. If your profit is compromised, you may curtail development.NBC is making sure that competition is fair and doesn’t dampen the development and compromise the stability.

Another issue for the NBC is the dollarization of the economy, which Chea Serey explains was a consequence of Cambodia coming out of post-conflict poverty and the UNTAC period.

“People tended to not trust the local currency and we saw the greenback coming in when the laws and regulations were not so strict, so it just happened and we’re stuck there, and it is difficult to reverse the trend.”

Generally people use another currency is because

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they don’t trust domestic currency because inflation rates are too high – and today in Cambodia, the inflation rate is very low compared to other parts of the world.

“Our inflation rate is very low, this year only 1 per cent year on year, and the exchange rate is very stable, about 4000 Riel per dollar during the past 15 years. This is a good ground for people to save in local currency” She said that NBC has developed a draft national strategy to promote the use of local currency.

“Our intention is to have all the price quoted in Riel, though customers can have the choice to pay in Riel or USD for a transition period.” she said. “We will have a public consultation, consultation among the ministries and hopefully the government will adopt it we hope before the end of this

THE PHNOM PENH POST • MAY 31, 2013

year. De-dollarization is very critical now.”

Chea Serey says Cambodia needs to have the ability and the tools to set interest rates.

“We need to be able to use our local currency because it shows our independence and shows our sovereignty.”

As for the future, Chea Serey approaches it with cautious optimism. “I see a lot of potential in the banking system. I see development coming and potential in contributing more to the economy, more to poverty reduction and banks are starting to provide mortgage loans. Newly married Cambodians are getting loans for houses. Microfinance institutions are providing loans for motorcycles and appliances.”

She said that while rapid growth is good, there are mechanisms in place to “put on the brakes” if the economy

starts to get overheated.

“We are moving too fast, we can use tools to put on the brakes. At the moment we are watching very cautiously on the speedometre and it is going okay. We need to see if the road is conducive to that speed. If the bank is going too fast and the economy is not there, it’s a problem.

If the economy can absorb it, we will be okay. We look at road conditions and the speedometre, and we watch for any hazards, warning sign along the road.”

Some of the recent work of the NBC includes the development of the “Interbank Market” by the third quarter of this year which enables banks to use the NBC’s negotiable certificates of deposit.

Banks will be able to use the Interbank Market for their liquidity management, she BF said.

BANKING&FINANCE

Graphics courtesy of the National Bank of Cambodia

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