Logo of Phnom Penh Post newspaper Phnom Penh Post - Cambodian banks seen as safe from SVB fallout

Cambodian banks seen as safe from SVB fallout

Content image - Phnom Penh Post
Silicon Valley Bank. AFP

Cambodian banks seen as safe from SVB fallout

Prime Minister Hun Sen on March 16 urged the public not to panic-withdraw funds from their bank accounts amid concerns following the recent bankruptcy of two major US lenders, as industry insiders assured that the Cambodian financial sector would be largely unscathed by fallout from their demise.

Earlier this month, Silicon Valley Bank (SVB) and then Signature Bank were taken over by regulators after collapsing under the weight of billions of US dollars in withdrawal requests made around the same time, triggered by fears of the lenders’ insolvency, in what is termed a “bank run”.

On March 13, President Joe Biden assured that the US banking system remains “safe”, explained how his administration is responding to the situation, and called for more stringent regulations to protect banks against failures.

Speaking at a graduation ceremony in Phnom Penh, the prime minister argued that the fall of the two banks does not pose a significant risk of contagion in the Cambodian banking system, nor will it have a severe impact on the global economy.

“I urge anyone who has deposited money in a [local] bank not to panic,” Hun Sen said, underscoring that doing so would be contrary to the common good.

“We call on the people to place their trust in [regulators’] abilities to manage the Cambodian banking and financial sector – banks have enough reserves to resolve any issues,” the premier stressed.

Although the 1997 Asian financial crisis caused some chaos among Cambodian banks, the adverse effects of the 2008 global financial crisis were minimal in the Kingdom, which at the time raised the reserve requirement ratio (RRR) from seven to 12 per cent to prevent more damaging consequences, he recapped.

RRRs are central bank regulations that set a minimum amount of cash which financial institutions must hold in reserve. The Cambodian RRRs for foreign and domestic currency deposits currently stand at 12.5 per cent and eight per cent, respectively, according to the National Bank of Cambodia’s (NBC) website.

ACLEDA Bank Plc president and group managing director In Channy claimed to The Post on March 16 that Cambodia’s “strict” financial regulatory frameworks, managed by the NBC, would make certain that these developments in the US have negligible bearing on the Kingdom’s banking and financial system.

“It’s isolated from our business environment. And it’ll never impact our banking system and industry at all, since we’re in a very different market environment. The banks here are under Cambodian laws and regulations, and we are supervised and regulated by the NBC.

“Cambodia is a small country, but our regulator [the NBC] is full of experience. They are conservative, but proactive when it comes to risk mitigation. Banks here are in the economic environment of Cambodia. We don’t have anything to worry about, because in the banking business, we’re always cautious at every step we take.

“And of course, we must comply at all times with both local and international regulations. We always keep in mind that there are two important sources of risks – among many – apropos of which, banks must take cautious action all the time: liquidity and credit,” he said.

Cambodia Post Bank (CPBank) CEO Toch Chaochek told The Post on March 16 that the two US banks in question were not large enough to pose systemic risk to the global economy.

He explained that while SVB was indeed large, its tech and start-up focus may have been too niche and risky, and its collapse followed a spate of layoffs in the bank as well as among its clientele, resulting in the closure of a considerable number of accounts.

At least at CPBank, there have been no signs of panic withdrawals, he affirmed. “The financial sector is chugging along as usual, as are lending operations.”

With almost all loans in the Cambodian financial sector secured against collateral, and local sources accounting for a sizeable share of domestic bank capital, “we are 100 per cent secure”, Chaochek stated.


  • 12th Cambodia int’l film festival to see return of Hollywood star

    Phnom Penh is set to come alive with the magic of cinema as the highly anticipated 12th Cambodia International Film Festival (CIFF) takes centre stage. Boasting an impressive line-up of 188 films from 23 countries, including captivating shorts, feature films, documentaries and animation, the festival promises an

  • Bareknuckle champion wants Kun Khmer fighter

    Dave Leduc, who is the current openweight Lethwei boxing champion in Myanmar, has announced that he will travel to Cambodia this year to challenge SEA Games gold medallist Prum Samnang any time that is convenient, after their planned match later this month in Slovakia was

  • Struggling Battambang artist dreams of staging full-scale gallery exhibition

    Leav Kimchhoth, a 55-year-old artist from Battambang province, is a familiar face to locals and tourists alike on the streets of the riverside in Phnom Penh. The one-armed painter and illustrator often hawks his work near the night market on weekends and public holidays. He

  • Fresh Covid warnings as Thai hospital fills

    A senior health official reminds the public to remain vigilant, as neighbouring countries experience an increase in Covid-19 cases, with the latest surge appearing to be a result of the Omicron XBB.1.5 sub-variant. Or Vandine, secretary of state and spokeswoman for the Ministry of Health,

  • New Law on Taxation comes into effect

    Cambodia has enacted the eagerly-awaited new Law on Taxation, which aims to improve the national tax regime’s compliance with present and future international standards and economic conditions; encourage accountability, effectiveness and transparency in the collection process; and promote investment in the Kingdom. King Norodom

  • PM warns of int’l election interference

    With the national election scheduled to take place in less than two months, Prime Minister Hun Sen has warned foreign nations and their diplomats not to interfere into Cambodia’s domestic affairs. He also hinted that their statements on court verdicts handed down to any