National bank to lend US100 million in loan to banks
After break-out of the global financial crisis, the national bank of Cambodia (NBC) has set up an approximately US$ 100 million loan for commercial banks to make sure that they will have cash on hand if needed. The central bank is ready to be careful with this issue, keeping a close eye on the banking sector.
Hang Chuon Naron, Finance Ministry Secretary General, was quoted by the Cambodia as saying on the sidelines of a signing ceremony for the country’s forthcoming stock exchange that the loan will help banks that might face short-term short-ages in liquidity, particularly due to high levels of withdrawals.
The NBC senior official said at the banking Cambodia conference that despite the world economic recession, the Cambodian banking sector still remained in a healthy state. The local banking sector has had no direct exposure to the global subprime mortgage crisis.
The International Monetary Fund (IMF) also warned in a report that the global financial crisis has exposed vulnerabilities among Cambodia’s banks and is beginning to affect their financial soundness. IMF reported that some of the country’s leading banks were facing a high risk of non-performing loans due to overexposure to the real estate market, which has plummeted in value in the past several months.
In Channy, president of Acleda bank said that “His bank remains stable, despite the downturn, adding that “I don’t need this money. Our deposits increased to US$533.5 million from $492.5 million- an eight percent increase compared to the same period last year,” reported the Phnom Penh Post.
Although, $100 million is available, but banks can only borrow up to half of their foreign currency that is held in reserve at the national bank, according to the NBC’s directive.
Hang Chuon Narong denied that a trouble banking sector had forced the government to make the loan fund available. If it had been necessary, the NBC would have considered such loans even earlier, reported the Cambodia Daily.