In conjunction with the 44th Anniversary of the Reintroduction of the Riel, Mr. Han Peng Kwang, CEO of Wing Bank gave an interview to Khmer Times and elucidated his bank’s initiatives in promoting the Riel in the local economy. The following is an abridged version of the interview.

Insight on the percentage of loans provided in Riels to Wing Bank’s customers and mandated percentage set by the NBC

The steps taken by NBC to de-dollarize the economy have included regulatory measures designed to enhance the prominence of loans denominated in Khmer Riel. The central bank’s vision is that a more Riel-based economy will empower the National Bank of Cambodia to effectively implement monetary policies in response to economic shocks.

As of January 31, 2024, the loan disbursement at Wing Bank in Cambodian currency, the Khmer Riel, exceeded 10% of the total loan disbursement. This achievement aligns with the mandated percentage set by the National Bank of Cambodia (NBC), which requires lending of at least 10% in Khmer Riel (KHR).

Wing Bank is committed to complying with NBC regulations, reflecting our dedication to supporting the broader economic goals set by the central bank. At Wing Bank, we take a meticulous approach to tracking the composition of our loan portfolio.

Understanding the dynamics of loan currency is not merely about meeting regulatory guidelines; it plays a crucial role in shaping the broader economic narrative. While we have successfully met the NBC-mandated percentage, our commitment goes beyond these percentages.

We actively analyze customer preferences, closely monitor market trends, and consider relevant economic indicators. This comprehensive approach ensures that our loan portfolio not only aligns with regulatory requirements but also adapts to the evolving needs of our customers.

By incorporating insights into customer behavior and market dynamics, Wing Bank strives to contribute meaningfully to the de-dollarization goals set by NBC. Our approach reflects a thoughtful and balanced strategy, aiming not only for compliance but for a strategic alignment that benefits both our clients and the economic stability of the nation.

Unilateral initiatives to promote the Riel and help with the de dollarization efforts

Wing Bank’s dedication to the de-dollarization agenda extends beyond mere commitment, manifesting in tangible performance metrics that highlight a noteworthy shift in our banking ecosystem. A remarkable statistic reveals that half of all Wing Bank accounts are now denominated in Khmer Riel, emphasizing our earnest efforts to foster the adoption of the national currency.

To fortify our commitment and encourage Riel usage, Wing Bank has implemented strategic initiatives, including highly competitive interest rates for both loans and deposits in Khmer Riel.

Customers opting for a KHR Savings Account can earn up to 3% per annum on their credit balances, while those selecting a KHR Term Deposit can earn up to 9% per annum on their placements. These attractive incentives not only benefit our customers directly but also contribute significantly to the overall financial stability and growth of the local economy.

In regards to unilateral promotion of Riel, we recognize that the financial landscape is complex and therefore requires a collaborative, multi-stakeholder approach, not just unilaterally. Therefore, Wing Bank actively engages with key entities, including the National Bank of Cambodia (NBC), our valued customers, and the broader financial community. This comprehensive engagement enables us to develop a nuanced strategy that considers the interplay of market forces, regulatory dynamics, and customer behaviors.

Recent collaborations further illustrate our commitment to the Riel and broader economic growth in Cambodia. Wing Bank has partnered with Cambodia Standard Development & Supply (CSDS) and Harvest III, a USAID-funded initiative focusing on sustainable economic growth in the agriculture sector.

This collaboration enables Wing Bank to provide collateral-free loans of up to 100 million Riels to farmer members of Harvest III and CSDS. Additionally, our collaboration with Amru Rice and Cambodian Agriculture Cooperative Corporation Plc (CACC) allows us to offer collateral-free loans up to 100 million Riels to farmers who are members of Amru Rice and Cambodian Agriculture Cooperative Corporation. These collaborations exemplify Wing Bank’s proactive role in supporting not only the de-dollarization agenda but also broader economic development initiatives, reflecting a thoughtful and balanced approach to financial growth in Cambodia.

Steps taken by Wing Bank to encourage Riel denominated transactions, especially deposits and loans

Wing Bank’s commitment to fostering Riel-denominated transactions is evident in the consistent growth trajectory of Riel transaction values within our ecosystem. In 2023, over 51% of the total transaction value, a 19% increase compared to the previous year, was conducted in Khmer Riel.

This remarkable achievement stands as a significant milestone, contributing substantially to the ongoing de-dollarization initiatives championed by the National Bank of Cambodia.

To reinforce the broader initiative of encouraging Riel usage, Wing Bank strategically provides highly competitive interest rates for both loans and deposits in Khmer Riel. Customers opting for a KHR Savings Account can earn up to 3% per annum on their credit balances, while those selecting a KHR Term Deposit can earn up to 9% per annum on their placements with Wing Bank.

These attractive incentives not only benefit our customers but also play a pivotal role in promoting the use of the Riel, thereby contributing to the overall financial stability and growth of the local economy.

Furthermore, as of January 2024, our efforts are reflected in the loan disbursement at Wing Bank in Cambodian currency, specifically in Khmer Riel, exceeding 10% of the total loan disbursement, while deposits in Khmer Riel recorded a substantial 17% of total deposit collected.

Encouraging Riel transactions necessitates a multifaceted strategy, and Wing Bank goes beyond conventional approaches. In addition to offering competitive interest rates, our incentives for Riel transactions are meticulously designed to resonate with customers.

Simultaneously, our educational initiatives aim to empower customers with the knowledge needed to make informed choices, fostering a deeper understanding of the benefits of engaging in Riel-denominated transactions.

This comprehensive approach underscores our commitment to instigating a sustainable shift in transaction preferences, contributing to the overall economic objectives of the bank and the nation.

Furthermore, Wing Bank has been working hand in hand with the National Bank of Cambodia and other relevant stakeholders to promote the widespread use of the local currency through various events in the country, such as Riel Day promotions, the Anniversary of National Bank of Cambodia, and others.

In line with our commitment to fostering a de-dollarized financial landscape, Wing Bank’s payroll services offer employers the flexibility to disburse salaries in either USD or KHR, catering to the preferences and convenience of both employers and employees.

Notably, approximately 10% of the total value of all payroll transactions within the Wing Bank network is now transacted in Khmer Riel, pointing towards a discernible acceptance of the national currency in employment-related financial transactions.

Dedicated Riel only ATMs and CDM’s

At Wing Bank, we currently operate ATMs and CDMs that are flexible , accepting and dispensing both Khmer Riel (KHR) and US Dollars (USD). This approach reflects our commitment to providing flexibility and convenience to our customers, allowing them the freedom to transact in the currency of their choice.

At Wing Bank, our commitment to adaptability and customer-centric services is paramount. We understand that the preferences of our customers may vary across different regions of Cambodia, and any decision regarding dedicated Riel-only machines will be meticulously data-driven.

Our approach is to ensure that the introduction of such machines aligns with the actual needs and preferences of our diverse customer base. By considering regional variations in currency preferences, we can better tailor our services to meet each community’s specific demands.

Flexibility remains a key principle in our decision-making process, guaranteeing that our services cater to the dynamic and diverse needs of our customers across Cambodia.

In essence, while we explore the possibility of dedicated Riel-only machines, our ultimate aim is to strike a balance that enhances customer choice and satisfaction, making data-informed decisions that contribute positively to the overall banking experience for our customers.

Wing Bank’s ATM’s and CDM’s across the country

Wing Bank takes pride in its extensive network of 33 strategically positioned ATMs and CDMs across the country, offering our valued customers round-the-clock accessibility, 24 hours a day, seven days a week.

As part of our unwavering commitment to meeting the evolving needs of our users, additional deployment of ATMs and CDMs are currently in the pipeline, ensuring a continuous expansion of our services.

The scale and reach of our ATMs and CDMs form integral components of our broader commitment to financial inclusivity. Beyond being numerical figures, these machines play a crucial role in ensuring that banking services are not only widespread but also available at all times for the convenience of our customers.

At Wing Bank, our deployment of ATMs and CDMs signifies more than just an expansion; it reflects our dedication to creating a banking environment where services are within convenient reach of every Cambodian.

However, more than our ATMs and CDMs, is our extensive network of 11,000 Wing locations located throughout the whole country in all the 25 provinces, serving as our banking agents nationwide, further emphasizes our commitment to accessibility. These Wing premises allow Cambodians to perform deposits or cash-out transactions in either Khmer Riel or USD and many other basic financial services.

It is important to note that conducting transactions in Khmer Riel at our Wing locations is not only accessible but also cost-effective compared to transactions in USD, aligning with our commitment to providing accessible and affordable financial services for all.

Borrowing norms of customers

So far, we do not have any knowledge of customers who request loans in Riel but convert them into USD. We offer loans both in Riels and USD as per the needs of the customers. Wing Bank engages in an ongoing dialogue with customers, emphasizing the advantages of retaining Riel transactions.

Our efforts extend beyond mere norms, focusing on educating customers about the long-term benefits of Riel-denominated loans and transactions, especially in the context of Cambodia’s evolving financial landscape.

Wing Bank’s initiatives in promoting de-dollarization of the economy and promoting the Riel

Striking a balance between de-dollarization and competitive rates demands strategic acumen. Wing Bank employs a sophisticated approach to interest rate management, incentivizing Riel transactions, and collaborating closely with the National Bank of Cambodia.

Our strategy is not merely about striking a balance; it is about actively contributing to both financial stability and the overarching national de-dollarization agenda.

Viability of imposing a transaction tax on dollar denominated transactions

Imposing a transaction tax on dollar transactions requires a meticulous evaluation of economic implications. Wing Bank acknowledges the potential role of such a tax in incentivizing Riel usage.

However, we emphasize the need for a comprehensive understanding of economic dynamics, customer behaviors, and potential market adjustments. Transparent communication and collaboration with stakeholders are paramount in navigating the complex landscape of transaction taxation.

In Wing Bank, our focus is on onboarding the underbanked and underserved population into the formal sector, regardless of which currencies they prefer to transact in.

Wing Bank’s wage cost in Riels

Wing Bank is exploring the strategic initiative of paying a percentage of our wage cost in Riels. This transcends conventional practices, aligning with our commitment to de-dollarization. This deliberate move symbolizes our organizational dedication to fostering the use of the national currency, internally reflecting the principles we advocate externally.

Disparity in Riel transactions amongst various Wing Bank branches

Analyzing Riel transactions across our diverse branches involves a tailored approach at Wing Bank. Our commitment to promoting Riel transactions is evident, with a notable emphasis on understanding and accommodating the distinct characteristics of each branch, be it in urban or provincial areas.

The breakdown of loans and deposits reflects the nuanced strategies in place. While the overall percentage of Riel loans has exceeded 10% of our total loan portfolio, the specific dynamics differ across branches. For instance, urban branches like Wat Phnom in Phnom Penh see a higher percentage at 13%, while provincial branches like Khemarak Phumen City in Koh Kong province demonstrate a substantial 60% in Riel transactions.

Similarly, the deposit breakdown by province illustrates our commitment to promoting Riel usage across Cambodia. Notably, provinces such as Steung Treng and Ratanakiri exhibit a high percentage of Riel deposits, reaching 63% and 58%, respectively.

In essence, Wing Bank’s strategy recognizes and responds to the diverse financial landscapes within Cambodia. Our commitment to promoting Riel transactions is not a one-size-fits-all approach; instead, it reflects a thoughtful and balanced strategy that considers regional dynamics and contributes meaningfully to the broader de-dollarization narrative.