BRED Banque Populaire, a French cooperative lending institution, is the newest entry to Cambodia’s competitive banking sector and the first venture of a European bank in the Kingdom since the late 1990s. The Post’s Kali Kotoski sat down with Guillaume Perdon, CEO of BRED Bank Cambodia, to discuss the bank’s growth strategy.

What services will BRED be offering and will it focus on corporate or retail banking?

We will work with all ranges of customers from the retail side, probably from medium to high, and of course some private banking activities as well. As for the business side, we will focus on small-to medium-size enterprises [SMEs] and larger corporate companies. We believe there is a huge gap to fill in SME lending.

What is the bank’s plan for expansion?

Today we only have our bank headquarters in Phnom Penh, but in the next three years we will have 15 to 20 branches in Cambodia with five to six branches just in the capital. By the end of 2017 or very early 2018 we will have at least four branches in Phnom Penh.

As a French lending institution, will you be targeting European clients?

While we will work with European clients in the beginning because they know us, we are definitely not only targeting them. In the coming years our plan is to have 90 percent of our clients being Cambodian.

How will you target SMEs and what is different about the bank compared to other existing financial services?

For SMEs we have a cash flow approach instead of a collateral approach. Our official stance for SMEs is that we will work with companies that have a turnover of anywhere from $0 to $10 million per year. Because we do not look first at the collateral of a company, our job is to understand the business, understand the management, to visit the business and help SMEs set up financial statements. Of course we want to make businesses grow, so just because an SME does not yet have a financial statement, it does not stop them from getting lending.

Also, we will focus on fast tracking lending. We have set up a dedicated team to decide loans for retail or SMEs that can be approved in one to two days. Fast-tracked lending is something that SMEs need, especially when they are trying to secure orders for things like cars and agricultural machinery, as well as home loans and things like that.

Are there any sectors that you will try to avoid?

We don’t want to touch large real estate development projects. The real estate market is moving a lot but we need to see where it is in a couple years when prices are different.

What are the projections for how much credit BRED could issue in its first year of operations?

According to our budget plan, we should reach about $50 million in the first year of operations. It is a first small step, but it is difficult when you start from zero. I wouldn’t say $50 million is a very aggressive amount when you launch a new bank. We currently have $30 million in registered capital and we will meet the National Bank of Cambodia’s requirement to have $75 million by March of 2018.

Why did BRED decide to open here rather than purchasing an existing bank?

We wanted to start from scratch. When you do that you can grow faster than purchasing an established bank. Also, when we first made the decision to come into Cambodia back in 2014, we were already seeing evidence that there would be a lot of consolidation and mergers in the market.

We want to be able to move quickly on our own with our institutional strength, rather than looking to invest in other banks. There is no plan to invest in another bank right now, but that could change in the future. While it is true that purchasing a bank would put us two or three steps ahead of where we are, you have to make sure that a lending institution fits our business model. And yes, there is a lot of competition in the market, and even if we are small in the beginning, we are backed by a large group to move quickly. We plan to break even in the next two years and then start making money.

This interview has been edited for length and clarity.