Acleda Bank delivered a New Year's surprise Thursday, announcing it obtained

permission from the government of Laos to open a commercial bank there in

2008.

Officials of Acleda called the expansion to Laos just the first of

a regional expansion. Investment in other countries is likely to

come.

Lao PDR has one of the most underdeveloped economies in Asia, but

like Cambodia, its finance and banking sector is developing and it is working

with help from the Korea Exchange to set up a stock market. The stock market is

expected to open in 2010, a year after Cambodia's stock market, with state run

companies listing.

In Channy, Acleda Bank president and CEO, said the

banking market in Laos is smaller than Cambodia with less

competition.

"Most commercial banks are operating in the capital city,

Vientiane, and they are now starting expansion to the provinces."

Channy

called the expansion the result of a three-year strategic plan he presented to

the Board of Directors in 2005 to build Acleda into a regional player. He said

Acleda is studying the possibility of entering Vietnam and China, as well as

other Asian markets.

He said the Lao bank will use the same retail

banking models, including electronic banking services and online MIS platforms,

that were developed for Cambodia.

Vann Saroeun, who will manage Acleda

Bank Lao Ltd., said plans are to expand to the provinces as soon as possible

starting with Sovannakhet and Pakse.

Saroeun managed Acleda operations in

Siem Reap and Uddar Meancheay since 1993.

He said the microfinance

industry in Laos is dominated by development funds in the north.

"There

is only one microfinance bank but there are many many development funds. We have

a different target."

The bank will begin operations at the beginning of

June, said Saroeun. He said recruitment will begin in January for a staff of

about 80.

"It's a very long process. We have to advertise by radio and tv

and newspapers." Saroeun has taken a crash course in the Lao

language.

Acleda, which now has $450 million in assets, started

operations as a microfinance NGO in 1993 making loans to the poor.

Paid

up captial for the Laos bank is $10.5 million.