French bank BRED Banque Populaire – part of the second-largest banking group in France – will start commercial operations in Cambodia later this year, marking the first foray for a European bank in the Kingdom since the late 1990s, sources in the banking sector said yesterday.
In Channy, CEO of Acleda Bank, confirmed that BRED, part of France’s Groupe BPCE, had applied for a commercial banking licence. He said that while the two banks would partner together, given their existing relationship, they would operate independently.
BRED currently owns a 12.25 per cent stake in Acleda through its subsidiary COFIBRED.
Channy added that while his bank will continue its focus on retail banking, it would pass on big corporate clients to BRED, which, he said, would be able to provide heavy loans to large corporations and enterprises.
“They will have their own licence and not use Acleda’s,” Channy said. “If we have large corporate customers, we will not [take them on]. So we will forward them to our partner.”
BRED was part of a $50 million syndicated loan to Acleda announced yesterday by the International Finance Corporation to be used to boost lending to small and medium enterprises, especially women-owned businesses.
According to Channy, BRED’s entry into the market was a big positive for the sector and would be the first bank outside the Asia-Pacific region to set up in Cambodia in nearly two decades.
“Yes, this is very good because so far there are a lot of banks from ASEAN [in Cambodia] and none from the European Union or the US,” he said.
Cambodia had 36 commercial banks, 11 specialised banks and nearly 50 microfinance institutions at the end of 2015.
According to French newspaper Les Echos, BRED will enter Cambodia’s cluttered commercial banking sector by setting up a sales office this year, which will be followed by a network of five to 10 branches.
BRED’s CEO Olivier Klein was quoted in the newspaper as saying that the bank’s initial investment in Cambodia would be between $22.7 million to $33.4 million.
Stephen Higgins, managing partner at Cambodia-based investment firm Mekong Strategic Partners, said BRED had received in-principle approval from the National Bank of Cambodia and had selected a location for its first branch.
Keeping in mind BRED’s full-fledged banking operations in Laos, Higgins said it was likely the bank would follow the same model in Cambodia and not focus only on corporate clients.
“They are very much a full-service bank and they are not going to base it necessarily on corporate clients,” he said. “They may be looking at that, but up in Laos they pretty much do everything as an all-purpose bank.”
Given the large number of commercial banks in Cambodia, Higgins said BRED will have to execute and run their business better than other banks in order to make space for themselves.
According to Higgins, banks would look at two things before entering a market like Cambodia’s – high growth prospects and ease of setting up a bank here.
“They can [set up here], and it’s a high growth market, but when they look at returns it will be a lot less interesting,” he added.
BRED, which is a cooperative bank with shareholder equity of $3.2 billion, announced yesterday that it had posted a record level of activity for 2015, with revenues reaching $1.18 billion and profits of $265 million.
Representatives of BRED could not be reached for comment yesterday.