You are the founder of the Canadia Bank, the largest bank in Cambodia. Can you present us your bank, its main developments since its formation and tell us why you decided to create it?

I left Cambodia in 1980 to go to Canada. The situation in my country was quite unstable and we wanted to go abroad to have a new life. In 1988, I received a letter from my uncle who had come back to Cambodia from Paris. In that letter, he explained to me that things had improved a lot in Cambodia at the political and economical level and that it was time for me to come back. So in 1991, I came to Cambodia, met some businessmen and government people and decided to establish a business. While being in Canada, we had a jewelry store and people were asking me to send their money towards family members in Cambodia. Although it began with small amounts, in 1989 we were sending already 5 million USD, which is a huge amount. This transfer of money concept gave the idea to create a bank.

At that point, there was not much confidence in the country and although the policy of the Government was to attract foreign investment, specially the one coming from Cambodians living overseas, we decided to create a trust company which was also able to provide banking services. At that time there were just 5 banks in Cambodia and my bank started to flourish thanks to the UNTAC and its soldiers that made a lot of deposits.

In 1993 the Governor of the Bank of Cambodia approached me requesting me to formally transform my trust company into a bank as it was growing so fast. Although our initial capital was not enough, the Governor told me we could start already with 1.5 million USD. As we had a lot of depositors and also plenty of Cambodians from overseas trusting in our bank, we managed to grow and currently my bank's total assets amounting of 174 million USD. In deposits we have 150 million and our reserves in 2002 totals 18 million USD. Currently my deposits are about 26% of the whole country's deposits and our loans are about 32% of country's total.

Can you give us some other facts and figures about your bank?

What concerns the customers, we do not have the statistics on that, but mainly we deal with local businessmen and other foreign businessmen coming mainly form China, Taiwan, Hong Kong, Singapore and Malaysia. We have a hard time attracting Western businessmen as they consider our country not to be reliable. They prefer to deal with foreign banks, as they do not have so much confidence in local banks, my bank is local owned even if the capital comes from foreigners, the money is always in Cambodia.

We have a total of 12 offices throughout the country one head office, one exchange office and ten other branches. There are 290 employees from which around 100 are security guards. This is needed to create confidence with our customers. There are no security companies to transport the money, so I must provide the trucks to send the money to our clients.

Since the application of the new banking law, there are 17 banks left operating in Cambodia, what would you consider are your competitive advantages in respect to those other 16 banks?

Before the application of the Banking Law, there were a lot of speculators obtaining a license for other purposes than just banking in Cambodia. Others thought that with the low capital requirements, just 5 million USD, they could come to Cambodia to make easy businesses, but in fact they were always disappointed and their level of business became so low that they had to shut down or the Government revoked their licenses. With the new requirements, there are just 17 banks left complying with the Banking Law.

What concerns our competitive advantage, we are creating the confidence in the people, even during hard times, and we have stayed while other banks, mainly foreign, ran away. We even remained opened during the July events in 1997. Everyone came to get their money so we decided to limit the withdrawals to a 1,000 USD per day and with the priority to customers who had to deal with foreigners in order to let them respect their payments and keep on business. Luckily at that time we had a lot of cash reserve, so we suffered a lot for more than 20 days, but later when everything cleared up, the depositors came back. Since then we have an image of reliable bank. Our money is here, not invested abroad. We also have quite a high cash reserve, between 52% and 48%, people is used to keep a lot of cash for safety reasons. So Cambodia's loan and deposit spread is very high because a lot of bankers keep cash in hand. Another thing is the solvency ratio of the Central Bank, it is always higher than international standards, so even when the normal ratio is around 8%, in Cambodia is 20%, 2.5 times the average, in Cambodia, every bank keeps the cash.

Your bank is also known for its product innovation, what are the main services and products you are offering?

Our bank is the first commercial bank in Cambodia to use the smart card system. We integrated this system from a French company called BULM. We were also the first banks to introduce an ATM machine for my cardholders, but it seems not to be so successful. This is mainly due to the fact that Cambodians are quite conservative and they always want to have cash in hand. In 2001, we became a principal member of MasterCard and a principal member of VISA in 2003. This has helped to increase the country's image.

Another of our advantages is our relatively small size that helps us take decisions quickly and easily on subjects like loan requests. When it comes to loans, we know the local people and business so we can take decisions easily and efficiently. Also my staff is part of my competitive advantage, most of them are multi-lingual, making Chinese, English and French investors feel comfortable. We also have several facilities without charge and we even offer some VIP services.

What other projects or services is Canadia Bank developing?

In 2001 we have created our venture capital, so when a client comes with a good project and they have funding above 10% of it, we take the project for study and if it qualifies as a good project we finance the rest of it. We have two conditions, the first one is that we must manage the finances and the second one is to obtain a good profit share. It doesn't have to be seen as equity participation, it is just a loan. So every year the developer must pay interests, the profit sharing and some small management fee to the bank. With this way of working we can help develop the country. There are plenty of people with good ideas but no money to implement them so our bank gets involved and helps those entrepreneurs to realize their projects. It is hard to find businessmen willing to get involved in projects above one million USD, but we already have created an industrial park, a shopping mall, a convention and multi purpose hall and a cultural village with this formula.

You are mainly focused on the local level but what are the plans of the bank to internationalize its activities and get involved in international projects?

International development projects are not that easy to start. We started dealing with IFC (International Finance Corporation) and the World Bank, but with Cambodia's image it is not so easy to get funding from this kind of institutions. We presented a project for renewable energy in 1999 with feasibility studies included and after three years we still have no answer. Some of my clients ask if it is possible to obtain from the IFC long-term low interest loans, but in fact in Cambodia it is difficult to find this kind of projects. Mainly also because of the competition big projects should have to face with our huge neighbors Vietnam and Thailand.

In order to get into the international scene, do you think you would need to create a strategic alliance or a partnership with a foreign institution?

We started up one project with a German financial institution called KfW. They prepared a 10 million EUR grant to Cambodia and asked the Ministry of Finance to chose some banks in Cambodia as their partner to run an SME (Small and Medium Enterprise) project. Our bank was chosen, as we are quite active on the small business loan. So, they sent a consultant to our bank and the project was approved.

We are interested into obtaining long term funding, I am talking of ten years with three years grace period. The problem you encounter in Cambodia is that if you deposit 1 million USD, 48% to 52% of it must remain in the bank. So our target is to find foreign financial institutions to have long-term local funds for economic development. My loan interest now is 12%, just the prime rate. This is very hard for local businessmen, we have to reduce the interest rate.

With all your experience in the Cambodian banking system, what would you say are the strengths and weaknesses of this system?

One of the points to improve is to be really connected with foreign financial institutions. Not only at the technical or the management level, the most important is the funding. We have had a good start but I think this is a long process. The moment we start to have a more attractive long term, low cost funding, and industries will start to get profitable. The factories can deal with a 7% or 8%, but 12%, as it is currently it makes its development quite hard.

On the positive side, the Cambodian banks have little Government intervention and although the start-up requirements are quite high, the Governor of the Central Bank does not ignore the banker's needs. The Government has established a working group with the banks and the Banker's Association to ask their opinions about new issues. They see the banker as a partner and they want to know about their problems and their opinions.

Do you have any kind of training policy for your own staff in order to develop their skills?

When we started our bank, most of the management team was former employees of the National Bank or people we had brought over from Canada or France. We required university level and mastering several languages. Currently we have training programs on Saturday for languages and internal management. We also encourage them to acquire computer skills and to obtain new degrees by paying them 50% to 80% of their fees. We also send employees to seminars abroad to improve our bank staff's skills. So, as you can see our bank is indeed committed to help our staff develop.

What would be your final message to foreign investors willing to come to Cambodia?

My opinion as a bank manager is that when a foreign investor decides to come to Cambodia, the first thing he has to do, is to choose a good partner. Second, there is a need to maintain a good communication at the right government level and also at a right timing. The most important thing is you need to do a good market research. Choose a good project with a good partner and invest the money in research.