Cambodia has produced some remarkable stories of survival in recent decades, but few are as inspiring as that of Acleda Bank and the man who heads it. The bank began as a microfinance NGO, helping people rebuild their lives after the horrors of the Pol Pot era. In Channy, its president and CEO, has been there since Day One, having survived years of detention and exile after being forced to drop out of high school and herd cows by the Khmer Rouge.
In Channy, President and Group CEO, Acleda Bank Plc, Cambodia
The story began in 1975 when the Khmer Rouge were advancing on Phnom Penh. In Channy was forced to separate from his parents and leave the capital, where he had yet to finish high school. His former school is now the Tuol Sleng genocide museum, where tourists go to learn about one of the darkest periods of human history.
At the time, anybody was at risk of being brought to Tuol Sleng to be tortured and killed, especially those labelled as "new people", the regime's term for urban civilians. The only hope was to play dumb and follow orders, no mater how insane they were. For 15-year-old Channy, that meant working in a rice field.
One day as he was staggering through the muddy field, he recalls, a wooden stick with the circumference of a five-baht coin pierced the flesh of his right leg, leaving him partly paralysed for almost two months.
"It was in the mud, and I couldn't see," he said, lifting his trouser leg to reveal a long, clear scar.
"After that [the Khmer Rouge] didn't let me stay too long. They assigned me to take care of cows as a punishment because I couldn't walk properly — and I couldn't say no."
There were 320 cows in all. The number is permanently imprinted on his brain because he couldn't afford to lose any. As his leg still hurt, he decided to ride on one of the cows to prevent the wound from getting worse. It seemed like a good idea at the time but it resulted in more pain.
"I hopped on the cow with a knife in my hand. It jumped. I fell, and I cut myself on the same leg," he said. "It was extremely painful, but I couldn't report it because I would get killed. So I used the fat from the cow to smear over my wound for a few weeks until it got better."
As a city boy who had no idea how to milk a cow, he soon learned. He drank the milk from a coconut shell as it was often the only food he had. Hope ebbed and the dreams of youth faded to a real-life nightmare. Yet Mr Channy looks back on the period today and feels thankful for the strength it gave him.
A NEW LIFE
The Khmer Rouge era finally ended in 1979 and the Vietnamese took control of the state. Mr Channy was reunited with his parents, but there was no happily-ever-after story, just the beginning of a new journey.
Two years after the Vietnamese intervention, he fled from Battambang to take refuge in Thailand. For the next decade he lived in the Site II refugee camp near Phnom Dongrak. He completed his high school studies under a UN continuing education programme and then obtained a bachelor's degree from Faculty of Advanced Education in the camp. He then embarked on a career instructing high school teachers in second language teaching in English.
His first break came in 1989 when Mr Channy was awarded a scholarship for a one-year programme at Gwynedd Mercy College in Pennsylvania in the United States. Out of 100,000 Cambodians living in the camps along the Thai border, only two were chosen for the US government scholarship.
"When I went to the US, I thought I would change my career from teaching to something related to business, accounting or finance, so I chose Business Organisation and Management," he said. When he returned to camp he switched to teaching management and accounting.
Returning to Cambodia in 1992 under a UN repatriation programme, Mr Channy found a country at peace but starting from scratch. He started working as a loan officer with the United Nations Development Programme (UNDP) and International Labour Organization (ILO), focusing on employment and income generation for disadvantaged groups, mostly Cambodian refugees and demobilised soldiers.
Under the programme, there were local economic development agencies in five provinces: Phnom Penh, Battambang, Siem Reap, Banteay Meanchey and Kampong Cham, and Mr Channy was named chief of the Phnom Penh agency. In 1993 he oversaw the merger of all five agencies to form the Association of Cambodian Local Economic Development Agencies (Acleda), as a nonprofit microfinance lender for micro and small enterprise development.
Now president of the association, Mr Channy decided he needed to broaden his knowledge of management and finance further. He completed a single-semester executive course on Financial Institutions for Private Enterprise Development (FIPED) at Harvard University, as well as training at the Australian Institute of Company Directors (GAICD). He also holds master's and doctorate degrees in business administration from Norton University and the Institute of Business Education (IBE) respectively in Phnom Penh.
'BANK OF THE PEOPLE'
Acleda became fully self-financed in 1998 and began a transformation from an NGO to a licensed microfinance institution. It was granted a specialised banking licence in 2000 with paid-up capital of $4 million.
Having built an extensive network that enabled it to cover all of Cambodia's provinces and operate profitably, within three years it obtained a fully fledged commercial bank licence with capital of $13 million and became Acleda Bank Plc.
The business took its first step abroad in 2008 with the establishment of Acleda Bank Lao Ltd. The operation became profitable last year and by 2017 the bank expects to have a presence in every province in the country.
"Originally we looked into Vietnam because of its population but the regulations then in Vietnam were not so conducive," said Mr Channy. "Then we looked into the economic situation of Laos, the culture and the need for access to finance there. We saw that it fit with what we do, so we expanded there."
Encouraged by its first success abroad, Acleda began its Myanmar operations as a microfinance institution under Acleda MFI Myanmar Co Ltd, in partnership with the National Bank of Cambodia.
"But we don't want to move fast in Myanmar because the population there is four times bigger than in Cambodia, as well as the land and the need. It will be long-term effort — about 10-15 years at least — to complete [expansion] in Myanmar," he said.
"We are looking forward to the improvement of the banking law and regulations in Myanmar so that Acleda can become one of the commercial banks there."
The licence that Myanmar authorities have offered so far is for wholesale banking, but Acleda is more interested in a retail business.
Acleda Bank Lao today has 41 branches and around 890 staff. In Myanmar, the company has 170 staff in six branches and offices in Yangon and Bago. Mr Channy said the long-term expansion strategy calls for a presence in all 10 Asean member countries and the Mekong region including China. Microfinance markets in the likes of the Philippines, Indonesia and Thailand continue to interest Acleda.
"If we go to Thailand, provinces near Thai-Lao border will be the most appropriate for us," he said. "I'm not looking at the whole of Thailand, just the areas that share similar economic and development stages."
BIGGER FOR THE BIGGEST
Since 2010, Acleda has been the largest bank in Cambodia in terms of assets. With 253 branches and about 12,000 employees, it is also the only local bank rated by an international agency, Standard & Poor's, with a counterparty credit rating of B and a stable outlook.
Fifty-one percent of the bank's shares are owned by Cambodian interests including Acleda NGO and the bank's own staff through the Acleda Staff Association (ASA), which holds 6.1%. The remaining shareholders include Sumitomo Mitsui Banking Corp of Japan, Banque Populaire of France, Jardine Strategic Holdings of Singapore and Tridos Bank of the Netherlands.
"Our asset growth each year has been between 25% and 30%. Everything is on the positive side," said Mr Channy. As of the end of 2013, assets totalled US$2.3 billion.
"We have a plan to list on the Cambodia Securities Exchange (CSX) but we haven't stated a specific time because our shareholders are still able to help us increase capital when we need it."
Currently there are only two companies listed on the CSX: Phnom Penh Water Supply Authority (PPWSA) in 2012 and Grand Twins International (Cambodia) Plc earlier this year.
There are currently 45 banks, both local and foreign, in Cambodia, "Acleda Bank now has the largest market share of both loans and deposits, at about 21% and 22% respectively, more than one-fifth of the whole banking sector in Cambodia," said Mr Channy.
"In terms of active customers, around 90% of loan customers in Cambodia are serviced by Acleda Bank. But in terms of dollars it's only 21% because we serve micro, small and medium enterprise loans with an average loan outstanding of $4,952."
As of August 2014, loans outstanding totalled $1.7 billion to 348,842 active borrowers, including 206,016 micro-business loans.
"We have very small number of corporate loans, about $15-50 million. So far we haven't done much on that," the CEO told Asia Focus.
TRUE TO ITS ROOTS
Having begun life as an NGO, Acleda chooses to start small with microfinance everywhere it goes, to keep building capacity and strengthening the foundation.
"We grow with the local people and the community. Initially, they might need micro loans and small business loans, and then gradually they need medium enterprise and corporate loans. So we grow together like that."
Access to finance for micro enterprises is still very limited in Cambodia because few have land titles. At Acleda, customers don't need to have collateral but they do have to form a group of two to 10 members and come up with a practical business idea.
Though most customers tend to be less affluent, non-performing loans (NPL) at Acleda Bank were only 0.2% of total credit last year, in line with its 11-year average and compared with 2.7% for the whole Cambodian banking system.
"We represent the people and the country as the bank of Cambodia. We promote transparency in banking and finance," said Mr Channy.
"We provide information so that the public knows who we are and what our financial propositions are, as we want to become the bank you can trust and the bank for the people."