Saturday, Apr 4, 2020
International Finance
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Phongsavanh Bank is focused on becoming the bank of first choice in Laos

Phongsavanh Bank International Finance
Chief Risk Officer Johnson Abraham in an interview with International Finance spells out the bank’s efforts over the years — and its ambition in the long run

Phongsavanh Bank won the International Finance Best Customer Service Bank – Laos 2019 award. What do you have to say about this award win?

We are absolutely delighted to win this prestigious award from International Finance for the Best Customer Service Bank – Laos 2019. We are honoured that the award panel has recognised Phongsavanh Bank’s efforts to provide superior banking services in the Lao market. This award is not only a strong external endorsement of our service capabilities, but will also give us a strategic competitive advantage in attracting more clients.

Phongsavanh Bank’s vision is to be the bank of first choice in Laos. What is the progress achieved by the bank on this vision? 

In order to be the first bank of choice in Lao People’s Democratic Republic (PDR), Phongsavanh Bank is focusing on the five P’s: People, Products, Policies, Process and Place. 

With regard to the first ‘P’ (people), we have made significant progress in attracting well-experienced international talent in strategic functions such as risk management, treasury, finance, HR, credit, AML, and IT security.  Also, we have launched a programme for onboarding well-educated Laotian staff with bilingual skills.  These new resources in turn have helped in developing and strengthening the next three ‘P’s — Products, Policies and Processes. 

The bank is going through a transformation, and we now have a dedicated department to drive reengineering efforts to deliver results effectively and efficiently. The fifth ‘P’ (Place) is related to the significant progress we have made in building and expanding our Distribution Network with over 40 branches and service units, together with over 100 ATMs and 650 POS terminals across the country.

We believe all these efforts will go a long way in building our brand.

What role is Phongsavanh Bank playing in the development of Laos and in supporting foreign investors in the country? 

Phongsavanh Bank has been in the business for 13 years, while our parent, Phongsavanh Group carries forty years of industry experience. Our group companies have a rich history of collaborating with international players in telecom, petroleum trading among other sectors. 

Over the years, we have established strong relations with the diplomatic missions of all countries that have a presence in Lao People’s Democratic Republic (PDR).  Our Group is always on the lookout for joint investment opportunities with foreign investors who are looking for a reliable and trusted partner with strong local market knowledge and influence.

More recently, Phongsavanh Bank established a dedicated International Business Department to offer banking services to foreign investors in Laos. Our bank played a pivotal role in advising the government on its first international USD bond issuance, which turned out to be successful among investors. This debt issuance is a big step toward deepening our capital markets.

In 13 years Phongsavanh Bank has achieved rapid growth. What are the reasons behind the rapid growth of the bank? 

The rapid growth of Phongsavanh Bank can be largely attributed to the first-mover advantage that we have had as the nation’s first private 100 percent Laotian-owned bank. 

Our bank was established by our visionary founder Prof. Dr. Od Phongsavanh in 2007 at a time when the banking sector was largely controlled by government-owned banks.  During that period, there were too many restrictions on banking transactions and people preferred to hold cash, or turn to unorganised sectors such as money lenders and money changers over banks. Our bank removed those hurdles and simplified banking services with fair pricing. This in turn encouraged customers to move toward traditional banking channels. As Phongsavanh Group was already well-known and a trusted name in the market, we were able to attract several new clients in the early years.

Subsequently, we expanded our distribution network across the country, which led to onboarding of several unbanked customers. We facilitated responsible growth by ensuring that anti-money laundering considerations were fully complied with.

What is your outlook for the banking sector in Laos over the upcoming decade and what role will Phongsavanh Bank play in the development of this critical sector? 

The banking sector in Laos is playing catch-up with regional peers in terms of sophistication. We expect rapid transformation to take place with the country’s sustained high economic growth. This will prompt more banks to make substantial investments in technology, particularly on digital initiatives. More sophisticated products can be offered when government regulations around capital movements are relaxed and capital markets open up further.

As Laos is an over-banked economy with over 40 banks, we also expect some consolidation and shake-out, where marginal players may get taken over or shut down by the regulators.

Phongsavanh Bank is closely monitoring these market developments in order to take advantage of emerging opportunities. Our bank is also collaborating with the regulators and multilateral agencies to improve the AML regime and legal infrastructure in Laos. We work closely with Anti-Money Laundering Intelligence Office (AMLIO) and United Nations Office for Drugs & Crime (UNODC) on AML initiatives. Also, we have provided critical inputs for an upcoming regulation related to Enterprise Bankruptcy Law.

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