BDC looking to double loan activity within five years
Small business bank is decentralizing and moving up market

Michel Vennat knows all about the financing challenges facing businesses. Early in his career he ran several companies and has he sat across from bankers many times. Now he is on the other side of the desk.

"Having run a business, I bring a different attitude to my work," said Vennat, president and CEO of the Business Development Bank of Canada, in an interview in conjunction with the bank's involvement with Small Business Week. "One of the real joys of this job is the privilege of dealing with Canada's entrepreneurs, who are some of the most innovative and dynamic people in the country.

Vennat, who took over his current position in August, 2000 after a two year stint as chairman, quickly put his stamp in the institution, which provides financing, consulting and venture capital to small and medium-sized businesses.

For one, he spearheaded the decentralization of bank's lending operations. "When surveys are done of small business attitudes towards banks, one of the things they most complain of is the "head-office mentality,"" Bennat said. "So de decided to make our structures more flexible."

Today, local or regional managers in the BDC network make 95 per cent of credit decisions and the loan approval process has been substantially reduced. The bank is also taking a new marketing orientation by pursuing mid-market loans in the $5 million to $10 million range.

According to Vennat, these moves, as well as several others targeted at better exploiting the bank's existing clientele, are setting the stage for a significant expansion of the bank's loan portfolio. His targets are impressive. "We doubled (our portfolio) in the last five years," Vennat said. "And we're going to double it again in the next five."

There certainly appears to be growth potential. Although mergers don't appear to be on the horizon for the time being, Canada's big five banks are focused outward to prepare for increased international competition.

But many believe that mergers are inevitable, and when they do come, the drecreased number of players, will create more opportunities in domestic niche markets.

If there is anyone who can spearhead the BDC's ambitious growth plans, it would appear to be Vennat, who brings a unique blend of public, private and international affairs experience to his position.

After completing his law degree at the University of Montreal, Vennat won a Rhodes Scholarship to study economics and political science at Oxford. From there he moved through a variety of jobs during which he was exposed to most aspects of the business world.

Recently, Vennat has become increasingly concerned about the growing productivity gap between Canadian and U.S. firms. "(Canadian businesses) have made progress, but they need to innovate more," Vennat said. "We also have to invest more both in businesses and in our education system."

The BDC's decision to expand its loan base comes at a pretty good time. According to Brien Grey, a vice-president at the Canadian Federation of Independent Business, the lobby groups members continue to express dissatisfaction at the service that they are getting from big banks.

"Our surveys show a slight yet noticeable decrease in the big banks willingness to provide loans," Grey said. "It seems to be a steady long-term down trend."

In the most recent CFIB survey, conducted during the first six months of 2002, 17.0 per cent of respondents said that the banking industry's willingness to extend credit had worsened, compared to 12.7 per cent who said it had improved.

The figures for the BDC were just about the reverse, with 26.9 per cent saying the bank's willingness to extend credit had improved, with only 11.1 per cent saying that it had worsened.

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Photo caption: According to Michel Vennat, president of the Business Development Bank of Canada, the bank will double its loan portfolio within the next five years.

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Sidebar: CFIB Survey

How has your bank's willingness to provide loans changes in the last six months?

For all Canadian banks:
Improved: 12.7%
Stayed the same: 64.2%
Worsened: 17.0%
No response: 6.0%

For BDC customers:
Improved: 26.9%
Stayed the same: 57.2%
Worsened: 11.1%
No response: 4.8%

 

The Canadian Federation of Independent Business survey was conduct between January and June of this year. A total of 20,282 responses were received including 200 from BDC customers.

 

 

 

peter@peterdiekmeyer.com

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