With faltering steps, an elderly customer navigates her way to the end of a queue in the bright, airy and revamped branch of Barclays Bank.
She looks at the self-service kiosks, notes the absence of traditional glass counters, spots staff dealing with enquiries via tablet computers and turns to her friend. “It’s bedlam in here,” she says.
She might not be a tech-savvy, time-pressed, financially proactive customer, but she probably visits the branch twice as often as somebody half her age.
So, how can the banking industry convince her that the modern counter-free branch with more screens than staff is going to serve her better than the more traditional bank?
The British Bankers’ Association, which represents the major UK banks, says there is a “revolution” taking place in UK banking. Smartphones, contactless cards and competition are changing the way customers use their bank, it says. It points to the fact that nearly £1bn a day is transferred using the internet. Transfers using mobile phones and tablets are up 40% in a year. But 67 million transactions a week still take place in bank branches, and the BBA says there is still a need for a High Street presence. “While the size of these networks will decline, High Street outlets will remain important for those bigger moments, such as when a customer takes out a mortgage, wants to assess their financial options or resolve a complaint,” the BBA says in a report on modern day banking. As a result it is inevitable that the way bank branches look and operate will alter, it adds. Such a move is referred to, in business-speak, as the “change curve” by Steven Cooper, the chief executive of Barclays Personal Banking.
He started his career as a cashier in a Barclays branch in London at the age of 16. Now, 28 years later, he has overseen the change that effectively strips away the very counters behind which he used to sit. “I did not want a pane of glass between the customer and Barclays. I want it to be open, friendly and more comfortable,” he says.
New technology has changed the bodywork of the branch, and it has altered the way the engine runs too. A more automated system ends the “soul destroying” work of processing cash and cheques, he says. Mr Cooper has abolished his old role of cashier. Since the start of October, branch workers have been known as community bankers. These members of staff are now seen wielding a tablet computer in branches, dealing with enquiries that cannot be resolved at the self-service counters.

The central bank has relaxed the provisioning requirements for banks against their investment in mutual funds in light of the deteriorating situation of the capital market.

Banks will not have to keep provision for losses against investment in mutual funds if the unit's cost price is equivalent to or lower than 85 percent of its net asset value (NAV) in current market prices, Bangladesh Bank said in a notice yesterday.

Earlier, if the cost price was Tk 10 per unit and its value dropped to Tk 5 in the market, the bank had to keep provision for the Tk 5 loss without considering the NAV of the mutual fund. Now if the NAV goes down to Tk 8.5 or less, the bank does not need to maintain any provision.

Bankers said many banks that have huge exposure to different mutual funds will get more investible funds, thanks to the BB's relaxed rules.

“This is a realistic move for banks at the moment,” Sayeed Ahmed, chief financial officer of Pubali Bank, told The Daily Star.

At present, about 40 closed-end mutual funds worth Tk 4,440 crore are listed on the Dhaka Stock Exchange.

Banks have exposure to Tk 1,125 crore worth of mutual funds, and most of the mutual funds' market value and NAV have gone down far below the cost price.

If the cost price of the unit is higher than 85 percent of the market value or NAV on the basis of current market price, banks will have to keep the provision by following two methods.

First, if the market value is equivalent or higher than 85 percent of NAV on current market price, banks will have to keep the provision by deducting the market value of the unit from the cost price.

Secondly, if the market value is less than 85 percent of NAV on current market price, banks will have to keep the provision by deducting the 85 percent of NAV on current market price from the cost price of the unit.

In case of open-ended mutual funds, banks will not have to provision losses against their investment if the cost price is equivalent or lower than 85 percent of the market value or NAV on current market price.

If the loss exceeds the ceiling of 85 percent, banks will have to keep provision by deducting the 85 percent of NAV on current market price from the cost price of the unit.

USD 35 million approved on expansion of the luxury hotel

Managing Director of Unique Hotel & Resorts Ltd. Mohd. Noor Ali signed a US$ 35 million foreign currency loan agreement recently with Standard Chartered Bank to fund the company's expansion plans into the hospitality sector. CEO, Standard Chartered Bank Bangladesh Abrar A. Anwar also seen.

Standard Chartered Bank and Unique Hotel & Resorts Limited (owner of The Westin Dhaka) signed an agreement recently to fund UHRL's ongoing expansion programmes into the hotel sector, said a statement.

Mr. Mohd. Noor Ali, the Managing Director of Unique Hotel & Resorts Ltd. signed the agreement on behalf of UHRL. Mr. Abrar A Anwar, CEO, Standard Chartered Bangladesh was also present on the occasion.

Unique Hotel & Resorts Ltd. is the owner of The Westin Dhaka - an internationally branded chain hotel in Bangladesh. The company has plans to set up two internationally branded 5 star hotels at Gulshan and Banani in Dhaka. Standard Chartered Bank has approved USD 35 million term loan to fund the on-going expansion programmes of Unique Hotel & Resorts Ltd.

On this occasion, Mr. Mohd. Noor Ali, MD of UHRL said, "This landmark deal will help Unique Hotel & Resorts Ltd. to lower its funding cost by availing financing in foreign currency and further consolidate its position as leading player in the hospitality sector in Bangladesh. We are really happy to sign this agreement with Standard Chartered Bank, as they are providing an innovative financial solution that will benefit us and our shareholders immensely."

Mr. Abrar A. Anwar, CEO, Standard Chartered Bank Bangladesh said. "We are really pleased to come up with such a solution for Unique Hotel & Resorts Ltd. This agreement is another testimony of our commitment to continuously innovate and provide the best financial solution to our clients and customers and also to bring global best practices to Bangladesh."

Bangladesh Bank (BB) has asked the First Security Islami Bank (FSIB) not to offer cash dividend for the year 2014 because of its provision shortfall.

Bangladesh Bank sent a letter to the bank yesterday with an instruction for not announcing any cash dividend, according to BB sources.

On the other hand, the FSIB board of directors is scheduled to sit today to decide on the dividend issue for the year 2014, considering the audited financial statements of the bank.

A primary investigation of the central bank conducted over the quick report of the FSIB has found the provision shortfall of Tk15 crore at the year-end of 2014.

Of the shortfall amount, the bank maintained only Tk3 crore in December last year. However, The bank has requested the central bank for an exemption from provisioning the rest of the amount of 12 crore till the year 2015.

In response, Bangladesh Bank allowed the bank to maintain the shortfall in two phases by June and September quarter this year.  At the same time the bank has been asked not to provide any cash dividend to the shareholders.

Bank company act also does not allow cash dividend for a company that suffers from provision shortfall.

Earlier, at the bankers meeting held December last year, the top managers had demanded for allowing banks to offer cash dividend to the shareholders, which is now prohibited as a pre-condition of the exemption in provisioning.

The banks were given the provision facility, against the losses they incurred through investing in the capital market in 2010, on a condition that they won’t be able to declare cash dividends.

Meanwhile, First Security Islami Bank made a decision to announce 10% cash dividend for last year, as the company was not in a shortfall before the investigation by the central bank, said a senior executive of Bangladesh Bank.

Though the maintained provision was Tk268 crore in the quick review report prepared by the bank, the investigation team of the central bank identified more accounts as classified, which caused the provision shortfall of the bank, he said.

The bank showed huge operating profit of Tk221 crore in the year 2014 but the net profit came down to only Tk67 crore due to more provisioning, he observed.

The bank had declared 10% cash dividend to the shareholders in the year 2013. It is running with paid up capital of Tk617 crore.

The non-performing loans of the bank stood at Tk340 crore at the end of December last year from Tk248 crore in the same period of the previous year, according to the Bangladesh Bank data. 

Bangladesh Bank Governor Atiur Rahman has expressed dissatisfaction as BASIC Bank’s sacked top officials have not been arrested yet despite allegations of huge anomalies.

The bank’s ex-chairman Sheikh Abdul Hye Bacchu and managing director Kazi Faqurul Islam were removed from the posts over the allegations of involvement with the Tk4,500 crore loan scam.

“It’s very sad that the two have not been arrested yet. But they face allegations of direct involvement with the financial irregularities in the BASIC Bank,” Atiur Rahman lamented at a meeting of the Parliamentary Standing Committee on Finance Ministry recently.

When contacted, Anti-corruption Commission Chairman M Badiuzzaman yesterday told Dhaka Tribune that they are investigating into the allegations against the bank’s former top brass.

“We are inquiring into the allegations, after which, cases will be filed. Then the issue of arrest will come,” he said.

On May 25 last year, the central bank removed Kazi Faqurul Islam on the charge of the irregularities. 

On July 6, Sheikh Abdul Hye Bacchu stepped down after facing the allegations.

Last month, the central bank directed the management of the crisis-ridden bank to reduce the volume of non-performing loans through intensifying recovery derives.

The overall NPL of the bank rose to Tk6,148 crore as of September 30 last year from Tk1,863 crore a year ago, according to the central bank data.

Earlier, the central bank had found various irregularities in the BASIC Bank in giving out loans, which include no verification of customers’ credit worthiness, absence of know-your-customer procedures, and providing loans to defaulters.

Bangladesh Bank investigations found financial irregularities involving around Tk4,500 crore  worth of loans in three branches of BASIC Bank, located in Gulshan, Dilkusha and Shantinagar in the capital.