LONDON: Britain’s big banks could be broken up after the country’s new competition watchdog set out plans for an 18-month investigation into services for small business customers and personal accounts because of a lack of competition.

The Competition and Markets Authority said banks have not done enough to meet the needs of retail customers or small and medium-sized businesses, such as making it easier to switch banks or providing clear information on fees.

The review will mark the latest attempt to open up banking in Britain to more competition and is also likely keep the banks in the political spotlight ahead of next year’s election.

The CMA, which became Britain’s new competition watchdog in April, has the power to order a break up of banks considered too dominant, as well as so-called behavioral remedies, such as improving information given to customers.

State-backed Lloyds Banking Group and Royal Bank of Scotland, the biggest banks for both personal accounts and business banking, are most at risk of being told to cut their market share, potentially by selling more branches.

“Our studies have found that despite some positive developments, significant competition concerns remain which mean that customers may not be getting consistently good service and value from their banks,” Alex Chisholm, CMA chief executive, said. A full investigation had been widely expected. It would take about 18 months, so it would be early to mid-2016 before any remedies were proposed.

Britain’s big four banks, which also include Barclays and HSBC, hold 77 percent of the 65 million personal current accounts in Britain, and have 85 percent of the 3.5 million business current accounts and provide nine out of every 10 business loans, the CMA said.

Current or personal accounts brought in about 8.1 billion pounds ($13.8 billion) of revenue last year for the banks — or about 125 pounds per customer. Revenue from small business accounts was well over 2 billion pounds,the watchdog said.

Shares in RBS fell 1.7 percent by 1100 GMT, the weakest stock in the European bank index. Lloyds shares fell 0.7 percent and Barclays and HSBC were both weaker, broadly in line with the bank sector.

Lloyds and RBS are already being forced to sell more than 900 branches between them by European regulators.

Analysts said these two were unlikely to have to shed much more of their networks, but they could have to cut into pockets of strength. That could include business banking in Scotland, where RBS has 39 percent of the market and Lloyds 30 percent.

An investigation may also raise the threat of more political interference ahead of a general election due by May.

“A break up thesis will definitely make its way into political manifestos and news flow is likely to remain volatile for the banks in this space,” Bernstein analyst Chirantan Barua, said.

Ed Balls, shadow finance minister for the opposition Labour Party, wants to impose market share caps on banks and welcomed a possible full industry investigation. —Arabnews 

Bangladesh Bank (BB) is set to announce two major policies ahead of the festival vacation for Eid-ul-Fitr, starting on July 28.

The central bank will announce the agriculture and rural credit policy for 2014-15 financial year (FY15) tomorrow (Monday), BB General Manager AFM Asaduzzaman told BSS on Saturday.

He said the BB would also announce its monetary policy statement (MPS) for the first half of the current FY15 on Sunday, July 27. Governor Dr Atiur Rahman would unveil the MPS at 11:30am at a press conference at the central bank headquarters in the capital city. The central bank is preparing the new MPS with special focus on some measures for increasing credit flow and spurring local and foreign investment, a BB official told BSS earlier. “There will be some measures to cut lending rate to create more demand for credit in the market,” he said.

Accordingly, he said the interest on bank’s deposit would also be reduced to protect the interest of both the people and banking sector.

The central bank in its two past MPS kept private sector credit growth to 16.5 percent to manage inflation at a comfortable level, which had been soaring due to high food prices. The inflation at the end of June dropped to a 17-month low of 6.97, creating the scope for credit expansion particularly to the productive sectors.

It, however, would prefer small and medium enterprises and similar sectors for credit expansion so money circulation on the market would not increase from non- productive spending, the BB official said. Besides, the central bank is expecting that the current trend of export and import would also help increase credit flow to private sector in the coming days.

The official said that the new MPS would have some measures to create scope of offering incentives to encourage both local and foreign investment. Economists, think-tanks and development partners earlier cautioned that the economy in the next few years would bump into some major challenges. The challenges are driving forward the country’s industrial sector by continuously attracting domestic and foreign investment.

Keeping in mind the long term goal of mobilizing investment from internal and external sources, the next MPS would propose incentive measures for investment in the productive sector, but with a balanced approach so the incentives would not hinder the growth of existing industries, the official said.

Apart from these new measures, the official said that the next MPS would stick to the old strategy to complement the fiscal measures, announced in the national budget for FY15. 

The Asian Development Bank (ADB) will come up with more climate resilient rural infrastructure and energy efficiency projects for environmental sustainability in the coming years while supporting Bangladesh’s infrastructure needs, said ADB Country Director to Bangladesh Kazuhiko Higuchi. “ADB will continue to support education and healthcare projects.  There’ll be more climate resilient rural infrastructure and energy efficiency projects for environmental sustainability, while supporting Bangladesh’s infrastructure needs,” said the ADB country director in an interview with UNB.
He said ADB operations were realigned following the Mid Term Review (MTR) of ADB’s Strategy 2020. “Most MTR priorities have already been operationalised in Bangladesh,” the ADB Country Director said. ADB’s Board of Directors approved the MTR report recently.
“As per the MTR, ADB would seek to expand education operations to 6 per cent to 10 per cent and health operations to 3 per cent to 5 per cent of its annual approvals of financial assistance, from 3 per cent for education and 2 per cent for health during 2008-2012.”
Higuchi mentioned that proposed investments in regional rail and road connectivity, and reforms in trade facilitation, under the South Asia Sub-regional Economic Cooperation initiative would further deepen regional cooperation.
“ADB is actively exploring public-private partnership (PPP) projects through its transactions advisory services,” he added.
Asked about the ADB’s focus on Bangladesh in the next few years, the country director said ADB would enhance its operations for better delivery of positive development results. “ADB in Bangladesh will strive to achieve these through improving implementation performance; simplification of business processes, including procurement; strengthening private sector operations; and the implementation of PPP transactions advisory services,” he said.
The ADB Board of Directors approved the Mid-Term Review of the Strategy 2020 on April 23 this year.
Revealing the outcome of the mid-term review of the Strategy 2020, Higuchi informed the MTR found that ADB had closely aligned its operations with Strategy 2020’s three strategic agendas: inclusive economic growth, environmentally sustainable growth, and regional integration.
During 2008-2012, he said that more than 80 per cent of ADB operations were in Strategy 2020’s five core areas-infrastructure, environment, regional cooperation and integration (RCI), finance sector development, and education. Infrastructure operations were the main channels of contribution to the three strategic agendas.
The success rates of completed ADB projects have improved in recent years, moving towards the corporate target of 80 per cent. The MTR suggests further strengthening of ADB’s institutional effectiveness, including staff skills and business processes.
Replying to another question, he said the review suggested 10 priorities for further enhancing and focusing ADB operations in its member countries, including Bangladesh. These are: Poverty reduction and inclusive economic growth; Environment and climate change; Regional cooperation and integration; Infrastructure development; More emphasis on middle-income countries; Private sector development and operations; Knowledge solutions; Financial resources and partnerships; Delivering value for money and Organising to meet new challenges.
The country director of the Manila-based lending agency said that ADB would focus on reducing vulnerabilities to economic and natural shocks by strengthening its support to sectors such as health, education, and disaster risk management that promote inclusive growth, reduce vulnerabilities, and empower more people. “ADB will move beyond its role as a project financier to bring a ‘finance++ approach’ to development projects by mobilizing greater resources and more innovative knowledge solutions at the same time ensuring ADB remains efficient and delivers value for money, he said.
Talking about the results of Strategy 2020 so far, Higuchi said that Strategy 2020 has improved ADB’s capability and positioning to respond to the Asia and Pacific region’s development challenges.
ADB’s development investments rose to more than $65 billion during 2008-2012 (the first 5 years of Strategy 2020), up by 75 per cent from the 5-year period (2003-2007) preceding the strategy’s adoption.
Combined with ADB’s support for knowledge and leveraging of additional resources, he said this assistance has supported faster growth in DMCs, helped fill their infrastructure gaps, and contributed to their progress on poverty reduction and the Millennium Development Goals. The country director said that ADB’s sharper focus on development effectiveness and results under Strategy 2020 has earned it a rating of “strong” for corporate strategy and mandate in the 2013 report of the Multilateral Organisation Performance Assessment Network (MOPAN).
Assessments by several other organisations and bilateral agencies have also rated ADB as one of the best performing development institutions in terms of providing value for money.
The Japanese-born country director of the multilateral lending agency informed that ADB’s financing for clean and renewable energy was 11 times higher during 2008-2012 than in 2003-2007, while financing for energy efficiency and conservation operations rose six times.
The share of financing for environment-friendly urban transport in total transport funding increased to 10 per cent during 2008-2012, up from 2 per cent during 2003-2007.
He said that ADB financing for water, sanitation, and waste management interventions rose 
by about 70 per cent during 2008-2012, compared to 2003-2007 levels.
In 2012, ADB financing for climate change totalled $3.3 billion, including $2.4 billion for mitigation and $896 million for adaptation. Private sector development-themed operations grew from an average of 29 per cent during 2003-2007 to an average of 38 per cent during 2008-2013.
Bangladesh has been a member of ADB since 1973. Since then, ADB has so far provided Bangladesh with around $15.4 billion in loans and grants, including $872 million in 2013 alone. 
ADB’s priority areas for support in Bangladesh include energy, transport, urban infrastructure and water supply and sanitation, education, agriculture and natural resources, and finance sectors. As of 31 December 2013, ADB’s current assistance for Bangladesh included 58 loans (48 projects) with $5.19 billion in total value.

The decision was taken in response to a request by Bangladesh Garment Manufacturers and Exporters Association

It will reduce transaction cost for both borrowers and lenders and bring down the demand for funds.