An employee walks behind the logo of BNP Paribas in a company’s building in Issy-les-Moulineaux, near Paris recently 

US authorities negotiating with BNP Paribas over alleged sanctions violations at one point suggested that France’s biggest bank pay a penalty as high as $16 billion, according to people familiar with the matter.While the sources said that number was only proposed as a negotiating tactic in response to an offer from BNP of about $1 billion, the dollar figures being thrown around demonstrate what bankers and their allies say is an alarming trend of ever-increasing record penalties.A $16 billion settlement would have pushed BNP’s penalty above the biggest ever for a bank — JPMorgan Chase & Co, which paid $13 billion last year to resolve a number of civil mortgage-related allegations.More recently, authorities have been discussing a settlement with BNP in the range of $10 billion, sources have said. US authorities are probing whether BNP evaded US sanctions relating primarily to Sudan between 2002 and 2009, and whether it stripped out identifying information from wire transfers so they could pass through the US financial system without raising red flags.The New York State Department of Financial Services, one of the five offices negotiating the settlement with BNP, could receive at least $2 billion of an eventual $10 billion deal, according to a source familiar with the matter. That would be more than three times that office’s $552 million annual budget this year.A $10 billion fine would almost wipe out BNP’s entire 2013 pretax income of about 8.2 billion euros ($11.2 billion). BNP reserved $1.1 billion against a potential fine.Representatives of the Justice Department and BNP declined to comment on the negotiations.In the past two years the US Justice Department has said it’s broken records on penalties for corporate misconduct at least seven times, including three times this year alone. The most recent was Credit Suisse in May, which paid $2.6 billion over charges that it helped American evade US taxes, the largest penalty ever levied in a criminal tax case.Total corporate criminal penalties in the United States overall increased about 647 per cent between 2001 and 2012 to about $4.3 billion, according to figures compiled by University of Virginia law school professor Brandon Garrett.The robust growth in corporate penalties, especially for banks, has defence lawyers questioning how authorities calculate each landmark settlement and how institutions can prepare for such fines they might face.Banks are also deploying strategies to try to keep the numbers from growing, including enlisting top executives in settlement negotiations and taking their chances going to trial.‘I think everyone realizes that it’s an exuberant market,’ said one defence lawyer who has negotiated recent settlements with the Justice Department and declined to be named.There are multiple explanations for the rising fines. For one, cases related to the 2007-2009 financial crisis have produced big settlements connected to trillions of dollars in subprime mortgage financial products. US authorities have also turned their attention to other crimes involving big dollar amounts, including money laundering, sanctions violations and the rigging of benchmark interest rates.The Justice Department may also be responding to political pressure, especially because no high-profile bankers have gone to jail for the role they played in fuelling the financial crisis.

 IFIC Bank Limited signed an agreement with Mars Stitch Limited to provide IFIC mobile banking services to the employees of the company.

As per the agreement, the bank will facilitate the Mars Stitch Limited in disbursing the salaries and other payments of its employees through IFIC mobile banking services, said a press release.

Shah A Sarwar, Managing Director and CEO of IFIC Bank Limited and Md Arif Mahmud, Managing Director of Mars Stitch Limited signed the agreement at the bank’s Gulshan office in Dhaka recently.

Aziz Ahamed Bhuiyan, Chairman of Mars Stitch Limited, Monirul Islam, Director, Md Nurul Hasnat, Relationship Manager of Gulshan Branch, Ashim Chowdhury, Head of Business Project Delivery, Ferdousi Begum, Head of Retail Banking, Mohammad Monirul Islam, Head, Mobile Banking Division, and Tasnuva Tarek, Head of Business of Mobile Banking Division of IFIC Bank attended the signing ceremony.

The government borrowing from the banking system would increase by 20% in the next fiscal year as compared to the current fiscal year to meet the widest deficit of the new budget.

The ceiling of bank borrowing has been set at Tk31,221 crore in the new budget which was set at Tk25,993 crore for the current fiscal year, according to a source in the finance ministry.

Though, the government increased the borrowing target to Tk29,982 crore in its revised budget due to fall in revenue collection.

Of the total amount of borrowing, Tk19,824 crore has been set for long term credit and Tk11,397 crore for short term credit, which was Tk16955 crore and Tk13,027 crore respectively in the revised budget of the current fiscal year.

The government needs to increase the amount of bank borrowing due to the demand for higher allocation by different ministries and divisions amid a slow revenue growth, a finance ministry official said yesterday.

The higher target of borrowing from the banking system is apprehended to affect the private sector and put pressure on inflation, said former adviser to a caretaker government Mirza Azizul Islam.

Entrepreneurs are now preparing to come up with large scale investment as private sector investment was nearly closed ahead of general election on January 5, said a senior executive of a private bank.

In these circumstances, higher ceiling of government borrowing might affect the liquidity position in the money market, he said.

The government borrowing in the current fiscal year did not affect the money market due to lower demand by private sector, he added.

The government wants to borrow Tk43,277 crore from domestic source in the new budget which is 27% higher from Tk33,964 crore that was set for the current fiscal year.

The borrowing target from foreign source has been set at Tk18,069 crore in the upcoming budget.

The target was set at Tk14,398 crore in the current fiscal year and cut down to Tk12,613 crore in the revised budget to be placed today.

News:Dhaka Tribune/05-Jun-2014

Dhaka Bank on Wednesday donated Tk 1.2 crore to Khulna University & Rotary District Community Hospital under its CSR initiatives at a programme in Dhaka.
Bangladesh Bank governor Atiur Rahman was present at the event as chief guest, said a news release.
Dhaka Bank chairman Abdul Hai Sarker, directors, and managing director Niaz Habib, and Bangladesh Bank deputy governors were also present.
KURDCH chairperson Ferdousi Ali received the cheque on behalf of her institution.

Bangladesh Bank will set simple rate of interest on farm loan instead of existing compound rate of interest in a bid to save the farmers from the burden of bank interests, said officials of the central bank. The BB will receive the relaxed rule in its upcoming agriculture and rural credit policy and programmes for financial year 2014-15. The credit policy is likely to be declared next month. Under the simple rate of interest, the farmers will pay their interest of the bank loans at the end of loan tenure meaning that they will get relief from a huge amount of interest. ‘The farmers are now counting interest on quarterly basis. From second quarter on, they have to pay the interest on the principal amount including the quarterly interest’, a BB official told New Age on Wednesday. The tenure of farm loan is maximum one year. The banks usually set compound rate of interest for almost all types of credit products, but they will have to set the simple rate of interest for the farm loan from July, he said. He said that the new policy would help the farmers to repay the bank loans as they would count lower rate of interest than the existing rate of interest. He said that the farmers would be able to protect themselves from the defaulting situation when the new policy will be introduced. The BB is likely to set farm loan disbursement target for local and foreign banks at around Tk 15,547 crore for the FY15 in its new farm loan policy. The probable loan disbursement target is 6.52 per cent higher than that of the current FY. The BB had set annual farm loan disbursement target at Tk 14,595 crore for the FY14, Tk 14,130 crore for the FY13 and Tk 13,800 crore for FY12. The banks disbursed Tk 14,667.49 crore, or 103.80 per cent of the annual target of Tk 14,130 crore farm loan in FY13. In the FY12, the banks disbursed Tk 13,136.91 crore, or 95 per cent, farm loan against the target of Tk 13,180 crore. Farm loan disbursement by the banks stood at Tk 13,109.53 crore in July-April of the FY14 against the annual target of Tk 14,595 crore. The banks collectively disbursed 89.82 per cent of their annual farm loan target in the first 10 months of FY14 whereas 83.09 per cent was disbursed during the same period of FY13.