M Shahjahan Bhuiyan, the managing director of United Commercial Bank Limited (UCBL), has said that the Bank has sustained growth in both profit and operation.

This has been possible mainly because of the highest level of compliance of banking laws. Another healthy factor is “low level” of interference by its directors in day-to-day banking activities, according to the MD. The first generation Bank was once “problem ridden” but now under the present management, the Bank has been able to overcome that stigma.

In an exclusive interview with The Independent recently, M. Shahjahan Bhuiyan shared his views on the techniques he along with his team applied in turning the first generation private problematic bank into a top class service oriented profit making one.

The Bank earned Tk 607 crore operating profit in 2011 amid liquidity crisis in the banking sector, turbulence in the capital market, a soaring inflation and financial meltdown in European countries.

The Bank’s deposit rose to Tk 13,949 crore during the year from Tk 11,307 crore in 2011 with a 23 per cent growth, it provided Tk 11,478 crore loans to customers in 2011 against Tk 9,346 crore in 2010.

The Bank utilised alternative financing to SME sector, continue talent hunt from the market, aimed at wider customer base and banked on deep experience in both the negative and positive sides of the banking to make UCBL earn and continue the sustained growth and achieve the success, the UCBL MD said

Along with profit making the other benchmark indicators of the bank grew as well in the year because of, what the top management claimed, maintaining strict compliance with the banking law and cherishing a solid service to its customers.

The Managing Director said the Bank’s focus to finance small and medium enterprises in a preferred manner wooed thousands of new customers to the bank and brought back many old clients during last two and a half years, which helped the Bank rejuvenate comparatively early.

Starting career with State Bank of Pakistan in 1970’s, Bhuiyan served Pubali Bank, City Bank, and Prime Bank Limited in different positions and capacities.

He joined as Managing Director of United Commercial Bank Limited in July, 2008.

He moved to UCBL as Senior Vice President and in 2002, was closely associated with Credit Management of Prime Bank since joining and promoting the Prime Bank Limited as managing director.

About preferred SME banking Shahjahan Bhuiyan says SME is the focus of his banking strategy. “The Bank can fund only Tk 250 crore to a single borrower. If the single borrower fails in his business the bank falls in severe crisis.
Whereas if the amount equal of the single exposure limit is distributed among 2500 SME entrepreneurs and if a portion of them fails even then, the Bank can recover its profits from well performing businessmen,” he explained.
Shahjahan Bhuiyan said why his crore banking strategy did not include financing large corporate projects. He said majority of the existing Bangladeshi old private corporations and newly developed ones lack adequate corporate culture. Most of the corporations are run by family members for which a well established culture of corporate governance has not yet been developed.

“The rapid funding to SME sector can help generate more employment, pose less risks as credit risks are distributed among many parties,” he added saying this was the reason why the bank focused to SME sectors.  The successful Chief Executive Officer in the banking sector of the country hoped that his bank would secure the number one position in the quality banking within 2015.

“Only quality human resources can help achieve a target with quality service. With the influx of new generation officers the Bank with get a fresh shot in the arms.

The Bank is currently strictly maintaining quality and talent in recruiting bankers. Previously the directors used to intervene in recruitment process and employ their relatives in the banks hampering the overall performance.

“International banks perform well at any stage as their directors never come in the frontline and intervene in recruiting officials. We are following international banks policy in recruitment,” Shahjahan Bhuiyan said.

Another strength of that banks is that 50 per cent of the exiting exporters and importers of the country had experience with the bank. Many of them are now returning to their old bank observing the banks re-emergence.

About corporate social responsibility, the CEO said the government should allow 10 percent of the banks profit for CSR activities. This spending involves the Bank with socially important issues and thus make stakeholders think that that bank is caring for them.

He opposes opening many branches by the bank but supported opening outlets across the country. “Opening of new branches will enhance bank’s risks furthermore,” he opined.

About giving new bank licence, Bhuiyan said the country is earning huge remittance which contribute to the development of the country. These banks he said can open new distance outlet to serve customers with minimum costs. But without ensuring a regime of good governance, he said the future of the banks would not be healthy.
About high lending rate Shahjahan Bhuiyan said the risks of the private commercial banks would increase paving more banks to several banks.

“We want to be a universal bank, which needs to achieve a consistent growth,” Bhuiyan said.
Firstly the bank focused with recruiting high quality human resource to deliver optimum service to its customers, secondly the newly set up management emphasized dedicated banking service with modern products
Success of a bank business relates to a change in activities which included opening to new ideas though research and investigation, and the quality human resources to implement those ideas in the real business and accomplish positive results through team efforts.

Due to successfully implementation of the banking model –– ‘create new ideas, implement those and generate results,’––made the UCBL an example for others in banking service. The result will come positively if you maintain the policy of –good employee, good policy and good guideline—

Earlier, the directors could not realise the situation that only quality service could help uplift performance a commercial bank. The directors now realize that they have to follow the suggestions made by managing directors. The UCBL held less board meetings and executive meetings than other first and second generation commercial banks, which implied that the directors interference was minimum in the Bank.

The Bank has to maintain continuous business growth by selecting viable projects instead of funding at random basis. This selection needs quality human resources which the country is now lacking. The UCBL had hired several brilliant officers who helped maintain its advancement.

The first generation banks lacked in adequate compliance with required banking rules and regulations. The situation improved after gradual enhancement of qualitative changes along with regulations set by different international agencies, he added.

The banking business has become universal which forced competitive banks to upgrade their service to achieve and hold on to at an universal standard, he said adding banks have to ensure quality service and improve capacity building for sustainable growth.

About migration abroad by the local brilliant students he said private banks are facing serious problem with lack of quality human resource because of brain drain. The Bank follows several well performing banking activities in the neighbouring countries and maintain the policy –– “We do business for business”, he said.

The Daily Independent/Bangladesh/ 4th Jan 2012