United Commercial Bank (UCB) as the lead arranger recently raised US$ 23.03 million under the Investment Promotion and Financing Facility (IPFF) of Central Bank funded by International Development Association (IDA) of World Bank. Bangladesh Bank disbursed a fund of $ 19.91 million which will be utilized for financing a 50 MW independent power generation plant. The said fund would be disbursed through UCB and Trust Bank Limited, says a press release. Bangladesh Bank, with the financial assistance of World Bank, is implementing the IPFF project for financing in a wide range of infrastructure development ventures in six key areas including ports, power, environment, industrial estates and water supply. UCBL, in near future will arrange more financing for projects that will meet the infrastructure development needs of the nation. On behalf of the participating Banks, Muhammed Ali, managing director, United Commercial Bank Limited and Ishtiaque Ahmed Chowdhury, managing director of Trust Bank Limited, signed the Facility Access Agreement. The Deputy Governor of  Md Abul Quasem signed on behalf of Bangladesh Bank.

News:The Independent/02-Nov-2013

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Sajjadur Rahman

Islami Bank Bangladesh Ltd, a leading private sector bank, has made a profit of a mere Tk 20 lakh in the third quarter this year, down from more than Tk 83 crore during the same period last year.
Its nine-month profit (after tax) slid to Tk 194 crore this fiscal year against Tk 505 crore a year ago.
Prime Bank’s nine-month profit went down to Tk 43 crore this year from Tk 212 crore at the same time last year.
Almost all banks — from Mutual Trust to Dhaka Bank, SIBL, Eastern Bank and AB Bank — saw their net profits fall drastically during the first nine months this year compared to the same period last year.
However, data from third quarter and first nine months of the fiscal year show that Bank Asia, United Commercial Bank, Southeast Bank and IFIC Bank performed well compared to the same time last year.
Bankers attributed the erosion in profit to new loan classification and rescheduling rules by the central bank and the presiding anti-business climate in the run-up to national elections.
“Increased loan-loss provisions based on the central bank’s new rules have eroded our profits,” MA Mannan, managing director of Islami Bank, told The Daily Star.
Islami Bank had to set aside more than Tk 500 crore from its nine months’ profits to provision against possible loan losses.
“We are feeling extreme pressures at the moment, but things may improve in the next quarter,” said Mannan.
Despite good business in the third quarter this year, the nine months’ profit figure for Jamuna Bank brought down its earnings per share to Tk 0.59 from Tk 1.73 at this time a year ago.
“Our business growth was excellent in the third quarter, but we had to make provisions for some bad loans in past years,” Shafiqul Alam, managing director of Jamuna Bank, said.
Alam said his banks’ provisioning requirement doubled to Tk 100 crore for the nine months this year from Tk 50 crore in the corresponding period a year ago.
The nine-month net profit for EBL also witnessed a sharp fall to Tk 104 crore this year from Tk 123 crore a year ago. For the third quarter, the bank’s net profit stood at Tk 6.56 crore and earnings per share at Tk 0.11 against Tk 34.42 crore and Tk 0.56 respectively for the same period last year.
“Overall, the banking sector is not in a good condition. Non-performing loans have been increasing and may be, banks will not be able to give good dividends for this year,” said Ali Reza Iftekhar, managing director of EBL.

News:The Daily Star/02-Nov-2013

Rejaul Karim Byron

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Sonali Bank board has rejected any possibility of rescheduling Hall-Mark Group’s loans worth Tk 2,554 crore that were taken out through fraudulent means despite the Group’s inability to repay the amount.
The decision, taken on Monday, was arrived at after assessing Hall-Mark Group’s total asset, their repayment capacity and their lawyers’ opinion, and was conveyed to the finance ministry’s banking division on Wednesday.
The state-owned bank also concluded that the Group does not have the capacity to repay the loans and therefore proposed filing several cases against the disgraced company, said a finance ministry official upon condition of anonymity.
The move comes after the finance ministry in March asked Sonali Bank to evaluate the Group’s assets and send a proposal to the ministry such that the company’s operations can be resumed.
In the letter to the finance ministry, Sonali Bank said the Group’s assets are worth about Tk 1,170 crore but it has a shortfall of Tk 1,000 crore in collateral against its total loans.
As of June 30, Hall-Mark Group’s outstanding amount to Sonali Bank stood at Tk 2,554 crore. Around Tk 200 crore was taken out as loan and the rest through various irregularities.
The official cited the withdrawal of Tk 1,000 crore against a “mere slip” as an example of the irregularities that took place.
According to the six lawyers that Sonali Bank consulted, the cases have to be filed within three years of detection of the irregularities.

Bangladesh Bank in May last year unearthed the wrongdoings in the state-run bank, which ended up being the biggest banking fraud in the country’s history. The offences took place between 2010 and 2012.
The Anti-Corruption Commission has already lodged 11 cases against several officials of Hall-Mark Group and Sonali Bank, but there has been none by Sonali Bank yet.
According to Sonali Bank’s latest data, Hall-Mark Group took loans of Tk 2,964 crore, of which it has already adjusted Tk 410 crore. As a result, the company still owes the state-run bank Tk 2,554 crore.

News:The Daily Star/02-Nov-2013

Rejaul Karim Byron

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The government yesterday exempted four foreign banks from the mandatory requirement of a subsidiary to participate in the stockmarket for the sake of development of the capital market.
The four banks are: Standard Chartered Bank, Citibank NA, HSBC and Commercial Bank of Ceylon.
The move comes after the central bank last month, as per the Banking Companies Law, sought the finance ministry’s opinion on the matter in a bid to boost portfolio investment.
The recently amended law has made it compulsory for banks to form a separate subsidiary if they want to offer share market services — a time-consuming and tricky process for foreign banks.
To form the subsidiary, the foreign banks would require approval from their headquarters, which, in turn, would require authorisation from their regulators.
As the size of the capital market in Bangladesh is still small, the headquarters of the foreign banks are unlikely to give permission for separate subsidiaries.

A high official of the central bank said the four banks have been providing custodian services to foreign multinational banks and financial institutions in the share market.
The amount of portfolio investment of the foreign financial institutions through Standard Chartered Bank, Citibank NA, HSBC and the Commercial Bank of Ceylon is more than $1.2 billion.
“As these banks account for the lion’s share of the external portfolio investment in the country, the problem caused by the recently amended law should be resolved,” the central bank told the finance ministry.
“Otherwise, the stability of the stockmarket might be hampered,” it added.

News:The Daily Star/02-Nov-2013

Non-financial businesses, including gold and real estate, will have to send reports of transactions they deem suspicious to the central bank from now onwards as part of the government’s efforts to combat money laundering and terrorism financing.
Bangladesh Bank yesterday issued a guideline to be applied by all real estate developers, business firms dealing with valuable metals and stones, trust and company service providers, lawyers, notary and other law professionals and accountants.
For instance, if a real estate developer becomes suspicious of the buyer’s source of money, it would immediately have to send the transaction’s report to the central bank.

The guideline, which was prepared in light of Anti-money Laundering Act, 2012 and Anti-terrorism Act, 2009, will be available in the website of the central bank and has been sent to the presidents of the concerned businesses and professional organisations.

News:The Daily Star/02-Nov-2013