Eastern Bank Limited (EBL) received a milestone award of recognition from the International Finance Corporation (IFC) of the World Bank Group as the “Best Global Trade Finance Programme (GTFP) Issuing Bank in South Asia”.

The award is in recognition of EBL’s contributions to trade and supply-chain finance in Asia. The award was handed over to EBL in the 5th Annual Bank Partners Meeting held in Dubai recently, said a press release Tuesday.

Md. Obaidul Islam, EBL Head of International Division and Junaid Masroor, Head of Transaction Banking received the award from Georgina Baker, Director, Global Trade and Supply Chain Solution of IFC, World Bank Group.

Over 275 trade and FI industry professionals from 130 institutions representing 58 countries across the globe participated in the 5th Annual Bank Partners Meeting in Dubai. EBL was the only bank from Bangladesh that participated in the meeting.

The Global Trade Finance Programme (GTFP) of IFC extends and complements the capacity of banks to deliver trade financing by providing risk mitigation in new or challenging markets where trade lines may be constrained.

EBL joined the Global Trade Finance Programme (GTFP) of IFC in 2005 and is using the facility to support more trade and business for its customers and thereby contributing to the economy of the country.

Established in 1956, IFC, a member of the World Bank Group, is the largest multilateral source of loan and equity financing for private sector projects in the developing worlds. IFC promotes sustainable private sector investment in developing countries.

News: Daily Sun/Bangladesh/31-Oct-12

 Bangladesh Bank (BB) has approved a new rating agency named Waso Credit Rating Company (BD) Limited (WCRCL), which takes the total number of local External Credit Assessment Institutions (ECAIs) to seven.

The remaining six rating agencies are—CRISL, CRAB, NCRL, ECRL, ACRSL and ACRL.

In a circular issued Monday, the central bank urged all the scheduled banks to nominate single or multiple rating agencies for their own and counter-part credit rating to calculate the Risk Weighted Asset (RWA) against credit risk as per Risk Based Capital Adequacy (RBCA) guidelines.

As per the RBCA, the RWA against credit risk is to be computed on the basis of credit rating conducted by ECAIs, duly recognised by the central bank.

Consequently, calculated RWA and Capital Adequacy Ratio (CAR) will be reported as per specific reporting formats enclosed in the RBCA guidelines, the BB circular reads.

News: Daily Sun/Bangladesh/31-Oct-12

The state-run Sonali Bank Limited (SBL) received clearance from the Bangladesh Bank (BB) to settle only the genuine 'overdue' payments to the country's 32 local and foreign commercial banks against 'inland bills'.

"We are going to settle some genuine claims of other banks soon as finally we have received a fresh list with the marking 'genuine inland bills' from the BB Thursday last," a senior official of SBL told the FE Sunday.

Earlier, BB slapped an unofficial bar on SBL to accepting or settling payments of any kind of 'inland bills' as it was directly linked with the swindling of loans by the Hall-Mark Group.

Therefore, the SBL had appealed for a written instruction from the BB about the payment procedures of both the genuine and fake 'inland bills' as there was a ban on dealing with such transactions after the scam was exposed.

"But the BB has given us instructions verbally again to settle only the genuine bills," the SBL official mentioned.

The Sonali Bank has also got clearance to accept fresh 'inland bills' or open local L/Cs for the traders, in this case mainly the suppliers to the country's hundred per cent export-oriented ready made garments (RMG) industry, for the sake of the country's economy.

Last week, Sonali Bank had submitted the list of all the alleged 'overdue' claims of 'inland bills' from 32 banks to BB for its final clearance about the payments. The claims amounted to about Tk 15 billion with extra charge.

The SBL has also pointed out that a large number of those claims by the banks are not genuine. Either the branch in question of the Sonali Bank has no record against some of the claims or the branch officials assisted the traders concerned in supplying fake documents.

However, it was not known immediately how many of the 'inland bills' were fake.

But the Sonali Bank may further consider such claims if the bank cocerned can prove the veracity of their 'inland bills' accepted by Sonali Bank.

The respective banks should now scrutinise the genuineness of their claims with their traders, if the Sonali Bank refuses to make payment against the 'inland bills' the same, identified as fake by the BB or the SBL, the SBL official said.

"We will notify the banks concerned about genuineness and settle the payments of the inland bills accepted by Sonali Bank subsequently," he said.

"However, the BB's clearance will help us settle the payments as it is also important for the interest of maintaining business relationship with the other banks," the SBL official noted.

Sonali Bank has already notified at least six local commercial banks that a branch, in this case the city's Agargaon branch, has no record about its claim to the amount worth Tk 540 million.

The SBL authorities have also been instructed by the BB to grant 'acceptance' or buy 'inland bills' from the traders with the 'acceptance' of other commercial banks only after the proper verification by the head office.

The BB already issued a circular for other commercial banks that their branches must take prior approval from their respective head offices while accepting or buying 'inland bills'. They also must verify the goods of the suppliers and the authenticity of such documents.

The total number of overdue accepted bills in the banking sector stood at about 7,260 involving around US$ 363 million as of June 30 last, according to sources at BB.

Most of the bank officials got panicked in dealing with such inland bills, as the Anti-Corruption Commission (ACC) took legal move against the banks' officials concerned and fake 'inland bills'.

The Bangladesh Bank authorities, after a formal meeting with the RMG leaders last week, have verbally instructed the banks to settle all 'overdue payments' and buy fresh 'inland bills' to restore the confidence of bankers and traders.

News: The Daily Financial Express/Bangladesh/22th-Oct-12

The International Monetary Fund (IMF) has softened its stance on a move of the government to increase banks' exposure to the capital market to 40 per cent of the total capital of a bank company to stabilise the flagging market.

On the other hand, the multilateral lending agency remains rigid about enhancing the authority of the central bank to regulate state-owned commercial banks (SCBs) meaningfully, sources at the Ministry of Finance (MoF) said.

The MoF and IMF have been in discussions to settle the two disputed issues in the process of amending the current Bank Company Act (BCA), 2003.

Against the backdrop of the Hall-Mark scam in collusion with an SCB, the justification to empower Bangladesh Bank (BB) to regulate the boards of SCBs, as suggested by the IMF and a government-commissioned high-powered committee, has been endorsed by economists and former central bankers.

The draft BCA (amended), 2012, despite being approved by Finance Minister AMA Muhith, is yet to be submitted to the Cabinet Division as the issue pertaining to empower BB has not been settled with the IMF yet, a top finance official said.

The conditions of IMF tagged under the Extended Credit Facility (ECF) include, among others, amending the BCA with the provisions of banks' exposure to the capital market by 25 per cent of the total capital and empowering BB to fire bank directors, managing directors and abolish boards of directors of four SCBs.

The existing exposure limit of a bank is 10 per cent of its total liabilities as stipulated in the existing BCA (amended), 2003.

"It is because of the persistent efforts by Finance

Minister AMA Muhith, who during the annual meeting of WB-IMF, held in Tokyo recently, convinced the top policy-makers of the multilateral lending agencies to accept the enhanced exposure of the banks in the capital market," a senior finance official told the FE on Sunday.

He said the draft BCA, however, kept the provision to lower the exposure to 25 per cent, if the situation demands.

The finance ministry officials are still in discussion with the IMF as the government wants to convince the Fund officials that BB has yet to be efficient enough to have all the powers to regulate the SCBs.

A meeting was held on Sunday at Bank and Financial Institution Division under the MoF. Eteri Kvintradze, Resident Representative of IMF, led a delegation to the talks, which was attended by Bank and Financial Institution Division Secretary Shafiqur Rahman Patwary, among others.

None of the participants elaborated on the meeting. But meeting sources said two contentious issues got the highest priority at the discussion.

"I cannot comment now on the issues as discussion is still going on," Eteri Kvintradze told the FE on Sunday, when she was approached by the FE on cell phone.

The IMF asked the government to implement the provisions concerned in the proposed BCA, 2012 as a condition for release of the second installment of its about $1 billion loan for Bangladesh.

The lender approved a $987 million loan to help it overcome macroeconomic pressure and build a buffer reserve.

Bangladesh entered the three-year loan deal by committing to a wide range of structural reforms.

According to the provision of Clause 46(6) of BCA, 2003(amended), the BB cannot remove the government-appointed bank directors, chairmen and MDs. It could only submit report to the government about the malpractices on their part, if the same take place in the banks concerned, the provision says.

The Clause 47 of the same Act also bars the BB from abolishing boards of government-owned banks. The appropriate authority of the BB after meeting certain conditions and formalities could fire bank directors, managing directors (MDs) and abolish the board of directors of private commercial banks only, stipulates the BCA, 2003.

Sources in the finance ministry said they want to hold more meetings with the IMF to keep the current provisions in the BCA on BB's authority on SCBs unchanged.

"We are not submitting the draft BCA to Cabinet Division now. We will fight to the last to convince IMF on the particular issue," a senior official concerned said.

News: The Daily Financial Express/Bangladesh/22th-Oct-12

Spain seems condemned to pay for its own banking rescue after Germany flatly refused to let the eurozone’s future bank supervisor do so, analysts say. That is bad news for Spain’s soaring public debt. But it is only one of a series of concerns now emerging from a eurozone bailout of Spain’s banks, which have been bogged down with bad loans since a 2008 property crash, diplomatic sources and analysts say.

Madrid had battled for a eurozone banking supervisor to be allowed to pump capital directly into its weak banks as part of a planned banking union for the 17-member single currency bloc.

That would have relieved Spain of the need to pay back an estimated 40 billion euros ($52 billion) it plans to use from a 100-billion-euro eurozone credit line.

But German Chancellor Angela Merkel, who faces general elections next year, left no room for doubt about her position on direct recapitalisation for banks that have already been bailed out.

“There will not be a retroactive direct recapitalisation,” she said on Friday after a European Union summit, which agreed to work on setting up a eurozone banking union with supervisory powers during 2013.

A French government source said the question of direct aid for Spain’s banks was not settled. But after the EU summit, a European diplomat was clear: “Spanish banks won’t be recapitalised before the end of 2013, probably in 2014.”

That would leave Spain holding the bill for the rescue loan, which was agreed with the eurozone in June and signed in July.

“Spain is going to ask for about 40 billion euros from the liquidity line,” said Daniel Pingarron, analyst at Spanish brokerage IG Markets. “That means the Spanish public debt grows automatically.”

In fact, Spain’s 2013 budget already takes into account a payment of 30 billion euros for the banking fix, pushing the level of public debt to 90.5 per cent of gross domestic product from an expected 85.3 per cent this year.
But the banking rescue is also running into other serious problems, analysts say.

News: The Daily Independent/Bangladesh/22th-Oct-12