Finance Minister AMA Muhith yesterday said many from outside the Sonali Bank were involved in the much-talked-about Hall-Mark swindle.

Without mentioning any names, he said those linked to the scandal had been identified following much investigation. And cases would be filed in this regard “very soon”.

Muhith added it was a mistake on his part to say that crores of taka swindled out of a Sonali Bank branch was a petty sum.

“I have acknowledged my mistake, and those who don't admit mistakes lack moral strength”, he told reporters at his secretariat office hours before leaving for China last night on a 10-day tour to join the World Economic Forum meeting.

The minister replied to journalists' queries on a number of issues, including Padma bridge funding, Grameen Bank and Mashiur Rahman's and his resignation.

Recently, a Bangladesh Bank probe found serious anomalies in the lending of Tk 3,606 crore to the Hall-Mark Group and five other companies.

Half of the loans, granted by the Sonali Bank's Ruposhi Bangla Hotel branch, were based on forged documents.

Muhith yesterday said it was quite impossible that such a grave offence was being committed and yet nobody in Sonali Bank had noticed it.

Replying to a query about extending the tenure of the Sonali Bank chairman and directors for another two years, the finance minister said a three-member board led by the chairman would remain in office.

Muhith said a government official and a chartered accountant had been kept as board members and the tenure of no other director had been extended.

A board is necessary for taking decisions on a number of matters, including cases regarding the scam, he added.

The minister said the Sonali Bank board would be reconstituted and a decision in this regard taken on his return from China.

About the demand for his resignation, he said, “There are many demands like this …. But I have not taken any decision.”

The minister also spoke on the bridge project. “We have been in talks with the World Bank, Asian Development Bank and Japan International Cooperation Agency (Jica) in this regard. I will speak about this after the talks conclude.”

Muhith declined to comment on the WB condition relating to the removal of the Prime Minister's Economic Affairs Adviser Mashiur Rahman for the funding of the project.

“Talks are also going on with the World Bank about this matter. I cannot say anything about this at this point.”

GRAMEEN BANK
Also yesterday, Muhith defended a recent change in the Grameen Bank Ordinance, saying the government had brought in the amendment to appoint a full-time managing director.

The appointment “must be done”; it had long been pending owing to objections apparently from directors, he said.

The world-renowned microcredit organisation has been run by an acting chief executive since its founder, Nobel Laureate Prof Muhammad Yunus, stepped down in May last year.

Grameen Bank supporters both at home and abroad and also the nine elected women borrower-directors say the change has been introduced to curb the authority of the majority of the board in choosing the managing director and give more powers to the government-picked chairman.

The minister also said the law did not permit the powers exercised over the last 27 years in appointing the managing director.

"The government allowed this to let a good thing continue. But there are two sides of the coin -- one is flexibility and the other is unaccountability,” he added.

News: The Daily Star/Bangladesh/10-Sep-12

 The Sonali Bank authorities have sought assistance from the Banking Division to get two new deputy managing directors (DMDs) on board after the incumbent DMDs have been made officer on special duty (OSD) in light of the recent loan scandal.

The managing director of the state-run bank made the request to Banking Division Secretary Shafiqur Rahman Patwari through an official letter Sunday.

Only three DMDs are working at Sonali Bank with huge amount of files pending, according to the letter.

Sources in the Banking Division and finance ministry said the Bank would not get new DMDs very soon since both the finance minister and secretary are currently out of the country.

Two deputy managing directors of Sonali Bank — Atiqur Rahman and Mainul Haque — have been made OSD for their alleged involvement in lending Tk 35.74 billion to Hall-Mark Group on forged documents.

The finance ministry issued an order to this effect on September 4 and warned that departmental action would be taken against the two.

Bangladesh Bank (BB) recently asked Sonali Bank to suspend 31 of its officials, including the two DMDs, over the loan scam.

The Bank suspended 17 of its officials over the fraud last week.

Earlier, the central bank in its audit found that the loan was given to Hall-Mark and a number of companies through fraudulent means.

News: Daily Sun/Bangladesh/10-Sep-12

The central bank yesterday relaxed rules for inland bill purchase (IBP) following a meeting with senior officials of commercial banks. IBP is a credit facility.

With the latest decision, banks can now accept inland bill purchase without pre-inspection of goods sent by exporters. But the banks must be sure about the goods in other ways, according to an amended notice issued yesterday.

SK Sur Chowdhury, deputy governor of the central bank, said commercial banks can now approve the acceptance bills if they (banks) ensure that the documents of LCs for the products being imported are not fake.

“Banks will take complete liability if they give acceptance to any bill on the basis of fake documents,” said Chowdhury.

Bangladesh Bank issued a circular on July 11, asking all banks to inspect the imported goods before giving approval to the acceptance bills.

BB's decision came after an inspection revealed that Hall-Mark Group took away Tk 3,547 crore from Sonali Bank's Ruposhi Bangla Hotel branch between 2010 and May 2012 by using fake documents against LCs.

A number of trade bodies recently complained that commercial banks were not providing acceptance for inland documentary bill purchases due to the BB's stern position.

SM Moniruzzaman, executive director of the BB; SM Aminur Rahman, managing director and chief executive officer of Janata Bank, and Helal Ahmed Chowdhury, managing director and chief executive officer of Pubali Bank, were also present.

News: The Daily Star/Bangladesh/10-Sep-12

The local banking industry is gradually turning into a role model for the bankers of the emerging countries thanks to offering innovative products and services through adopting global best practices.

The banking sector now starts getting international recognition and eyeing more accolades from global arena.

“We are in the limelight in the international arena due to our adoption of global best practices for satisfying customers' financial needs,” said K Mahmood Sattar, managing director and CEO of The City Bank.

The bank was recently conferred the prestigious 'Best Bank in Bangladesh for 2012' award by FinanceAsia, a leading financial publication in the Asia Pacific region.

“We are extremely delighted with the award,” said Sattar at an exclusive interview with The Daily Star at the bank's head office in Dhaka recently.

The award came thanks to City's successful adoption of global best practices of the banking sector.

“This is the first year we are awarding in this category and have selected City Bank for its leadership in risk management and its plan for steady and sustainable growth,” said the FinanceAsia award citation.

“It might not be the best bank in the country in terms of network and balance sheet size or even profitability, as there are some bigger and more profitable banks operating in Bangladesh.”

But it is the best bank in terms of adopting global best practices, which in an emerging market is extraordinarily important, as the commercial banking system is the backbone of the economy, according to the citation.

The transformation began when senior banker Sattar stepped up to the helm of the Bank in mid-2007 as the managing director and CEO.

He spearheaded several innovative steps to turn the bank into a modern financial supermarket using the latest technologies.

“Since its establishment in 1983, City Bank's main endeavor has been to increase its shareholders' value and be respected as a compliant organisation,” Sattar says, while explaining the main philosophy of this first generation bank.

But under Sattar's leadership the bank has gone beyond those targets.

Sattar joined the local banking industry after 20 years of senior management experience across the globe with banks such as SCB and ANZ.

His core management team also came with extensive foreign banking backgrounds -- and they brought international standards to the table.

They focused on remodelling the business along a customer value segmented line and created separate tailor-made services for each segment such as corporate, retail, SME, cards and treasury.

The decentralised branch-based banking system, steeped in irrational cost and non-transparency, was shunned for a centralised business plan overseen by top industry professionals.

But City did not just streamline operations: they improved the overall quality of assets, re-launched the brand, leveraged the potential of technology potential, improved the quality of product offerings and put in place much higher benchmarks for service excellence.

“We have brought an international standard in risk management and improved service standards,” said Sattar. “So now we are getting international recognition.”

Earlier in 2010, Asian Banker, another esteemed international financial publication, honoured City with 'The Strongest Bank in Bangladesh' award in recognition of successful 'change management processes'.

The bank also collected other awards such as the American Express Marketing Award for 'Outstanding New Card launch' in 2010, MoneyGram International's 'Best Corridor Collaboration in South Asia for 2011' for its inward remittance business growth.

“We actually got the international attention in 2009, when American Express nominated City Bank as its sole franchisee in Bangladesh,” said Sattar, a former chairman of the Association of Bankers Bangladesh, a professional body for senior bankers.

He said American Express, after a six-year long search, finally selected City as its sole franchisee in Bangladesh, thanks to the Bank's strong corporate governance, transference and sound credit risk management.

Considering the overall negative outlook for the global economy and the many challenges Bangladesh that faced in meeting its macroeconomic goals for fiscal 2011-12, City Bank's solid performance during the year becomes all the more impressive.

Despite liquidity pressures, the bank was able to maintain its credit deposit ratio at a satisfactory level.

City's statutory liquidity ratio, by the end of December 2011, according to the annual report, stood at 20.90 percent against the 19 percent demanded by the central bank.

Earnings per shares of the bank rose to Tk 3.99 in 2011, from Tk 3.66 of the previous year, despite the share market crash.

In 2011, capital adequacy of the bank stood at 12.79 percent against the Basel II and regulatory requirement of 10 percent, while profit before tax rose to Tk 3,468 million from the previous year's Tk 2,999 million.

Non-performing loans dropped from 4.42 percent to 3.44 percent in 2011, indicating further improvement in asset quality.

City has been awarded an AA3 for long-term rating in 2011, one notch higher than that of the previous year, by the credit rating agency of Bangladesh.

As part of the restructuring plan, the bank introduced various innovative services and products: brokerage business, merchant banking arm, SME centres and numerous SME and Agro-products and a full-fledged Islamic banking business under the brand name of City Manarah.

Currently City has 104 online branches and 132 ATM booths; it has around 1 lakh Amex cardholders, with plans to launch two new Amex cards this year.

The bank also plans to launch mobile banking both for rural and urban people. It also aims to open at least 10 financial kiosks this year.

“Once the kiosks go in full operation a customer need not go to the Bank branches. From the kiosks, customers can satisfy all their banking needs, such as applications for loan and credit card, deposit and cash withdrawal,” said Sattar.

“The accolade is not only for City Bank but for the whole country,” said Sattar, adding that the award will encourage other banks in the country to adopt global best practices.

Sattar feels the award had notified the international community of Bangladesh's strong banking system -- and will now consider Bangladesh as an emerging market for investment.

“Banking is the backbone of an economy. If a local bank gets international recognition, it portrays a positive image among the prospective investors. It will encourage them to invest more in that country.”

“So local industries will get the opportunities to form more joint-venture companies with foreign partners,” Sattar said.

He said the luring of foreign investment, however, depends on opportunities and regulations, citing examples of African countries where there are plenty of opportunities but no regulations -- and hence there have not been that many significant investments.

“But we have both opportunities and regulations to attract foreign investments,” he added.

The City Bank will continue to put emphasis on organisational excellence, the Bank chief stressed.

News: The Daily Star/Bangladesh/10-Sep-12

 The merchant bankers will get more time till September 30 to compensate small investors as the Securities and Exchange Commission (SEC) has extended the deadline.

The government earlier announced a bailout package to compensate small investors who incurred loses due to recent slump in stock market.

The commission also extended time till October 14 for Bangladesh Merchant Bankers Association (BMBA) and the bourses to submit comprehensive reports on scheme implementation.

The commission has sent letters to the concern authorities in this regard Sunday, said Saifur Rahman, executive and spokesperson of the commission.

Earlier on August 6, the commission issued circular signed by SEC Chairman Professor Dr M Khairul Hossain.

According to the SEC directives, the BMBA and the stock exchanges were asked to submit com-prehension reports on compensation package implementation by 14 October.

August 13 was the last date to compensate small investors who invested in stocks up to Tk 1 million by taking margin loans from merchant banks. The deadline has already expired.

The government announced a bailout package including waiver of 50 percent interest on margin loans to compensate retail investors who incurred losses due to the recent share market debacle.

The government declared that the interest to be waived within the calendar year of 2011 or the financial year 2011-12.

The government also offered to reserve 20 percent of all initial public offerings (IPOs) – both government and private – those appear in 2012 and 2013, for those small investors.

Daily Sun/Bangladesh/10-Sep-12