Standard Bank recently come up with their intention to open a new exchange house in New York aiming to grab the remittance business. This bank has already become one of the leading commercial banks in Bangladesh and hence extending their network worldwide. S A Farooqui, Managing Director and CEO of Standard Bank said, "We are set to launch our remittance business operation in the top city of the world very soon." on Thursday in an interview. He said Bangladesh Bank has already given necessary permission in this regard and the bank is waiting for the final approval from the US side.

This will be a subsidiary exchange company of the bank in U S A. As a result, Bangladeshi expatriates will be able to remit their earnings easily under proper banking channel. The bank has also plans to open Exchange Houses in Spain and Australia in near future subject to the regulatory permission. "We opened 'Standard Exchange Co (UK) Ltd' on August 20, 2009 in London and we received BDT 1 billion remittance from UK through the new company," the Standard Bank chief said. Standard Bank started its commercial operation on June 3, 1999.

Standarar Bank is in operation with their 58 branches, and 10 more branches will be open this year, of which 8 will be urban and two will be rural. "During my tenure, the bank under the strong support from its board of directors and Bangladesh Bank as well experienced sustainable growth in all areas of business," Mr Farooqui said. According to the latest un-audited report, the bank achieved laudable growth in all areas of operation including raising capital, asset, deposit, advances, international business and profit. The Bank clocked significant growth in its business areas in the outgoing year. The Bank achieved around 90 per cent growth in operating profit, 48 per cent growth in deposit and 42 per cent growth in advance in 2010. "We always put thrust on developing the rural economy through disbursing loan to SME and agri-business and in testimony to our mission, we financed flower cultivation in Jessore," the Standard Bank chief added.

In line with the Bangladesh Bank thrust, the Standard Bank launched few projects to mitigate poverty which includes crop loan, live stock & poultry loan, fishery loan, agriculture machinery and equipment loan, poverty elevation scheme and crop mortgage loan. "We have so far selected two villages as 'adarsha village' (ideal village) aiming to make the villagers poverty-free through disbursing agriculture and rural credits," the Standard Bank chief executive said. The villages are Kurpala under Kotalipara upazila and Tungipara under Tungipara upazila.

Mr S A Farooqui, a senior banker began his career in 1973. Prior to join the Standard Bank as EVP in April of 1999, he worked in National Bank and Agrani Bank. He was promoted as the MD of Standard Bank on September 30, 2008.

News: Financial Express/Bangladesh/16 Jan 2011

Ibrahim Hossain Ovi

Prime Bank Investment, a subsidiary company of Prime Bank limited, is mulling over raising funds from alternative source to overcome dependency on bank loans.

In this regard, the company is going to organise a three-day long share market fair of Bangladesh at Whitechapel area in London from March 5 this year.

Local brokerage houses and merchant banks will take part at the fair, first of its kind, to draw the attention of the non-resident Bangladeshis to invest in Bangladesh share market.

President of the Bangladesh Merchant Bankers’ Association (BMBA), also CEO Prime Bank Investment Sheikh Mortuza Ahmed, said “We must have our own funds”.

“If we do not have enough funds we have to face liquidity shortage which creates shortage of cash flow in the share market,” he added.

He also said, “we are trying to raise funds from alternative sources so that we need not to dependent on banks for loans to avert further disaster in the stock market due to cash crunch.”

“We will seek cooperation from the market regulator to take up the initiative and follow the regulations in this regards,” he told daily sun.

“Collecting funds from alternative sources will not be wise decision as the share market is not stable at present,” Salahuddin Ahmed Khan, former DSE CEO said.

If it is done it should be based on the asset value of the company for reducing risk, he added. Institutional investments help stabilise the market as they are managed by the topnotch officials, said experts.

Many investors alleged that lenders frequently failed to give them margin loan at even 1:1 ratio, though the SEC now has set the margin loan ratio at 1:2. Fund crisis is still prevailing in the market, and the parent companies also failed to provide additional fund to the merchant banks, dealers said.

Currently, the source of funds for stock brokers and merchant banks is the parent companies and banks loans, they mentioned.

Due to shortage of funds, the stock market faced the steepest fall of 660 points on January 10 triggering the market watchdog to suspend trading of the bourse.

If funds are raised from the non-residents Bangladeshis, then it will increase participation of them into the country’s share market, said an expert.

Prime Bank Investment Ltd will sponsor the fair organised by UK-based media company Curry Life Events.

Curry Life Events organises different sorts of event in different parts of the globe including the UK and it also has got several publications and magazines.

Share market of Bangladesh is gaining with highest popularity among the NRBs and there is a great response from the expatriates in the UK and other countries in Europe, the company source said.

They are very much keen to participate in share business in Bangladesh as the government always encourages them to make more investments in the home.

The present government and the regulators are always working sincerely to remove obstacles against investment of non-¬residents and they also maintain a percentage of IPOs reserved for the NRB's, the source said.

Moreover, the interest of NRB's regarding Bangladesh share market is easily measured by looking at the size of application of IPO.

Syed Belal Ahmed of curry life events said “A large number of expatriates Bangladeshis living across the UK consider buying properties in Bangladesh as major prospective investments.

But now they want to diversify their investments and are showing interest in country’s share market, he said adding some NRBs have already invested in share market.

Hundreds of million of taka of NRBs remain idle which could easily be poured into the Bangladesh share market through proper guidance from the concerned bodies, he opined.

National Bank Limited (NBL) and Monohar ICM Krishok Club have handed over farm loans at a function at Rangpur Monohar High School ground in Rangpur recently, said a press release. The chief guest of the programme, Bangladesh Bank Governor Dr Atiur Rahman, distributed agricultural loan sanction letters issued by NBL among local farmers. Md Towhidul Islam Tuhin, president of Monohar ICM Krishok Club, presided over the meeting.

Haroon Or Rashid Chowdhury, executive director of Bangladesh Bank, M Badiul Alam, managing director (CC) of NBL, A K M Shafiqur Rahman and Nazib Uddin Bhuiyan, NBL's deputy managing directors, among others, were also present on the occasion.

News: Daily Sun/Bangladesh/11 Jan 2011

Many employees like Aminul Haque, a government employee, came to the booming share market to invest in bank shares expecting quick returns before quitting the scene. He infact came into this business two months ago and invested 2 lac taka already expecting big hand. All was well for the 29-year-old until December 19 last year when the premier bourse lost over 550 points, which ate up a significant part of his profits. But he did not worry after his mentor, who works for a brokerage house, assured him of a quick turnaround.

An irregular investor, Haque, with an MSc in biochemistry from a public university, stayed put, but he saw his hopes shattered in a storm that brought the stockmarket down to its knees. "I have lost half of what I was worth. This is dangerous. I never thought I would have to witness such disaster," he told The Daily Star over telephone. "I came to the market with a particular target, but all my hopes have been dashed," admitted a demoralised Haque. His comments came after the authorities stopped trading of both Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) before noon yesterday following a freefall of share prices on the bourses that stomached the highest-ever single day drop in indices.

The closure came at 11:50am after the benchmark index of the premier bourse, DGEN Index, slumped by 660 points and CSE Index, 914 points -- their highest drops. Haque was not alone. Thousands like him rushed to the markets with little knowledge about the share market, fundamentals of the companies they were investing in, despite repeated warnings from analysts. Nusrat Jahan, a student of Bangladesh Islami University, invested Tk 4.5 lakh last year and made it to Tk 10 lakh during the period. Now her current portfolio value went below the initial investment. Small-time retail investors blamed the regulator for failing to act fast enough, saying many have lost at least half of their investments due to the market collapse.

Mohammad Shihabuddin, who works for an audit firm, had the prices of his shares just halved. "Many of my colleagues are involved in the trade and they all are in shock," he told The Daily Star by phone. He said he understood that a correction was due, but it happened melodramatically. "The correction should take place gradually, not through drastic ups and downs." General investors said the regulator should have taken the closure decision earlier or during the first few minutes of yesterday's trade, which would have help avoid the doom.

"Many investors like us would have been able to avoid the slump if the decisions had been taken earlier. The collapse has already made many of us losers," said Utpal Kumar, an investor. Utpal, also a student, said the market has collapsed, as the central bank has imposed restrictions on banks and other financial institutions investing in the market. "The financial institutions, particularly banks, have already over-invested in the market. But following restrictions from Bangladesh Bank, they are not investing anymore. The market will go up once they start trading again." He said the investors who joined the market in November and December have been particularly affected. "Most of them have lost up to 70 percent on their investment."

Jewel Islam, a stock investor since 2006, blamed the authorities for the slump, as "they talk too much", doing more harm than good to the market. The 29-year-old business graduate said the banks which represent the bellwether stocks were responsible for the catastrophe. "They have been investing heavily in the market putting aside their core business."  anks logged as high as 90 percent growth in their operating profit in 2010, largely riding on the stockmarket boom. Many banks earned a big portion of their profit from the stockmarket. A bank involved in Islamic banking made a profit of about Tk 400 crore, of which Tk 100 crore came from its brokerage business.

He said many investors have withdrawn their money before the Eid. "As the marking is nose-diving, they will invest now. Small investors like us will suffer most," said Islam, who has invested Tk 2 lakh in the premier bourse. Shariful Alam, another small investor, said the market has fallen as investors are withdrawing money from the secondary market and diverting to new initial public offerings. Nahid Hasan, an investor, who also has lost about half in prices of his shares, said the decision was right, but it should have come earlier. He said his portfolio was valued at Tk 10 lakh just before the latest round of slumps. "It is now worth Tk 5 lakh only."

News: The Daily Star/Bangladesh/11 Jan 2011

Professor Mohammed Farashuddin, Former governor of Bangladesh Bank, has called for imposing a strict limitation on scheduled banks' investment in Initial Public Offerings (IPOs) only and bringing them out of pre-IPO investment as it is creating only asset inflation in the economy. He was speaking at tenth Nurul Matin Memorial Lecture on 'Ethics in Banking', organized by Bangladesh Institute of Bank Management (BIBM) in a city hotel Monday.

"Banking Ethics has been put in the cold storage by commercial banks in diverting good part of their advances in non-IPO shares and making abnormal margin in a chaotic stock market", Dr. Farashuddin said, adding that such practice bars stock market's capacity of capital or equity formation. "Limiting commercial banks' involvement in IPOs and ensuring the limited exposure is channeled through properly formed and supervised subsidiaries should be in order along with regular surveillance on Small and Medium Enterprise (SME) fund to stop its diversion in consumer goods and non-IPO investment", he suggested.

Dr. Farashuddin also asked for scrutinising SME fund's performance not only in terms of providing working capital, but also from the aspect of creating newer enterprises. He also emphasised on further strengthening of Bangladesh Bank's supervisory capacity as well as additional operational independence and asked the government's attention for separate compensation package for central bank officials. "BB should be relieved from the duty of 'auxiliary assistance in socio-economic development' which will enable it to concentrate more on monetary policy and bank supervision objectives", Dr. Farashuddin said.

The speaker brought the issues of depositor's representation in board of directors, double-digit spread of interest, political intervention in sanctioning and waiving loan, excessive loan taken by equity-holder directors, commercial bank's BASEL-II compliance in his speech. Dr. Farashuddin also suggested for forming Asset Management Company for dealing with Non-performing Assets (NPAs), offloading nationalised commercial bank's share and exposing them in competition for efficiency, BB's involvement in assessment of scheduled bank's chief executives, limiting spread of interest to 6-7 per cent, and finalising merger law and enforcing it simultaneously with capital adequacy requirement. Concurring with the speaker's suggestion, BB governor Dr. Atiur Rahman, chair of the function, said, "BB is pursuing equitable and inclusive growth by engaging private banks in socially desirable lending and creating ground for tomorrow's profitable business".

Former governor A.K.N Ahmed was present as the chief guest and suggested to ensure ethics in policy making level in banks and keeping banks' growth in line with society's growth. BIBM director general Dr. Toufic Ahmad Choudhury welcomed all. Bankers, eminent economists, representatives from civil society and BB top officials were also present.

News Source: Financial Express/05 Jan 2011