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

British financial giant HSBC announced Thursday it was closing its struggling retail brokerage and depository business in India, the latest international bank to reduce operations in India.

The move comes five years after HSBC, one of the three largest foreign banks in India, entered the country’s fiercely competitive retail broking business.

Nearly 300 employees of the company stand to lose their jobs due to the decision, the Press Trust of India said, quoting unnamed sources.

“We are discontinuing retail broking and retail depository services business here, operated under HSBC InvestDirect Securities,” HSBC India said in a statement.

“Impacted employees will be offered a fair and equitable severance pay in line with HSBC policy,” the statement added.

HSBC India entered the Indian retail brokerage business in May 2008 -- just months ahead of the global financial crisis—by buying a 73 percent stake in ILFS Investsmart for $242 million.

Later it took its stake to over 93 percent, bringing its total investment to $296 million.

News:The Daily Sun/19-Oet-2013

 After a periodic lull, the state owned Sonali Bank (SB) has resumed its full credit operation with a cautious loan disbursement target of Taka 80 billion by next June thanks to its robust growth in deposits and impressive loan recovery.

Talking to BSS, Pradip Chandra Datta, Managing Director and CEO of Sonali Bank said his bank now stands on a strong financial footing due to robust deposit growth and a record recovery of classified loans mostly in cash from a few big defaulters during the last six months.

The bank’s deposit jumped from Tk 543.95 billion to 633.95 billion during the last fiscal and continues to rising when it recovered a record of nearly Tk 29 billion outstanding loan mostly in cash during the last eight months. This enabled the bank to start taking an intensive loan disbursement plan for financing projects, he said.

“We have formulated a cautious new credit policy to disburse nearly Tk 80 billion to real entrepreneurs with 100 per cent recovery target. We have given instructions to all of our branches to choose real entrepreneurs and potential projects very cautiously in line with our new policy and disburse loans quickly”, he said.

Of the total loans, officials said nearly Tk 800 crore would be invested in small and medium industries where the bank had a recovery success of more than 90 per cent and Tk 770 crore has been allocated for loans to agricultural sector.

The bank is under pressure to reduce interest expense that shot up to Tk 3.20 billion on June 30, 2013. The bank’s interest expense jumped by Tk 3.10 billion and increase interest income dropped by 1.54 billion as on June 30, 2013, according to a Soanli Bank statement made on provisional figures.

Sonali Bank, the largest commercial bank in the country, became the discussion of the table in 2012 due to some big loan scams that swindled nearly Tk 40 billion crore from its exchequer specially in a time when it was suffering from the overburden of mounting classified loan of Tk 20 billion.

News:The Daily Sun/13-Oet-2013

The Bangladesh Bank Governor Dr Atiur Rahman has said the regulator has been promoting socially responsible banking in Bangladesh to avoid financial crisis.

For doing so, the central bank took lessons from the most recent global financial crisis, what he said, “was in part caused by excessive risk taking and a narrow focus on short-term profit maximisation on the part of key financial institutions.”

The governor was speaking at a discussion at World Bank heaqquarters in Washington on Friday.

The event was organised on the sidelines of 2013 annual meeting of the World Bank Group and the International Monetary Fund.

He said BB has already formulated a CSR guideline that indicates the type of activities that banks can classify as CSR and which also excludes elite club contributions.

The annual CSR report launched in by all banks created healthy competition in the banking sector, he added.

News:The Daily Sun/13-Oet-2013

Of the amount, Sonali Bank will disburse Tk910m, Janata Bank Tk3.44bn, Rupali Bank Tk500m and Agrani Bank Tk1bn