Bangladesh will see a surge in capital from advanced and emerging economies in the next five years, lured by cheaper stocks and tax incentives, a senior Standard Chartered Bank official says.

Harinder Singh, a managing director of the UK-based but emerging markets-focused bank, has said institutional investors, mutual funds, private equity firms, and wealth management groups from the Organisation for Economic Cooperation and Development (OECD) countries would come to Bangladesh in droves to invest.

OECD is a 34-member bloc of the world's most advanced and emerging economies.

"This is a time of great opportunity," said the Mumbai-based banker, even if he is aware of the risks associated with euro-zone crisis and a stuttering global recovery. He has no estimates of the potential flow.

His comments came as the average stock price-to-earnings ratio in the capital market hovered below 15 while the government waived a 10 per cent tax on income from mutual funds.

Although Dhaka Stock Exchange, the premier bourse, is one of the worst-performers in Asia this year, its market capitalisation is still as high as $33 billion.

Cheaper stocks have provided rooms for bargain hunting by foreign portfolio investors whose participation in Bangladesh's equity market is negligible.

Mr Singh said his bank is also seeking to mobilise funds for Bangladesh's power sector, which requires an investment of US$9.0 billion to produce 9,426 megawatts of electricity by 2015.

"We're trying to raise Bangladesh's profile abroad. Investments will be flowing in power and telecommunications sectors," he said.

Foreign direct investment climbed by 30 per cent in 2010 to US$913.32 million, up from $700.16 million a year ago, the United Nations Conference Trade and Development (UNCTAD) data showed.

Mr. Singh, whose career with Standard Chartered spans as long as 17 years, said international capital should be harnessed in a way, making sure that it adds maximum value and trickles in useful and productive sectors.

Although liquidity crisis has engulfed the local banking industry, he said Bangladesh operations of Standard Chartered remain unscathed, because "we're disciplined in balance sheets."

However, the Bank's profit after tax plunged by Tk 350 million to Tk 4.5 billion in 2010, down from Tk 4.8 billion the year before, according to figures available with the Bank.

Mr Singh, a business graduate of Delhi University, said positive demographics and domestic demand would propel Bangladesh's growth in the coming years.

"We're bullish about (Bangladesh's) prospects," he said, insisting that young people who make up two-thirds of Bangladesh's 160 million population would prop up growth.

The country's internal demand is driven mainly by its 3.0 million-odd middle class with considerable spending habit, say economists.

Despite the debt crisis in the euro-zone and US economic woes, the Bangladesh economy expanded at 6.6 per cent in the last financial year, its highest since the early 1970s.

"Lots of countries wouldn't have growth at all during the time," Mr Singh said.

He didn't say whether it was a "right step" to allow more private banks to operate in the country -- a move that has already sparked nationwide controversy.

But he said market forces would determine whether it is good or bad to issue new licenses for private lenders in what is otherwise Bangladesh's crowded banking sector.

Excluding state banks, a total of 39 private banks are operating in Bangladesh and the central bank is now reviewing applications of 37 sponsors who are seeking new banking licenses.

Mr Singh noted that attracting clients would be the biggest hurdle for new banks, making it challenging for them to stay afloat.

The depreciation of Bangladesh Taka doesn't worry the banking professional who said India's Rupee declined by 16 per cent this year -- the worst performing currency in Asia in 2011.

Asked whether his bank planned to be listed in Bangladesh's stock markets in near future, Mr Singh said he is not aware of any such move.

"Bangladesh is a key market for us. We feel that we're a local bank and we bring in cross-border expertise," he said. "We're here for 107 years and not focused on short-term profitability."

The Financial Express/ Bangladesh/ 20th Dec 2011

Bangladesh has started preparations to implement the Basel-III framework for bank companies from 2014 in line with the global standard, a top central bank official said Monday.

"We've started the ground work to implement the Basel-III for bank companies by 2014," Executive Director of the Bangladesh Bank (BB) SK Sur Chowdhury told the FE.

The Basel-III is a new global regulatory standard on bank capital adequacy and liquidity agreed upon by the members of the Basel Committee on Banking Supervision.

The third of the Basel Accords was developed in response to the deficiencies in financial regulation revealed by the late-2000s financial crisis.

The Basel-III strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage.

"Liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) are pros and cons of the Basel-III framework," Mr Sur said, adding that the central bank is providing training to the commercial bankers about the LCR and NSFR.

The LCR is a new liquidity standard introduced by the Basel Committee to ensure that a bank maintain an adequate level of unencumbered, high-quality liquid assets that can be converted into cash to meet its liquidity needs for 30 calendar days.

The NSFR is a new standard introduced by the Basel Committee aiming to limit over-reliance on short-term wholesale funding assessment of liquidity risk across all on and off-balance sheet items.

As part of the preparations, the central bank has been organising a three-day-long training programme on liquidity risk management tools since Sunday. It will continue today (Tuesday), he added.

"We're organising the training programme aiming to improve efficiency of the commercial bank officials about measuring, identifying and controlling of liquidity risks in line with the existing Basel-II and Basel-III frameworks," Mr Sur noted.

He also said the central bank advises the bankers for taking necessary measures to submit liquidity profile reports in line with the BB's prescribed formats.

Liquidity profile is a snapshot of a bank's overall liquidity position in different time buckets.

"We need accurate liquidity profile reports for taking proper measures to keep the country's money market stable," the central banker said.

The training programme has been discussing implication of the credit-deposit ratio (CDR) to avoid liquidity risk.

The CDR is the proportion of loan-assets (investment-assets) created by the banks from the deposits received.

"Excessive credit growth, that is, when the credit growth is higher than the deposit growth, causes higher interest rates," the BB said in a document, adding that this is simple, because banks are borrowing for a short term for credit expansion.

"When the payment is due they again borrow. But when most of the banks have the similar situation in their books, scarcity of fund arises which causes higher interest rates," it noted.

Bangladesh is now implementing the Basel-II accord to consolidate capital base of the banks in line with the international standard.

It has been prepared on the basis of three pillars: minimum capital requirement, supervisory review process and market discipline.

Three types of risks - credit risk, market risk and operational risk - have to be considered under the minimum capital requirement.

The Financial Express/ Bangladesh/ 20th Dec 2011

The SME Fair-2011, the fifth version of the event, begins in the city on Tuesday, aiming to uphold the potentials of the sector.

The theme of this year’s five -day fair is: ‘SME and the Nation Growing Together’.

The first SME fair was held in 2002 while the second in 2005, the third in 2006 and the fourth in 2009. The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) is hosting the event to be held at the Bangabandhu International Conference Centre in the city from December 20-24.

Prime Minister Sheikh Hasina will inaugurate the fair while President Zillur Rahman hand over the SME awards to entrepreneurs, a senior FBCCI official confirmed on Monday.

FBCCI president AK Azad, first vice president and convener of the fair committee M Jashim Uddin and vice president and fair committee co-convener Mostafa Azad Chowdhury Babu will also attend the inaugural session of the fair.

There will be 131 stalls and 19 pavilions for entrepreneurs, banks, insurance and Financial Institutions (FIs).

Plastic, furniture, steel furniture, textiles, handicrafts, jute products, electric cable, generator, foods, ceramic, and engineering, leather and leather goods will be displayed in the event apart from highlighting the country’s tourism sector.

Three SME awards will be given in two categories - Small and Cottage Industries and Medium Enterprises.
Meanwhile, another award, best SME Facilitator, will be given for outstanding role in SME development.

Besides, three seminars - Infrastructure Development and Sectoral Zones for SMEs in Bangladesh, Women Entrepreneurs in SMEs: Bangladesh Perspective and Access to Finance and Technological Up-gradation for SMEs: Bangladesh Perspective - will be held on the sidelines of the fair.

The fair will remain open from 10am to 8pm till December 24. Sixty-four SME entrepreneurs’ organisations and 34 banks, insurances and financial institutions are taking part in the fair.

A six-member jury board comprising businessmen, journalists and researchers has been formed for the selection of SMEs for the awards. Media partners of the fair, the Daily Samakal and the Financial Express, will publish supplements on the opening day of the event.

The Daily Independent/ Bangladesh/ 20th Dec 2011

Bangladesh Bank Governor Dr Atiur Rahman, seen with the participants of a regional workshop on ‘Beyond Inflation Target: Policy Options and Instruments for Sustainable Growth and Equitable Development,’ at a city hotel yesterday.

The Daily Sun/ Bangladesh/ 20th Dec 2011

K S Tabrez, managing director of Dutch-Bangla Bank Limited, is seen inaugurating a branch in Naogaon yesterday.

Dutch-Bangla Bank Limited (DBBL) has opened its 107th branch at Ananda Bazar in Naogaon district town yesterday.

K S Tabrez, managing director of the Bank, formally inaugurated the branch, said a press release.

The new branch will provide all on-line Banking facilities to the clients, K S Tabrez said in his speech.

DBBL provides a wide range of banking products and financial services including card services to its retail and corporate customers, he added.

DBBL has started mobile banking operation to reach banking services to the doorsteps of the millions of rural people. It has a wide variety of delivery channels including ATMs, Fast Tracks besides branch networks at important places of the country, the news release said.

DBBL serves over 1.9 million customers throughout the country, the news release said, it added.

The Daily Sun/ Bangladesh/ 20th Dec 2011