Kazi Towhidul Alam joined Al-Arafah Islami Bank as deputy managing director on Saturday, the Bank said in a statement yesterday.

Prior to joining, he was the senior executive vice president and head of local office of Dutch-Bangla Bank.

Alam started his banking career with Arab Bangladesh Bank in 1983. He was also involved with Bank of Credit & Commerce International Ltd, Banque Indosuez and Eastern Bank.

He is an alumna of the accounting department of Chittagong University.

The Daily Star/Bangladesh/ 15th March 2012

A move is underway to bring operations of subsidiaries of banks and illegal banking activities in the name of cooperative societies under the strict surveillance of the Bangladesh Bank (BB) to ensure discipline in the financial sector, a top central bank official said.

The measures have been incorporated in the proposed amendment to Bank Company Act (BCA), 1991. The BB has recently prepared the draft amendment of BCA, 1991 in line with the suggestions of International Monetary Fund (IMF) and the World Bank (WB).

The Ministry of Finance (MoF) is now busy scrutinizing the amendment proposals of the BB made on BCA, 1991, sources said.

Presently, the scheduled banks and financial institutions have around 40 subsidiaries, which act as merchant banks or securities firms. The subsidiaries are now regulated by Securities and Exchange Commission (SEC).

However, the SEC is not authorized to monitor whether the subsidiaries invest excess fund of their parent organisations into share business or they make any illegal or unauthorised investment in the capital market, a BB official said.

The securities regulator only monitors the sale, buy and loan portfolios of dealers and clients as the subsidiaries are liable to provide the SEC with these information on regular basis.

"We want subsidiaries of banks are brought under the BCA, 1991 so that the central bank can lawfully oversee their entire activities of merchant banks and brokerage houses in stock business and lending to share investors," an Executive Director of BB told the FE on Monday.

"The clause 44 and 45 of BCA, 1991 have to be made applicable to all subsidiaries of banks and financial institutions for the sake of clarity," he added.

The BB will be empowered to take any legal action against errant subsidiaries if they are brought under BCA, 1991 and clauses 44 and 45 of the act are made applicable to merchant banks and brokerage houses.

The BB could even liquidate any merchant bank or brokerage house if they are found involved in any illegal financial transaction, stipulates clause 44 of BCA, 1991.

"Our objective is to enforce strict monitoring of BB on merchant banks and brokerage houses to protect the interest of share investors and establish good governance in the financial sector," another BB official said.

The proposed amendment to BCA, 1991 has suggested to bring illegal banking activities of cooperatives under watch as many cooperatives operating in the country use the word 'bank' after their names to attract general people to have confidence in them, it is alleged.

Besides, the cooperatives which collect deposits from persons other than their members will also come under the purview of clauses 44 and 45 of BCA, 1991, says one proposed amendment to the act.

The proposed clauses have given the BB adequate authority to make inspection of any bank, give it instruction or close it down, if needed.

Officials in the MoF said they have formed a high-powered committee to scrutinize the amendment proposal of BCA, 1991. After the examination is completed, the amendment would be placed in the cabinet and before the parliament respectively for approval.

"The amendment to the act is inevitable as the IMF has asked to amend the BCA, 1991 to become eligible for proposed $1.0 billion loan under its Extended Credit Facility (ECF) package," a top finance official told the FE.

Financial Express/Bangladesh/ 14th March 2012

A senior official of the HSBC Holdings PLC's Bangladesh operations said on Tuesday that the bank was not exiting any markets in Asia, denying a report from the Financial Times that it was planning to sell or close retail operations in Bangladesh and several other weaker Asian countries. 

The bank has now decided to focus on six core Asian countries outside of Hong Kong; the London-based newspaper quoted Peter Wong, chief executive of HSBC in Asia, as saying. Noman Anwar, head of marketing and communications of HSBC Bangladesh, said in a statement: "Bangladesh continues to be important for HSBC and is part of the new trade flows across Asia."

"Our objective is to build a sustainable business in Bangladesh," The markets to see the HSBC scale back are Bangladesh, Brunei Darussalam, Macau, New Zealand, Pakistan, the Philippines and Sri Lanka, the FT said in a report on Monday.

The bank has also been widely reported to be in discussions to sell its Korean business, which has 14 branches.
The key Asian markets where HSBC is planning to reinforce its strength are Australia, China, India, Indonesia, Malaysia and Singapore, while the strategic markets are Taiwan, which Wong said was the third leg of the Greater China story, and Vietnam, which was very fast growing.

The report said the bank has already sold or shut down its retail operations in Japan and Thailand and sold its Asian insurance businesses as part of a broader strategic overhaul under chief executive Stuart Gulliver.

HSBC had missed analysts' expectations with a near $22 billion profit last year, which marked the biggest profit among western banks thanks to its strength in Asia and other emerging markets.

But Anwar said, "We continue to invest and grow in Asia as evidenced by our strong financial performance for 2011."
Regarding the news of Financial Times on HSBC's Asian operations, he said, "The priority and strategic markets are where we prioritise our investment but that doesn't mean that we exclude other markets."

HSBC, Europe's biggest bank, on Feb 27 reported that 2011 profits of $21.9 billion, up 15 percent on the year but just below the average forecast of $22.2 billion from 13 analysts polled by Reuters. The profit included $3.9 billion of gains on the value of its own debt, Reuters has said.

Profits at its investment bank were down 24 percent on 2010 at $7 billion, hurt as the euro zone debt crisis slowed capital markets activity in the second half of last year, it added.

CEO Gulliver is reshaping HSBC to cut annual costs by $3.5 billion, lift profitability and sharpen its focus on Asia, and said he will step up the execution of his plan this year, according to Reuters.

The Independent/Bangladesh/ 14th March 2012

In a recent article published in The Daily Star (Safeguarding citizen's money, published on August 18, 2011), I provided a fairly detailed review of the pros and cons for the licensing of new banks.

I had basically argued against granting new banking licences during this present economic and financial environment of Bangladesh. In summary, I made the following arguments:

1) The number of banks at present providing services in urban areas adequately meet the needs of the urban population.

2) With 47 banks in place, there is sufficient competition to ensure the quality and pricing of services provided.

3) While the efficiency and profitability of banks have increased, there is still an unfinished reform agenda for the banking sector. The financial health of the state-owned commercial banks is still fragile and a number of private banks are vulnerable, owing to exposure to the declining stockmarket. A few banks are fully compliant with Basel II standards.

4) The supervision of Bangladesh Bank has improved but remains constrained by a lack of autonomy in hiring skilled and professional staff.

5) In the present environment of high inflation, growing budget deficit and the need for monetary tightening, the liquidity situation in the banking sector will be tight and requires careful management of banking sector portfolio and associated risks.

6) In this economic and financial situation, adding new banks will create pressure on existing banks that could well lead to difficulties and a liquidity crisis in vulnerable banks. This in turn could jeopardise the stability of the banking sector.

7) The presumption that the treasury and Bangladesh Bank would bail out vulnerable banks is inconsistent with macroeconomic stability that is already under strain. Any attempt to bail out vulnerable banks through pumping additional liquidity in the economy will contribute to even higher inflation, destabilise the balance of payments and add pressure on the nominal exchange rate.

I also provided my views on the criteria for giving licences to new banks when the time is right. Drawing on good international practices, I suggested the need to further increase the capital adequacy requirements than is presently the case.

I had provided my views as a technocrat. In the real world, governments are run by politicians and often technical considerations come in conflict with political imperatives. It will be naive to ignore those political imperatives even though I do not believe political considerations should come in the matter of granting new licences.

This is especially because banking, unlike other business, involves dealing with other people's money and without adequate safeguards, bank owners would not hesitate to take undue risks in a bid to make profit.

The government has a moral and social responsibility to safeguard citizen's interests. The political party in power also has a commitment to promote the interests of its constituencies, especially those who provide the financing of political parties. How a government balances its social commitments to the citizens with its private commitments as a political party to its financiers and other supporters is an art rather than a science.

A government succeeds or fails as a political power depending upon ability to properly balance these often conflicting and competing claims. The case of giving licences to new banks is an important example of this art of proper policy making.

The present government is firm in its decision to move ahead with the licensing of new banks, despite sound technical advice against this policy. So, now we are in the second best world involving possible trade-off between safeguarding citizen's interest with profit making by political allies.

A number of considerations might guide the government in securing the proper balance between these two conflicting considerations.

First, it is imperative that the long list of applicants must be properly evaluated against the announced criteria and guidelines for bank licensing.

Second, a short-list of prospective banks that fully meet the criteria should be prepared and presented to the Bangladesh Bank board for review, debate and discussion.

Third, depending on the short list, the Bangladesh Bank board will need to evaluate the prudent number of new banks that might be given licences at this time. While there is no scientific way of establishing the number of new banks, prudency requires keeping this list to a small number and certainly no more than three-four.

Fourth, if the shortlist is more than four, the board might want to select the four best new proposals based on the following two considerations: (a) the amount of own capital in excess of the minimum required; and (b) the quality of the business plan, past banking experience, and the quality management and proposed staffing.

The alternative approach of licensing as many banks as politically desired is fraught with serious downside risks as noted earlier. It also serves to undermine the institution of the central bank and its board. International experience suggests that long term development requires strong institutions.

This is already a serious constraint in Bangladesh. The few good economic institutions that still remain including Bangladesh Bank, the finance ministry and the National Board of Revenue must not be weakened through excessive political pressure.

This may also be an opportune moment to reflect and learn from the stockmarket crisis. Unbridled competition for profit taking combined with poor regulations, weak regulatory institution (Securities and Exchange Commission) and excess liquidity played havoc on the stockmarket. Everybody enjoyed the profit taking game when the going was good.

The inability of the policy makers to anticipate the inevitable downturn and the likely havoc led to inappropriate or inadequate interventions at the right time. In hindsight, the stockmarket crisis could have been prevented through proper regulations, by having a strong regulatory body and by managing liquidity properly.

The situation is now similar in the case of the licensing of new banks. Fortunately, however, the regulatory body (Bangladesh Bank) is a strong institution and has adequate regulatory policy in place (the criteria for new banks) to implement the government's decision to introduce new banks.

This institution must be allowed to do its due diligence and not be swept under the political rug. The country and the citizens would be the loser.

The Daily Star/Bangladesh/ 14th March 2012

Anisur Rahman Sinha, former Chairman of Bank Asia, inaugurates a new branch of the Bank at Lal Dighirpar in Sylhet recently.

Bank Asia has opened its 62nd branch at Lal Dighirpar in Sylhet recently.

Anisur Rahman Sinha, former Chairman of the Bank formally inaugurated the branch, said a press release.

Among others, Mohd. Safwan Choudhury and Mohammed Lakiotullah, vice chairmen, Rumee A Hossain, chairman of audit committee, directors AM Nurul Islam, M Irfan Syed, Nafees Khundker, Shah Md. Nurul Alam, and president and managing director Md. Mehmood Husain were present on the occasion.

The new branch has equipped with all the modern Banking facilities including on-line Banking and ATM.

The Daily Sun/Bangladesh/ 14th March 2012