Eastern Bank :: Workshop on Operational Risk

Eastern Bank Limited (EBL) organized a feedback session on "Operation Risk & Anti Money Laundering Act'' for their staffs at conference room of Metropolitan Chamber of Commerce & Industry, Dhaka recently. A total of 69 Branch Anti Money Laundering Compliance Officers and Customer Service Managers-Operation of EBL participated in the workshop. 




M Mahfuzur Rahman, Executive Director, Bangladesh Bank was present as the chief guest. The day long session was conducted by EBL Head of Operation Risk, Internal Control & Compliance Mohammad Musa and Head of Compliance and Legal Unit-ICCD Mohammad Shahjahan Ali. Head of Internal Control & Compliance Mahbubul Alam Tayiab, Head of Human Resources Department Sirajul Islam, Head of Operation Risk, SD-ICCD Md. Abdul Awal, Head of Audit Md. Rezaul Islam of EBL were also present in the workshop.

Bank Asia :: Bonds got green signals from SEC

The Securities and Exchange Commission (SEC) has given a green signal to the proposal of Bank Asia to issue subordinated zero coupon bond worth Tk 110 crore. The raised fund will be used to expand its investment in various sectors and consolidate its capital base in line with the Basel-II framework, said the SEC in a statement on Tuesday. The six-year tenure bond will be non-listed, redeemable and non-convertible with 13 per cent maturity yield. Each unit price of the bond will be Tk 5,000. A zero-coupon bond is a bond bought at a price lower than its face value, with the face value repaid at the time of maturity. It does not make periodic interest payments. 

When the bond reaches maturity, its investor receives its par (or face) value. Infrastructure Development Finance Company is the issue manager, which will be amortised. The institutions can be subscribed to the bonds through private placement. The SEC also approved the amendment of merchant banker and portfolio manager rules 1996 and capital issue rules 1987 after taking public opinions, said the statement. Under the amendment of merchant banker and portfolio manager rules, paid-up capital of a full-fledged merchant bank will be Tk 25 crore, instead of the existing Tk 10 crore. The paid-up capital of a merchant bank with only an underwriting licence will be Tk 2.50 crore, instead of the existing Tk 1 crore, while the capital of a merchant bank with only an issue management licence will be Tk 12.50 crore, instead of the existing Tk 5 crore. Under the amendment of capital issue rules, the regulator will now conduct 'special audits' into the listed companies' financial statements in a bid to ensure transparency and accountability in their financial management.

 If an issuer fails to get its financial statement audited and submitted to the SEC and stock exchanges within the stipulated time, the commission may appoint a firm to audit the issuer's financial reports. Cost of acquisitions and constructions, valuation, including revaluation and physical existence and the title of the fixed assets will be checked during the period of special audit. In line with the guidelines, the audit firms will also re-audit the authenticity of liabilities of a company, including direct confirmation for major amounts -- which is more than 5 percent of the total liabilities.

HSBC Asia :: Hits $22 billion Profits

HSBC Holdings Plc, Europe's biggest bank, predicted growth in Asia and other emerging markets would outweigh sluggish European economies this year as it posted a $21.9 billion profit for 2011, the best outturn by a western bank so far. HSBC added, however, that success in emerging markets was becoming increasingly expensive, with costs rising 10 percent, or $3.9 billion - a third of that due to higher pay. Banks across Europe have been posting billions of dollars of losses as the euro zone sovereign debt crisis has eroded the value of their government bond holdings and hit their trading operations, and as they strive to meet tough new rules aimed at preventing a repeat of the 2007-09 banking crisis. HSBC has been relatively unscathed because it makes more than three quarters of its profits outside Europe and north America. It remained upbeat on Monday about prospects for emerging markets despite fears that some are overheating and could see an abrupt slowdown in growth this year.

 "We remain comfortable with the emerging markets (outlook) and are confident that GDP growth in emerging markets will be positive and China will have a soft landing," Chief Executive Stuart Gulliver told reporters on a conference call.
"We think there's some recent buoyancy in the US, so the real issue of negative focus is how the euro zone plays about," he added, predicting the euro zone economy would flatline this year, with "marked recessions" in some southern countries. HSBC, with around 7,200 offices in 80 countries, said pretax profit rose 15 percent to $21.9 billion in 2011, just below analysts' average forecast of $22.2 billion in a Reuters poll. The figure fell short of the group's record profit of $24.2 billion in 2007, but beat all other western banks that have reported so far for last year, including US rival JP Morgan, which made a $19 billion profit. The world's most profitable banks in recent years have been China's ICBC, which made $32 billion in 2010, and China Construction Bank, which made $26.4 billion. HSBC's profits were boosted by a $3.9 billion accounting gain on the value of its debt. Stripping that out, underlying pretax profit fell 6 percent to $17.7 billion, due in part to rising wages in emerging markets and to restructuring costs. Gulliver, who is reshaping HSBC to cut annual costs by $3.5 billion, lift profitability and sharpen its focus on Asia, said he would step up his plan this year. He said HSBC would continue to pay higher wages in emerging markets, where there is strong competition for bankers among international and local rivals, adding higher revenue from those areas showed the investment was worthwhile. 


At 0945 GMT, HSBC shares in London were down 1.5 percent at 566.1 pence, lagging a 0.7 percent decline in the UK's benchmark FTSE 100 index .FTSE. The shares have beaten the STOXX Europe 600 banking index by 15 percent over the past year. "They've had a good run so I can't get too enthusiastic, but they're (HSBC) going in the right direction and it's a good bet in a difficult sector," said Brown Shipley fund manager John Smith, who holds HSBC shares in his portfolio. HSBC said profits at its investment bank fell 24 percent to $7 billion, hurt as the euro zone debt crisis slowed capital markets activity in the second half of last year. Loan impairment charges and other credit risk-related provisions, however, fell $1.9 billion to $12.1 billion. The group said it paid out $4.2 billion in bonuses, down 2 percent on 2010. Banks are coming under intense pressure from politicians and the public to rein in pay awards because of the role of the sector in the world's economic problems. HSBC said it paid one of its bankers, whom it declined to name, 8 million pounds ($12.7 million) last year. Gulliver was the second-highest paid employee, getting 7.2 million pounds -- including a 2.2 million bonus -- down from 8.4 million in 2010 when he ran the investment bank. Peter Wong, chief executive of HSBC in Asia, said: 'As our strong financial performance shows, HSBC's strategy is delivering results in the Asia-Pacific region across all geographies and the Global Businesses.

“It is clear that HSBC Asia-Pacific is well positioned for sustainable growth. As economic expansion in our region continues to outpace that of the developed world, I believe our international connectivity is a core strength serving our customers locally, regionally and globally.”

MTB :: Hold Annual Business Conference

MTB Securities Ltd. (MTBSL) &MTB Capital Limited (MTBCL), two fully owned subsidiary companies of Mutual Trust Bank Ltd. (MTB) jointly held their Annual Business Conference 2012 recently at MTB Square in the city. Anis A. Khan Managing Director and CEO of MTB and Vice Chairman of both MTBSL & MTBCL was present on the occasion as the Chief Guest while Mr. Quamrul Islam Chowdhury, Deputy Managing Director of MTB and Director of MTBSL & MTBCL, presided over the day-long programme. Meer Sajed-Ul- Basher, Group Chief Finance Officer of MTB and Director of MTBSL & MTBCL, Md. Nazrul Islam Mazumder, Chief Executive Officer of MTBSL, Khairul Bashar Abu Taher Mohammed, Chief Executive Officer of MTBCL, Chinmoy Das, Deputy Chief Executive Officer of MTBSL, Branch in-charge of all MTBSL Branches and senior officials of MTBCL were present at the annual business review and planning event. 

 The conference dwelt on the activities of both the companies over the past year and focused on future business plans. Anis A. Khan, in his speech, thanked the management of MTBSL & MTBCL for being most compliant companies and asked them to strive hard and remain ever vigilant to protect the MTB image and reputation. He also requested them to prepare and cope with the emerging challenges in 2012 and continue to work hard for achieving sustainable growth. The CEOs of MTBSL & MTBCL gave multimedia presentations on the business and operational performance of their companies in 2011. They also presented their budget and action plans for this year. MTBSL branch heads highlighted their performance, problems and prospects. MTBSL is one of the leading brokerage houses and has the largest branch network across the country. It was the 4th largest brokerage house in terms of trade volumes in December 2011 and is considered one of the most compliant securities trading companies by market regulators. MTBCL is a full-fledged merchant bank, recently set up and which provides issue management and portfolio management services, underwriting as well as other products and services.

Padma Bridge :: Last chance to Finance by World Bank

The usual lenders of such projects were lined up soon after the present government came to power. According to agreement reached in January 2009 the World Bank was to provide US$ 1.2 billion, the ADB $615 million, JICA $415 million and IDB $140 million. Things were moving as per schedule and provisions of the agreement with lenders and construction work was to start in October 2011. But things did not move smoothly and thereby hangs a tale, as Shakespeare would have put it. The problem that suddenly surfaced was more than a hiccup, rather it has turned out to be an intractable obstacle. Based on a case filed by Canadian police against the Canadian firm SNC Lavalin for giving kickback to a firm belonging to the former communication minister of Bangladesh the World Bank promptly suspended the loan that had already become effective and was being used by Bangladesh government for preparatory works. The other lenders in the project soon followed suit and the work on Padma bridge ground to a halt. 
It was alleged that the Canadian firm had given bribe to the Bangladesh minister's firm to win pre-qualification as a bidder in the tender for works in the Padma river bridge project. Knee-jerk reaction: World Bank's sudden and almost knee-jerk reaction to the news about Canadian police's corruption case against a firm of that country and abrupt suspension of loan committed to Bangladesh was brazen and lacked propriety. The allegation of corruption against the Canadian and the Bangladeshi firms had not yet been proved in court and taking a decision on submission of the case was premature.More importantly, the allegation of graft did not lead to any independent investigation by World Bank which has a department for this. Allegation of corruption both within World Bank and inside member countries is not new for World Bank and it has a standard procedure to handle such cases. Strangely the Bank did not institute its own enquiry and thought it proper to rely on the investigation of an agency belonging to a member country other than the loan recipient country. This is what must have irked the government of Bangladesh most. The fact that the allegation was made public by the Bank even before a judgement was given by the concerned court aggravated the ire of the Bangladesh government. The World Bank behaved as if the parties (the two firms) were guilty as charged and put the government of Bangladesh as a whole on the dock. It was small wonder that having been offended by the blanket accusation by the Bank the government of Bangladesh refused to take any action in response to the allegation at first. Any self-respecting government would have done the same in the face of such humiliating gesture and highhandedness from a lending agency of which it is a member. Having made its point the government removed the controversial minister to pave the way for resumption of work on the project. At the same time a formal enquiry was ordered to be conducted by the Anti-Corruption Commission (ACC) of the country. By that time the World Bank should have instituted its own enquiry rather than harping on the same tune borrowed from the Canadian police. The Bank's failure in this regard has not only been astonishing but also smacks of amateurish approach in such a serious matter. The enquiry into the allegation against the former communication minister's firm has been completed by the ACC. Nothing incriminating has been found to substantiate the charges of graft. The Bangladesh government has called upon the Bank to prove its allegation but there has been no move on the part of the Bank in this regard which can only be interpreted as its obstinacy and lack of finesse in dealing with member countries like Bangladesh. Meanwhile, the suspension of loan by World Bank led to the expiry of the deadline for the effectiveness of loan. After keeping the government of Bangladesh in suspense for some time the deadline was extended by another six months only after the government made formal request for the purpose whereas this should have been done automatically. 
 Looking for alternative sources for funding: The request from the government of Bangladesh showed that it had not turned its back on the Bank for financing the Padma bridge project. But in view of the uncertainty caused by the suspension of the loan and the inscrutable attitude of the Bank the government had to look for alternative sources for funding the project. Soon a formal offer came from Malaysian government which showed interest in constructing the bridge under public-private-partnership. An emissary of the Malaysian Prime Minister came to Dhaka to hold preliminary discussion. Soon after the ministry of communication expressed declaration of intent and informed that a memorandum would be signed with the Malaysian authorities. Even a date for this was announced even though the loan agreement to the Bank had not been cancelled. This showed lack of co-ordination between the ministry of finance and communication. But allowances can be made for this confusion because of the extraordinary circumstances. Meanwhile, some interest was also shown by China, though no formal proposal was made in this regard. While exploring alternative means of financing Padma bridge project the government of Bangladesh had not cancelled the loan agreement with the World Bank and other co-financiers. The overture made to other financiers was merely to explore other sources of finance in case the Bank and other lenders continued to dither. Having already used some portions of the loan money from the Bank for acquisition of land and re-settlement of displaced persons the government of Bangladesh would naturally prefer to avail of the loan amounting to US$ 2.97 billion that have been committed for the project. But it could not wait indefinitely for the lenders to resume lending after withdrawal of suspension of loan. Surprisingly, after removal of the communication minister and the completion of enquiry by ACC no new proposal had come from the World Bank to normalise the situation. 
The government must be at a loss as to what else does the Bank require from it for their satisfaction. According to newspaper reports, having been exasperated by the nonchalant attitude of the Bank the government has now decided to set the process for cancellation of the loan in motion. A proposal has been sent by ERD to the PMO's office for the annulment of the loan agreement. Unless the Bank wakes up and takes a quick decision for resumption of the loan the government will be compelled to cancel the agreement. This will be both to preserve its prestige and to save valuable time for the construction of the bridge. No one can blame the government if the agreement is finally cancelled. It has done everything that it was required to do though the actions taken were delayed somewhat. But this, too, can be justified when looked at from the government's perspective. How can a sovereign government be expected to dance attendance to the whim and unreasonable demands of a lender without asserting its position at first? But it is not the government of Bangladesh which has been obstinate, the blame should be laid at the World Bank. Even after all the actions taken by the government the Bank has not budged an inch and change its position and the suspension continues.
 There is still time for it to salvage the insalubrious situation by resuming disbursement of fund for Padma bridge project. If the agreement ultimately falls through it will be mainly because of its rigid stand and negative attitude. Even the hardened critics of the government will be hard put to blame the government for this unprecedented event. For the government of the Bangladesh the World Bank and other lenders with whom the loan agreement has been signed should still be the preferred choice and first priority. Before canceling the agreement the government should make a last-ditch attempt to remove the sticking point, if there is any. For this purpose a high-level meeting should be held immediately. While cancellation of the loan will not be to the benefit of Bangladesh it will also not be to the credit of the Bank which will be seen as rigid and uncompromising in dealing with its member countries, particularly smaller ones. Cancellation of the loan will entail higher costs for the construction of the bridge which cannot be desirable for resource-poor country like Bangladesh. 
On the other hand, it will show the Bank in an unfavourable light as a lender driven more by ego than by reason. Bangladesh should be careful: If the worse comes to the worst and the agreement with the World Bank and the other lenders has to be cancelled, Bangladesh should be careful about choosing the alternative financier. From what has appeared in newspaper there are quite a few aspects of the Malaysian offer that does not make it very attractive. The involvement of many private firms in a consortium make it ambiguous whether agreement will be between the two governments or between GoB and a consortium of firms having the support of the Malaysian government. That there is a basic difference between these two positions need not be overemphasised. News about lack of experience of the consortium in constructing such a big bridge is also not very assuring. Reportedly it will hire a third party for construction purpose and in that event the government of Bangladesh will have no say over this. Even the mobilisation of fund has raised many questions as to its legal status. The rate of interest ranging from 5 to 7 per cent as reported in newspapers will be much higher than 0.5 per cent charged by the World Bank.


The period of 50 years over which the consortium will have control over the bridge appear to be very long while the proposed recoupment of investment money through collection of toll leaves room for an exorbitant rate. The condition that no other bridge can be constructed over Padma elsewhere is not in the interest of Bangladesh. The requirement that the GOB will have to pay subsidy in case toll collection is less than expected is also too demanding. Floating bond for the project by the government of Bangladesh to help the consortium is also an undesirable condition. Compared to these conditions and aspects a proposal from China will be much better, judged by their past record. If an alternative source has at all to be utilised for the Padma bridge, GoB should make a serious approach to China. Sitting over a vast amount of foreign exchange reserve China is looking for new avenues for investment. Padma river project may be just the type that fits their bill. As a lender China has proved to be generous and considerate. Besides, it has vast experience in building infrastructures in developing countries. Padma bridge will be in safe hands if given to China after due negotiation. But before that government should give the World Bank a last chance to change its mind. It should not be given an excuse that GoB moved precipitately.

Dhaka Bank :: Given stock dividend and Opened New Branch

The board of directors of Dhaka Bank yesterday recommended five percent cash and 30 percent stock dividend for the year ended on December 31, 2011. The Company has also reported consolidated Earning Per Share (EPS) of Tk 6.25 and consolidated Net Asset Value (NAV) per share of Tk 25.88 for the year ended on December 31, 2011. The company will hold its Annual General Meeting (AGM) on March 29 at Bangabandhu Interna tional Conference Centre in Dhaka. The record date for the entitled dividend has been set on February 28.
Dhaka Bank has opened its 62nd branch with all modern banking facilities including an ATM booth at Jatrabari in the city recently. Mohammed Hanif, sponsor director of Dhaka Bank, formally inaugurated the new branch as chief guest where Reshadur Rahman, chairman of the Bank, was also present, said a press release. Among others, ATM Hayatuzzaman Khan, sponsor director and Altaf Hossain Sarker, former chairman, Khondker Fazle Rashid, director, Niaz Habib, managing director, Neaz Mohammad Khan, additional managing director, Sajjad Hossain, deputy managing director, Arham Masudul Huq, company secretary, along with other high officials of the Bank were also present on the occasion.

Meanwhile, the board of directors of Prime Insurance has also recommended 10 percent stock dividend for the year ended on December 31, 2011. The Company has also reported EPS of Tk 1.90, NAV per share of Tk. 15.17 and NOCFPS of Tk. 0.63 for the year ended on December 31, 2011 The company will hold an AGM on April 18 at Bangladesh Institute of Administration and Management (BIAM) in Dhaka. The record date has been set on March 1 this year.

EXIM BANK :: Organized A Customers' Conference

EXIM Bank organized customers’ conference for its Gulshan, Corporate and Bashun- dhra branches in the city recently. Md Farid Uddin Ahmed, Managing Director of the Bank was present at the conference as chief guest, said a press release. Among others, Md Abdullah Al Zahir Swapan, member of the board of directors of EXIM Bank, Lt Col. Sirajul Islam, Additional Manging Director, Dr Md Haider Ali Mia, Deputy Managing Dirtector were present.

Trust bank :: Getting Optical fiber Networks

Broad Band Telecom Services Limited (BBTS) -a joint venture of the country’s industrial conglomerate Ispahani Group-- will set up optical fibre network to connect Trust Bank Limited head office with its all branches across the country. To this effect, Mirza Ali Behrouze Ispahani, chairman of BBTS, and Shah A Sarwar, managing director of Trust Bank, singed the agreement on behalf of their respective organisations recently in a city hotel. Under the agreement, BBTS will build a nationwide Wide Area Network (WAN) infrastructure through optical fibre/radio link to connect Trust Bank head office with its all branches and ATM Booths. 

The connectivity will help the Bank’s custonmers save time and cost, which is one step forward to get closure to its valued clients countrywide. Abu Zafar Hedaytul Islam, senior executive vice president and S M Akram Syeed, head of IT from Trust Bank and Syed Samiul Huq, director of BBTS, were also present at the signing ceremony.