Banks continue to expand their branches this year to net new customers for low-cost deposits.
Despite a slowdown in the global financial sector, some 300 new bank branches will be added to the country's existing network in 2009, taking the tally to over 7,000, according to Bangladesh Bank (BB) data.
“We have agreed to permit opening of around 300 new branches in 2009, assessing the demand, mainly from the private banks,” a senior BB official told The Daily Star.
The total demand was much more than the permitted number, the official said.
As of December 2008, the number of total bank branches stood at 6,886.
The banking sector of Bangladesh comprises four categories of scheduled banks -- state-owned commercial banks (SCBs), state-owned development finance institutions (DFIs), private commercial banks (PCBs) and foreign commercial banks (FCBs).
These banks had a total of 6,717 branches as of December 2007, while the number was 6,562 and 6,402 in 2006 and 2005 respectively.
With new branches banks can collect millions in cheap deposits that are lent at higher rates, bankers said.
Even though they increasingly offer technology-driven products and automated teller machines (ATMs) in convenient places, banks still hope to lure customers to a physical branch.
According to BB data, total deposits of the banks in 2008 increased by 19.19 percent to Tk 256,127 crore from Tk 214,890 crore in 2007. The growth was 15.5 percent in 2007. Banks' deposit was Tk 186,060 crore in 2006.
Share of four SCBs -- Sonali, Janata, Agrani and Rupali -- is declining on the increasing presence of PCBs, BB data shows.
Deposits of 30 PCBs increased by 26.12 percent in 2008 compared to 8.44 percent by four SCBs.
The SCBs' share in deposits decreased from 35.2 percent in 2006 to 32.6 percent in 2007. On the other hand, PCBs' deposits in 2007 amounted to Tk 115,020 crore or 53.5 percent of the total industry deposits. PCBs' deposit was Tk 95,550 crore or 51.3 percent in 2006.
FCBs' deposits in 2007 rose by Tk 3,260 crore or 21.6 percent over the previous year. The DFIs' deposits in 2007 were Tk 11,560 crore against Tk 10,020 crore in 2006 showing an increase by 15.4 percent.
“We want to reach more rural and semi-urban population. Already we have more rural branches than urban ones,” said Muhammad A Rumee Ali, chairman of BRAC Bank that has got permission to open 15 branches in 2009.
Rumee Ali, also a former deputy governor of BB, said still the bankable people in the country are much lower compared to many countries.
He urged BB to look into the issue of urban and rural branches opening by banks.
The BB approves new branch opening based on a set criteria such as capital base, provision shortfall, corporate governance, foreign exchange management and disbursement of SME loan.
This year the central bank will not allow a bank to open more than three branches in Dhaka and Chittagong, the most concentrated areas. BB encourages banks to open more branches in rural areas.
Besides BRAC Bank, Islami Bank Bangladesh has been given permission to open a total of 15 branches this year.
Source: The Daily Star, February 22, 2009
February 22, 2009
February 05, 2009
Bankers fear slow loan payback from spinners
Bankers fear random import of low-cost yarn from neighbouring India will cost them heavily by making their clients defaulted.
Banks have also tightened their grip on new lending to this sector to see the bad time of the industry, which had a consistent growth for the past one decade, bankers said.
“Payment from the spinning millers is getting slowed,” said Ali Reza Iftekhar, managing director and chief executive officer of Eastern Bank.
He said banks are in a threat because they have huge exposure in spinning mills, which are capital-intensive industries.
“We are in great uncertainty. Immediate steps are needed to address the issue,” said Shahjahan Bhuiyan, managing director of United Commercial Bank.
Bhuiyan said about Tk 60,000 crore are involved in the textile sector spinning, knitting, dyeing and import of raw materials required for the industries.
The ongoing global recession has already caught up with the country's yarn industry with substantial fall in its local and export demands and a pile up of a huge amount of unsold yarn.
Easy access to import the item from India at a cheaper rate has made the local millers more worried.
According to industry people presently the Tk 27,000 crore spinning mills of the country are struggling with an inventory of 2.5 lakh tonnes of yarn worth Tk 2,500 crore that millers failed to sell for a demand decline and a flood of comparatively low cost yarn from India.
Earlier yarn import from India was restricted, but the caretaker government at its last time decision withdrew those restrictions and allowed importers to go freely.
Manufacturers are now importing Indian yarn at 15 to 20 cents per pound lower rate than that of locally produced yarn.
Bangladesh's commercial banking sector comprising 30 private banks, nine foreign banks and four state-owned banks has financed a lot to develop the country's textile industry. They have financed set up about 350 spinning mills in the country to supply yarn for manufacturing woven and knit garments. Banks also fund to import raw materials for the spinners.
“About Tk 60,000 crore bank finance are involved with the whole industry spinning, dyeing, knitting and import of raw materials,” Shahjahan Bhuiyan said.
Bhuiyan said many of their clients couldn't finance bank payment due to poor sale of the yarn produced locally.
“Now local yarn producers are forced to sell their product at a lower rate for their survival,” Ali Reza Iftekhar said.
He said Bangladesh's yarn is better in quality than the Indian product.
“Immediate corrective measures are needed, otherwise the industry will be in great difficulty,” the EBL chief executive remarked.
A senior official in Janata Bank, which has huge exposure in the sector, also admitted the fear.
“Local industry will have benefited if the government did not allow low-cost Indian yarn,” the official who requested not to be named said.
Source: The Daily Star, February 5, 2009
Banks have also tightened their grip on new lending to this sector to see the bad time of the industry, which had a consistent growth for the past one decade, bankers said.
“Payment from the spinning millers is getting slowed,” said Ali Reza Iftekhar, managing director and chief executive officer of Eastern Bank.
He said banks are in a threat because they have huge exposure in spinning mills, which are capital-intensive industries.
“We are in great uncertainty. Immediate steps are needed to address the issue,” said Shahjahan Bhuiyan, managing director of United Commercial Bank.
Bhuiyan said about Tk 60,000 crore are involved in the textile sector spinning, knitting, dyeing and import of raw materials required for the industries.
The ongoing global recession has already caught up with the country's yarn industry with substantial fall in its local and export demands and a pile up of a huge amount of unsold yarn.
Easy access to import the item from India at a cheaper rate has made the local millers more worried.
According to industry people presently the Tk 27,000 crore spinning mills of the country are struggling with an inventory of 2.5 lakh tonnes of yarn worth Tk 2,500 crore that millers failed to sell for a demand decline and a flood of comparatively low cost yarn from India.
Earlier yarn import from India was restricted, but the caretaker government at its last time decision withdrew those restrictions and allowed importers to go freely.
Manufacturers are now importing Indian yarn at 15 to 20 cents per pound lower rate than that of locally produced yarn.
Bangladesh's commercial banking sector comprising 30 private banks, nine foreign banks and four state-owned banks has financed a lot to develop the country's textile industry. They have financed set up about 350 spinning mills in the country to supply yarn for manufacturing woven and knit garments. Banks also fund to import raw materials for the spinners.
“About Tk 60,000 crore bank finance are involved with the whole industry spinning, dyeing, knitting and import of raw materials,” Shahjahan Bhuiyan said.
Bhuiyan said many of their clients couldn't finance bank payment due to poor sale of the yarn produced locally.
“Now local yarn producers are forced to sell their product at a lower rate for their survival,” Ali Reza Iftekhar said.
He said Bangladesh's yarn is better in quality than the Indian product.
“Immediate corrective measures are needed, otherwise the industry will be in great difficulty,” the EBL chief executive remarked.
A senior official in Janata Bank, which has huge exposure in the sector, also admitted the fear.
“Local industry will have benefited if the government did not allow low-cost Indian yarn,” the official who requested not to be named said.
Source: The Daily Star, February 5, 2009
February 03, 2009
World Economic Forum in Davos & Dr Muhammad Yunus
Nobel laureate Dr Muhammad Yunus told the just-concluded World Economic Forum in Davos that world's poor people would be the most affected by the ongoing global financial crisis.
Prof Yunus, a panellist at the Davos Philanthropic Roundtable, said when the world is busy talking about bailout packages for companies, at the same time it is needed to design similar packages for the poor.
Former US President Bill Clinton, billionaire philanthropist Bill Gates and former British prime minister Tony Blair were present, among others, at the discussion, says a release from Yunus Secretariat.
The theme of the 39th World Economic Forum this year was 'Shaping the Post Crisis World.'
Prof Yunus, also founder and managing director of Grameen Bank, underlined that the crisis increased the need for special attention to the poor and the rich still had plenty of money.
"Those who had billions and have lost half of it, still have the other half. Their lifestyles will not change. But the real impact will be on the people at the bottom," said Yunus, who was awarded Nobel Peace Prize in 2006 for his efforts to lift people out of extreme poverty.
Bill Clinton also echoed his views during the roundtable saying, "The economic stimulus packages should be aimed at the poorest in society."
He also urged the world's rich nations to spend more on supporting projects in the developing world even though their own wealth has been hit.
In addition to the Philanthropic Roundtable, Prof Yunus was a lead speaker at an especially organised panel entitled 'Restoring Growth through Social Business.'
During this session, moderated by Kishore Mahbubani of the Lee Kuan Yew School of Public Policy Singapore, panellists discussed the great prospect of social business, non-loss, non-dividend companies, to address social goals ranging from improved nutrition, provision of safe drinking water, information technology for the poor and others.
They also discussed the on-the-ground experience of social businesses already being operated in Bangladesh by Grameen.
Panelist Franck Riboud, chairman and CEO of French dairy giant Danone, which has partnered with Grameen in a social business, said that all CEOs would now have to reinvent what business means in light of what is happening, and social business is a way forward for this.
In Davos from January 29 to February 1, Prof Yunus held discussions with business leaders, philanthropists, including Bill and Melinda Gates, heads of UN agencies on joint-venture collaborations in social business to address some of the world's most pressing problems, particularly healthcare for the poor.
He finalised the joint venture agreement to set up production plant in Bangladesh to produce nutrition supplement and treated mosquito nets, with Dr Humbrecht, CEO of BASF, a giant German company.
Prof Yunus, a panellist at the Davos Philanthropic Roundtable, said when the world is busy talking about bailout packages for companies, at the same time it is needed to design similar packages for the poor.
Former US President Bill Clinton, billionaire philanthropist Bill Gates and former British prime minister Tony Blair were present, among others, at the discussion, says a release from Yunus Secretariat.
The theme of the 39th World Economic Forum this year was 'Shaping the Post Crisis World.'
Prof Yunus, also founder and managing director of Grameen Bank, underlined that the crisis increased the need for special attention to the poor and the rich still had plenty of money.
"Those who had billions and have lost half of it, still have the other half. Their lifestyles will not change. But the real impact will be on the people at the bottom," said Yunus, who was awarded Nobel Peace Prize in 2006 for his efforts to lift people out of extreme poverty.
Bill Clinton also echoed his views during the roundtable saying, "The economic stimulus packages should be aimed at the poorest in society."
He also urged the world's rich nations to spend more on supporting projects in the developing world even though their own wealth has been hit.
In addition to the Philanthropic Roundtable, Prof Yunus was a lead speaker at an especially organised panel entitled 'Restoring Growth through Social Business.'
During this session, moderated by Kishore Mahbubani of the Lee Kuan Yew School of Public Policy Singapore, panellists discussed the great prospect of social business, non-loss, non-dividend companies, to address social goals ranging from improved nutrition, provision of safe drinking water, information technology for the poor and others.
They also discussed the on-the-ground experience of social businesses already being operated in Bangladesh by Grameen.
Panelist Franck Riboud, chairman and CEO of French dairy giant Danone, which has partnered with Grameen in a social business, said that all CEOs would now have to reinvent what business means in light of what is happening, and social business is a way forward for this.
In Davos from January 29 to February 1, Prof Yunus held discussions with business leaders, philanthropists, including Bill and Melinda Gates, heads of UN agencies on joint-venture collaborations in social business to address some of the world's most pressing problems, particularly healthcare for the poor.
He finalised the joint venture agreement to set up production plant in Bangladesh to produce nutrition supplement and treated mosquito nets, with Dr Humbrecht, CEO of BASF, a giant German company.
January 14, 2009
BB hikes cash reserve ratio for banks
Bangladesh Bank yesterday increased the rate for daily cash reserve requirement (CRR) against deposits by 50 basis points to help banks manage liquidity better than before.
In line with the past rules, all banks had maintained a monthly CRR of 5 percent on average. On a daily basis, the rate had been no less than 4 percent -- a ratio which was hiked to a minimum requirement of 4.5 percent by the central bank yesterday.
A high official with Bangladesh Bank said the banks had normally maintained 4 percent at the beginning of the month. In an attempt to maintain 5 percent on average throughout the month, bankers had often created a volatile situation in the call money market.
But the BB official would not see the latest move as a tight monetary policy.
The required reserve ratio is a bank regulation that sets the minimum reserves each bank must hold to customer deposits. The reserves are designed to satisfy withdrawal demands and would normally be in the form of fiat currency, or with a central bank.
The reserve ratio is sometimes used as a tool in monetary policy, influencing the economy, borrowing and interest rates.
Source: The Daily Star, January 14, 2009
In line with the past rules, all banks had maintained a monthly CRR of 5 percent on average. On a daily basis, the rate had been no less than 4 percent -- a ratio which was hiked to a minimum requirement of 4.5 percent by the central bank yesterday.
A high official with Bangladesh Bank said the banks had normally maintained 4 percent at the beginning of the month. In an attempt to maintain 5 percent on average throughout the month, bankers had often created a volatile situation in the call money market.
But the BB official would not see the latest move as a tight monetary policy.
The required reserve ratio is a bank regulation that sets the minimum reserves each bank must hold to customer deposits. The reserves are designed to satisfy withdrawal demands and would normally be in the form of fiat currency, or with a central bank.
The reserve ratio is sometimes used as a tool in monetary policy, influencing the economy, borrowing and interest rates.
Source: The Daily Star, January 14, 2009
January 11, 2009
Local firms zoom in on bank software
Domestic software developers are slowly making a niche in the local banking software market.
Presently, the banking software used for a particular branch is mostly made by local information technology (IT) firms. Also, at least six local private commercial banks (PCBs) with online banking services use locally developed online real-time software, according to sector people.
Thanks to the flourishing IT industry, the market for real-time banking software, once totally captured by foreign companies, is now being grabbed by the local firms. However, the industry has been catering to the domestic needs for branch banking solutions since the 1990s.
Branch banking software is used for a branch of a bank, while a single real-time banking software is used for keeping, processing and updating information and data of all branches of a bank.
"We have been working for a long time with real time software for banks and we have so far supplied the product to four private banks," said SM Waesh, senior vice president of Flora Systems, a local software and data entry company.
Four PCBs such as Trust Bank Ltd, NCC Bank Ltd, Jamuna Bank and Mutual Trust Bank now use 'Flora Bank', a centralised banking software, said Flora Systems officials.
According to software developers, said the cost of such a locally developed varies between Tk 1 crore and Tk 3 crore, while a foreign software costs between Tk 30 crore and Tk 40 crore.
"Apart from such cost-effectiveness, this local centralised banking software saves our hard-earned foreign currency and creates job opportunities for many,” Waesh added.
Flora and five or six local software developers, including Beximco Computers Ltd, a concern of Beximco Group, Leads, are the local players who are working to build online and branch banking software.
In addition, some banks have developed their own banking software for their own use.
After building the software for its own use, Bank Asia now markets it for other banks.
Pubali Bank Limited, Islami Bank Bangladesh Ltd and Uttara Bank Limited have also developed their branch banking and online banking software by their own to meet their needs.
Bank Asia has developed its centralised software through ERA- InfoTech Ltd, a joint venture company. Bank Asia Ltd, Ranks IT Ltd and a Dubai based IT firm are funding this project.
"We are using the software successfully and also supplied it to the locally owned Standard Bank," Irfan Uddin Ahmed, deputy managing director of Bank Asia, said, adding that the software would be exhibited in an international fair in Dubai soon to attract foreign customers.
Officials with Beximco Computers Ltd, a concern of Beximco Group, said the company supplies branch banking solutions, but it is now thinking of developing a centralised banking solution to meet the market demand.
Now over 300 branches of 15 major banks of the country use the company's software, according to the official website of Beximco Group.
Talking to The Daily Star, Shaikh Abdul Aziz, chief executive officer and managing director of LEADS Corporation Limited, a software company, said his company has developed both branch and centralized banking software including PcBANK2000 and BankUltimus. As many as 21 banks and financial institutions are using the products, he added.
Sector people attributed the competitive price and extensive after-sales-service to the increased use of local software. They said foreign solutions are dearer.
"Generally the annual service and maintenance fees account for 10-20 per cent of the total cost of a software. As the cost of local software is low, its service charge is also low," said Subodh Kumar Bhowmik, chief technical officer of Flora Systems.
He said it takes two-three years to fully customise a foreign made software because these software are made for different use in different countries. But local software are developed targeting the local market, he added.
But local customers sometimes undermine the local solutions thanking that it would not serve company purposes, Bhowmik lamented.
Source: The Daily Star, January 11, 2009
Presently, the banking software used for a particular branch is mostly made by local information technology (IT) firms. Also, at least six local private commercial banks (PCBs) with online banking services use locally developed online real-time software, according to sector people.
Thanks to the flourishing IT industry, the market for real-time banking software, once totally captured by foreign companies, is now being grabbed by the local firms. However, the industry has been catering to the domestic needs for branch banking solutions since the 1990s.
Branch banking software is used for a branch of a bank, while a single real-time banking software is used for keeping, processing and updating information and data of all branches of a bank.
"We have been working for a long time with real time software for banks and we have so far supplied the product to four private banks," said SM Waesh, senior vice president of Flora Systems, a local software and data entry company.
Four PCBs such as Trust Bank Ltd, NCC Bank Ltd, Jamuna Bank and Mutual Trust Bank now use 'Flora Bank', a centralised banking software, said Flora Systems officials.
According to software developers, said the cost of such a locally developed varies between Tk 1 crore and Tk 3 crore, while a foreign software costs between Tk 30 crore and Tk 40 crore.
"Apart from such cost-effectiveness, this local centralised banking software saves our hard-earned foreign currency and creates job opportunities for many,” Waesh added.
Flora and five or six local software developers, including Beximco Computers Ltd, a concern of Beximco Group, Leads, are the local players who are working to build online and branch banking software.
In addition, some banks have developed their own banking software for their own use.
After building the software for its own use, Bank Asia now markets it for other banks.
Pubali Bank Limited, Islami Bank Bangladesh Ltd and Uttara Bank Limited have also developed their branch banking and online banking software by their own to meet their needs.
Bank Asia has developed its centralised software through ERA- InfoTech Ltd, a joint venture company. Bank Asia Ltd, Ranks IT Ltd and a Dubai based IT firm are funding this project.
"We are using the software successfully and also supplied it to the locally owned Standard Bank," Irfan Uddin Ahmed, deputy managing director of Bank Asia, said, adding that the software would be exhibited in an international fair in Dubai soon to attract foreign customers.
Officials with Beximco Computers Ltd, a concern of Beximco Group, said the company supplies branch banking solutions, but it is now thinking of developing a centralised banking solution to meet the market demand.
Now over 300 branches of 15 major banks of the country use the company's software, according to the official website of Beximco Group.
Talking to The Daily Star, Shaikh Abdul Aziz, chief executive officer and managing director of LEADS Corporation Limited, a software company, said his company has developed both branch and centralized banking software including PcBANK2000 and BankUltimus. As many as 21 banks and financial institutions are using the products, he added.
Sector people attributed the competitive price and extensive after-sales-service to the increased use of local software. They said foreign solutions are dearer.
"Generally the annual service and maintenance fees account for 10-20 per cent of the total cost of a software. As the cost of local software is low, its service charge is also low," said Subodh Kumar Bhowmik, chief technical officer of Flora Systems.
He said it takes two-three years to fully customise a foreign made software because these software are made for different use in different countries. But local software are developed targeting the local market, he added.
But local customers sometimes undermine the local solutions thanking that it would not serve company purposes, Bhowmik lamented.
Source: The Daily Star, January 11, 2009
January 10, 2009
PCBs post rise in profit
Private commercial banks (PCBs) kept up a good show in 2008 despite a global and domestic slowdown in business activity, according to data received from different PCBs.
The operating profit of a PCB was as high as 97 percent and the lowest margin was 23 percent for 2008.
Bankers put the growth down to higher import payments following a huge rise in the prices of commodities from the beginning of 2008.
“The commodity price hike that lasted through the third quarter of 2008 pushed the banks' profit up in 2008,” said Shahjahan Bhuiyan, managing director of United Commercial Bank (UCB).
“Banks' commission income increased significantly because of a price rise in 2008,” said AKM Shafiqur Rahman, executive vice president and secretary of National Bank Limited (NBL).
The operating profit of Al-Arafah Islami Bank rose by 97.5 percent to Tk 158 crore in 2008 from Tk 80 crore in 2007. Shahjalal Bank and Islami Bank saw operating profit increasing by 57 percent and 55 percent respectively in 2008, from a year earlier.
National Credit and Commerce Bank recorded a 33 percent rise in operating profit to Tk 236 crore in 2008 from Tk 178 crore a year ago. The growth rate for UCB and NBL, two first-generation PCBs, was 24 percent and 28 percent respectively in 2008.
Operating profits by NBL and UCB reached Tk 374 crore and Tk 260 crore respectively in 2008.
Operating profits of BRAC Bank, a third-generation private bank, also increased by over 23 percent to Tk 200 crore from Tk 162 crore in 2007.
Prime Bank's operating profit soared to Tk 410 crore in 2008 from Tk 326 crore in 2008. Pubali Bank earned Tk 60 crore more than its 2007 income of Tk 306 crore.
Southeast Bank posted Tk 300 crore in operating profit, up from Tk 291 crore in 2007.
Of the other banks, EXIM earned Tk 260 crore, Dhaka Bank Tk 254 crore, Dutch-Bangla Tk 221 crore, Mercantile Tk 190 crore, IFIC Tk 177 crore, Basic Tk 175 crore, Standard Bank Tk 156 crore, Trust Bank Tk 138 crore, Jamuna Bank Tk 120 crore, One Bank Tk 110 crore and Social Investment Bank Tk 100 crore, according to data tallied by The Daily Star.
AB Bank's operating profit however dipped by Tk 15 crore to Tk 450 crore in 2008 from Tk 465 crore in 2007.
“Banks in Bangladesh saw a good year in 2008 despite the global financial turmoil. Credit should go for the central bank for its prudent and effective guideline,” said Nurul Amin, managing director of NCC Bank.
“We have also seen growth in the banking industry in 2008 in spite of a slowdown in the global economy,” said Syed Abu Naser Bukhtear Ahmed, chief executive officer of state-owned Agrani Bank.
Agrani's operating profit reached Tk 600 crore in 2008 from Tk 526 crore a year ago.
The operating profit of the PCBs had increased by nearly Tk 1,500 crore to Tk 5,200 crore in 2007, up from Tk 3,734 crore in 2006.
The country's imports grew by 31.66 percent in the first four months of the current fiscal year, compared to the same period of the previous fiscal year, according to Bangladesh Bank data.
The value of letters of credit against imports worth $7.898 billion was settled in the July-October period of fiscal 2008-2009, compared with $5.999 billion in the same period of the previous fiscal year.
Credit to the private sector rose by 24.72 percent to Tk 39,736 crore in October 2008, compared to the same period of the previous year.
Source: The Daily Star, January 02, 2009
The operating profit of a PCB was as high as 97 percent and the lowest margin was 23 percent for 2008.
Bankers put the growth down to higher import payments following a huge rise in the prices of commodities from the beginning of 2008.
“The commodity price hike that lasted through the third quarter of 2008 pushed the banks' profit up in 2008,” said Shahjahan Bhuiyan, managing director of United Commercial Bank (UCB).
“Banks' commission income increased significantly because of a price rise in 2008,” said AKM Shafiqur Rahman, executive vice president and secretary of National Bank Limited (NBL).
The operating profit of Al-Arafah Islami Bank rose by 97.5 percent to Tk 158 crore in 2008 from Tk 80 crore in 2007. Shahjalal Bank and Islami Bank saw operating profit increasing by 57 percent and 55 percent respectively in 2008, from a year earlier.
National Credit and Commerce Bank recorded a 33 percent rise in operating profit to Tk 236 crore in 2008 from Tk 178 crore a year ago. The growth rate for UCB and NBL, two first-generation PCBs, was 24 percent and 28 percent respectively in 2008.
Operating profits by NBL and UCB reached Tk 374 crore and Tk 260 crore respectively in 2008.
Operating profits of BRAC Bank, a third-generation private bank, also increased by over 23 percent to Tk 200 crore from Tk 162 crore in 2007.
Prime Bank's operating profit soared to Tk 410 crore in 2008 from Tk 326 crore in 2008. Pubali Bank earned Tk 60 crore more than its 2007 income of Tk 306 crore.
Southeast Bank posted Tk 300 crore in operating profit, up from Tk 291 crore in 2007.
Of the other banks, EXIM earned Tk 260 crore, Dhaka Bank Tk 254 crore, Dutch-Bangla Tk 221 crore, Mercantile Tk 190 crore, IFIC Tk 177 crore, Basic Tk 175 crore, Standard Bank Tk 156 crore, Trust Bank Tk 138 crore, Jamuna Bank Tk 120 crore, One Bank Tk 110 crore and Social Investment Bank Tk 100 crore, according to data tallied by The Daily Star.
AB Bank's operating profit however dipped by Tk 15 crore to Tk 450 crore in 2008 from Tk 465 crore in 2007.
“Banks in Bangladesh saw a good year in 2008 despite the global financial turmoil. Credit should go for the central bank for its prudent and effective guideline,” said Nurul Amin, managing director of NCC Bank.
“We have also seen growth in the banking industry in 2008 in spite of a slowdown in the global economy,” said Syed Abu Naser Bukhtear Ahmed, chief executive officer of state-owned Agrani Bank.
Agrani's operating profit reached Tk 600 crore in 2008 from Tk 526 crore a year ago.
The operating profit of the PCBs had increased by nearly Tk 1,500 crore to Tk 5,200 crore in 2007, up from Tk 3,734 crore in 2006.
The country's imports grew by 31.66 percent in the first four months of the current fiscal year, compared to the same period of the previous fiscal year, according to Bangladesh Bank data.
The value of letters of credit against imports worth $7.898 billion was settled in the July-October period of fiscal 2008-2009, compared with $5.999 billion in the same period of the previous fiscal year.
Credit to the private sector rose by 24.72 percent to Tk 39,736 crore in October 2008, compared to the same period of the previous year.
Source: The Daily Star, January 02, 2009
December 27, 2008
PCBs double industrial lending
Private commercial banks (PCBs) have almost doubled their stake in industrial term lending outpacing state-owned banks, a domination the latter enjoyed for years, central bank data show.
“With a very high level of past overdue, their (state-owned banks) actual role in industrial lending has become quite minor,” said a senior Bangladesh Bank (BB) official quoting its report of the 2007-08 financial year.
As per the report, the industrial term credit disbursed by all financial institutions in the country last fiscal stood at Tk 20,150 crore.
Of which, 30 PCBs alone disbursed Tk 13,650 crore, which was Tk 7,540 crore in FY 2006-07. Nine foreign commercial banks gave Tk 2,790 crore and non-bank financial institutions Tk 2,390 crore.
On the contrary, four state-owned commercial banks (SCBs) and five specialised banks disbursed only Tk 1,320 crore or 6.6 percent.
Of the amount, Sonali, Janata, Agrani and Rupali banks disbursed Tk 980 crore, while the specialised Bangladesh Krishi Bank, Rajshahi Krishi Unnyan Bank, Bangladesh Shilpa Bank, Bangladesh Shilpa Rin Sangstha and BASIC Bank disbursed Tk 340 crore.
Such loan disbursement by the banks and financial institutions marked a 62.6 percent rise and recovery 50.2 percent to Tk 13,620 crore.
According to bankers, the SCBs' contribution to industrial credit was above 80 percent until 1990, but the situation started getting reversed since the mid-90s with the more private banks' into business.
Shahjahan Bhuiyan, managing director of United Commercial Bank Limited (UCBL), a first generation private bank, said professionalism, services and above all customers' care have helped PCBs improve their stake significantly in lending.
SM Aminur Rahman, managing director of state-owned bank Janata identified some factors for the SCBs' low volume of credit disbursement, which include the credit ceiling set by the central bank, lack in business confidence and the fall in commodity prices in the international market.
“We could not disburse a significant amount of industrial credit in 2008,” said Syed Abu Naser Bukhtear Ahmed, managing director and chief executive officer of Agrani Bank.
He blamed political instability for this poor project financing by the bank.
Janata Bank MD has added another point: “Businessmen also did not come up with new ventures in 2008.”
SM Aminur Rahman, however, claimed that it is the SCBs that still create new entrepreneurs, not the PCBs.
Bhuiyan opposed Rahman's claim on developing entrepreneurship terming his idea 'an outdated one.'
“Now PCBs are creating entrepreneurs, not the SCBs,” he added.
Source: The Daily Star, December 26, 2008
“With a very high level of past overdue, their (state-owned banks) actual role in industrial lending has become quite minor,” said a senior Bangladesh Bank (BB) official quoting its report of the 2007-08 financial year.
As per the report, the industrial term credit disbursed by all financial institutions in the country last fiscal stood at Tk 20,150 crore.
Of which, 30 PCBs alone disbursed Tk 13,650 crore, which was Tk 7,540 crore in FY 2006-07. Nine foreign commercial banks gave Tk 2,790 crore and non-bank financial institutions Tk 2,390 crore.
On the contrary, four state-owned commercial banks (SCBs) and five specialised banks disbursed only Tk 1,320 crore or 6.6 percent.
Of the amount, Sonali, Janata, Agrani and Rupali banks disbursed Tk 980 crore, while the specialised Bangladesh Krishi Bank, Rajshahi Krishi Unnyan Bank, Bangladesh Shilpa Bank, Bangladesh Shilpa Rin Sangstha and BASIC Bank disbursed Tk 340 crore.
Such loan disbursement by the banks and financial institutions marked a 62.6 percent rise and recovery 50.2 percent to Tk 13,620 crore.
According to bankers, the SCBs' contribution to industrial credit was above 80 percent until 1990, but the situation started getting reversed since the mid-90s with the more private banks' into business.
Shahjahan Bhuiyan, managing director of United Commercial Bank Limited (UCBL), a first generation private bank, said professionalism, services and above all customers' care have helped PCBs improve their stake significantly in lending.
SM Aminur Rahman, managing director of state-owned bank Janata identified some factors for the SCBs' low volume of credit disbursement, which include the credit ceiling set by the central bank, lack in business confidence and the fall in commodity prices in the international market.
“We could not disburse a significant amount of industrial credit in 2008,” said Syed Abu Naser Bukhtear Ahmed, managing director and chief executive officer of Agrani Bank.
He blamed political instability for this poor project financing by the bank.
Janata Bank MD has added another point: “Businessmen also did not come up with new ventures in 2008.”
SM Aminur Rahman, however, claimed that it is the SCBs that still create new entrepreneurs, not the PCBs.
Bhuiyan opposed Rahman's claim on developing entrepreneurship terming his idea 'an outdated one.'
“Now PCBs are creating entrepreneurs, not the SCBs,” he added.
Source: The Daily Star, December 26, 2008
December 24, 2008
Banks on branch expansion spree
Private banks have quickened their branch expansion programme to net the unbanked population across the country, officials said.
Some thirty private commercial banks (PCBs) have opened around 50 branches only during the time from November to December 20, 2008.
According to Bangladesh Bank (BB) data, the central bank has granted licences to 30 PCBs to open around 150 branches by this year.
BB officials meanwhile said the demand for new branches is increasing this year like never before.
“No one disputes the importance of online banking or its increasing coverage, but every bank believes that the way to get there is to first have a more visible presence on the street,” said Muhammad A Rumee Ali, chairman of BRAC Bank and a former deputy governor of BB.
Rumee Ali said: “I don't think it's possible to provide full banking services without physical presence.”
BRAC Bank has got BB approval to open the highest number (20) of new branches in 2008 followed by Dutch-Bangla Bank with 15 branches. No other banks got permission to open more than 10 branches, according to BB data.
As of October 31, 2008, 48 Bangladeshi banks that include four state-owned, 30 PCBs, nine foreign and five specialised banks have a total of 6,789 branches. The number was 6,562 at the end of 2006 and 6,402 in 2005.
“The number of total branches will be around 6,850 at the end of 2008,” a senior BB official said.
Different banks have different explanations for their branch expansion strategy. For some it is about plugging geographical gaps in their network, for some others it is a response to customer demand and the call for more business.
“Business is the prime objective of any branch expansion. A branch needs to generate income, otherwise it will be shut down,” Rumee Ali said.
Helal Ahmed Chowdhury, managing director of Pubali Bank, which would have 371 branches at the end of 2008, said a bank needs to assess business potentials before opening a new branch.
Pubali Bank got permission to open 10 new branches this year, of which seven rural and the remaining three are urban branches.
“Now we consider economic activities and remittances before opening a new branch,” Chowdhury said.
There will be more branches as new areas are becoming urbanised, he added.
Responding to a query, he said a branch requires only one year to make profit.
“An urban branch generates quicker profit than a rural one,” Rumee Ali said.
Source: The Daily Star, December 23, 2008
Some thirty private commercial banks (PCBs) have opened around 50 branches only during the time from November to December 20, 2008.
According to Bangladesh Bank (BB) data, the central bank has granted licences to 30 PCBs to open around 150 branches by this year.
BB officials meanwhile said the demand for new branches is increasing this year like never before.
“No one disputes the importance of online banking or its increasing coverage, but every bank believes that the way to get there is to first have a more visible presence on the street,” said Muhammad A Rumee Ali, chairman of BRAC Bank and a former deputy governor of BB.
Rumee Ali said: “I don't think it's possible to provide full banking services without physical presence.”
BRAC Bank has got BB approval to open the highest number (20) of new branches in 2008 followed by Dutch-Bangla Bank with 15 branches. No other banks got permission to open more than 10 branches, according to BB data.
As of October 31, 2008, 48 Bangladeshi banks that include four state-owned, 30 PCBs, nine foreign and five specialised banks have a total of 6,789 branches. The number was 6,562 at the end of 2006 and 6,402 in 2005.
“The number of total branches will be around 6,850 at the end of 2008,” a senior BB official said.
Different banks have different explanations for their branch expansion strategy. For some it is about plugging geographical gaps in their network, for some others it is a response to customer demand and the call for more business.
“Business is the prime objective of any branch expansion. A branch needs to generate income, otherwise it will be shut down,” Rumee Ali said.
Helal Ahmed Chowdhury, managing director of Pubali Bank, which would have 371 branches at the end of 2008, said a bank needs to assess business potentials before opening a new branch.
Pubali Bank got permission to open 10 new branches this year, of which seven rural and the remaining three are urban branches.
“Now we consider economic activities and remittances before opening a new branch,” Chowdhury said.
There will be more branches as new areas are becoming urbanised, he added.
Responding to a query, he said a branch requires only one year to make profit.
“An urban branch generates quicker profit than a rural one,” Rumee Ali said.
Source: The Daily Star, December 23, 2008
December 07, 2008
Beautiful Bangladesh: Country Brands for Bangladesh
Chief Adviser Fakhruddin Ahmed yesterday launched the first country branding for Bangladesh.
The logo of the branding includes a rising sun above waves of seawater with the slogan "Beautiful Bangladesh" beneath.
Fakhruddin told the function that the country branding would be able to attract more tourists and foreign investments to the county.
Emphasising the need for country branding, the chief adviser said the thousand-year heritage of the country, its people, quality of its goods and services could be taken under a single brand.
The country branding represents not one segment but all the sectors and the population as a whole, Fakhruddin told the function at Sonargaon Hotel.
He also thanked the committee who had prepared and developed the logo and the slogan.
The country branding was launched amid a cultural programme, including a laser show, music and dance.
The image of the country considerably lies on tourism branding, and tourism itself could be developed by branding and promotion, said Mahbub Jamil, the chief adviser's special assistant for civil aviation and tourism.
"A nation's brand is not static. It evolves with the country," he said.
The Daily Star, December 7, 2008
November 13, 2008
Two organizations eye merger Bangladesh Development Bank planned
The Bangladesh Shilpa Bank (BSB) and the Bangladesh Shilpa Rin Sangstha (BSRS) are going to merge into one organization under a new name Bangladesh Development Bank.
The finance ministry sent last month a proposal on the matter to the secretary committee on administrative development.
A draft of Memorandum and Articles of Association on establishing a public limited company named Bangladesh Development Bank Limited was also sent to this body.
A senior official of the ministry said the proposal will be sent for the cabinet's nod after its scrutiny by this committee.
According to the proposal, Bangladesh Development Bank will be a public limited company under state ownership.
The official, however, said this bank might gradually be privatized.
The paid-up capital of the merged company will amount to Tk 400 crore. The present paid-up capital of the BSB is Tk 200 crore and BSRS' Tk 70 crore. Such capital will be raised to Tk 400 crore through an adjustment of the reserve funds of the two companies.
The proposed Bangladesh Development Bank will have at least seven directors.
In 1992, the government's several initiatives to privatize BSRS could not be accomplished due to some complexities.
BSB and BSRS, which have almost similar functions, were established to provide loans and facilities to industrial institutions besides helping in setting up new industries and expanding investment in the country. But, these two companies, according to the finance ministry official, failed to live up to their expectations.
In a recent meeting, representatives from the law ministry, Bangladesh Bank, BSB and BSRS emphasized making these two state-run lending agencies stronger and agreed on a merger.
An official sought that the government immediately take a decision with regard to the fate of the company because any uncertain situation will disappoint the employees of the companies.
Source: The Daily Star, November 13, 2008
The finance ministry sent last month a proposal on the matter to the secretary committee on administrative development.
A draft of Memorandum and Articles of Association on establishing a public limited company named Bangladesh Development Bank Limited was also sent to this body.
A senior official of the ministry said the proposal will be sent for the cabinet's nod after its scrutiny by this committee.
According to the proposal, Bangladesh Development Bank will be a public limited company under state ownership.
The official, however, said this bank might gradually be privatized.
The paid-up capital of the merged company will amount to Tk 400 crore. The present paid-up capital of the BSB is Tk 200 crore and BSRS' Tk 70 crore. Such capital will be raised to Tk 400 crore through an adjustment of the reserve funds of the two companies.
The proposed Bangladesh Development Bank will have at least seven directors.
In 1992, the government's several initiatives to privatize BSRS could not be accomplished due to some complexities.
BSB and BSRS, which have almost similar functions, were established to provide loans and facilities to industrial institutions besides helping in setting up new industries and expanding investment in the country. But, these two companies, according to the finance ministry official, failed to live up to their expectations.
In a recent meeting, representatives from the law ministry, Bangladesh Bank, BSB and BSRS emphasized making these two state-run lending agencies stronger and agreed on a merger.
An official sought that the government immediately take a decision with regard to the fate of the company because any uncertain situation will disappoint the employees of the companies.
Source: The Daily Star, November 13, 2008
October 29, 2008
Bangladesh Bank may pick S&P, Moody for Sovereign Rating
The central bank is at the final stage to hire two international credit rating agencies - Standard & Poor's and Moody's Investors Service to conduct a credit rating for Bangladesh.
A five-member technical committee, comprised of officials from Bangladesh Bank (BB), Ministry of Commerce and the Institute of Chartered Accountants of Bangladesh, sits today to recommend these two firms to the BB governor for their appointment. The central bank chief will finalise the appointment of the two among the three invited to do the credit rating.
Another firm, Japan Credit Rating Agency did not respond.
“The technical evaluation committee has decided to recommend Standard & Poor's and Moody after scrutinizing their proposals,” a senior BB official said yesterday.
The move for Bangladesh's first-ever credit rating, initiated by the central bank in May to ensure a better credit rating for the country, will help attract foreign investment and mobilize resources from the capital market as well, experts believe.
Such rating was earlier arbitrarily practiced by donors and individual enterprises.
“We need a credit rating for the country so that any organizations or countries cannot do such rating solely on Bangladesh based on their own perceptions,” a BB senior official remarked.
In this context, the BB governor's observation is: “Some ratings unnecessarily branded Bangladesh as a high risk country.”
On appointment of the recommended firms,
the central bank will issue work orders to them after completing negotiations with them on prices and time duration in a month.
There foreign banks -- Citibank NA, Hongkong and Shanghai Banking Corporation (HSBC) and Standard Chartered Bank will offer advisory services to the BB in the total process of completing the task.
Standard & Poor's and Moody's Investors Service will be allowed to do the credit rating job independently, if appointed. However, the reports to be submitted by these firms will be assessed by the central bank for a better rating of the country.
Although credit rating for business organizations is common globally, country-wise credit rating is a bit new. Besides developed countries, some Middle East and many African countries have their own country credit ratings.
Credit rating generally reflects a country's overall economic situation, but socio-political issues also get high focus.
>> Source: The Daily Star, October 29, 2008
A five-member technical committee, comprised of officials from Bangladesh Bank (BB), Ministry of Commerce and the Institute of Chartered Accountants of Bangladesh, sits today to recommend these two firms to the BB governor for their appointment. The central bank chief will finalise the appointment of the two among the three invited to do the credit rating.
Another firm, Japan Credit Rating Agency did not respond.
“The technical evaluation committee has decided to recommend Standard & Poor's and Moody after scrutinizing their proposals,” a senior BB official said yesterday.
The move for Bangladesh's first-ever credit rating, initiated by the central bank in May to ensure a better credit rating for the country, will help attract foreign investment and mobilize resources from the capital market as well, experts believe.
Such rating was earlier arbitrarily practiced by donors and individual enterprises.
“We need a credit rating for the country so that any organizations or countries cannot do such rating solely on Bangladesh based on their own perceptions,” a BB senior official remarked.
In this context, the BB governor's observation is: “Some ratings unnecessarily branded Bangladesh as a high risk country.”
On appointment of the recommended firms,
the central bank will issue work orders to them after completing negotiations with them on prices and time duration in a month.
There foreign banks -- Citibank NA, Hongkong and Shanghai Banking Corporation (HSBC) and Standard Chartered Bank will offer advisory services to the BB in the total process of completing the task.
Standard & Poor's and Moody's Investors Service will be allowed to do the credit rating job independently, if appointed. However, the reports to be submitted by these firms will be assessed by the central bank for a better rating of the country.
Although credit rating for business organizations is common globally, country-wise credit rating is a bit new. Besides developed countries, some Middle East and many African countries have their own country credit ratings.
Credit rating generally reflects a country's overall economic situation, but socio-political issues also get high focus.
>> Source: The Daily Star, October 29, 2008
October 18, 2008
Banks plan to switch to DIBOR by year-end
Commercial banks have planned to implement the proposed Dhaka inter-bank offered rate (DIBOR) by the year-end to discipline lending and borrowing of funds among them.
The move will help banks control the unusual nature of inter-bank call money rates and know the banks' overall liquidity position, treasurers in different banks said.
Currently, banks have no mechanism to quote rates for inter-bank lending and borrowing, which ultimately forces a bank to borrow at higher rates than that of even the corporate lending.
“We like to implement DIBOR by the year-end. Bangladesh Bank also wants DIBOR to be implemented,” said Syed Abu Naser Bukhtear Ahmed, chairman of Bangladesh Foreign Exchange Dealers Association, the initiator of the move.
The forex trade body has recently formed a technical committee to prepare a report on DIBOR, which will probably be submitted by the month-end.
DIBOR, if implemented, will be the barometer for interest rates that the banks in the country charge each other for term loans ranging from twenty-four hours to five years, according to technical committee members.
This inter-bank market provides a means for financial institutions with excess capital to earn higher rates of return by its lending liquid assets to those in need of funds.
The forex trade body chief, Syed Abu Naser Bukhtear Ahmed, also the chief executive officer of state-owned Agrani Bank Limited, said: “The technical committee is supposed to submit the report this month for a discussion on October 26.”
The meeting will also discuss how DIBOR-based lending and the limit of lending volume would work.
DIBOR is also important because it will be used as the base for variable rates for government and corporate loans and derivative-based products such as credit swaps, according to bank treasurers.
An increase or decrease in DIBOR will result in a corresponding rise or fall in a bank's cost of borrowing.
A treasury official of a private commercial bank who strongly supports DIBOR said the treasury bill rates are no longer reflective of the market-based interest rates.
Source: The Daily Star, October 17, 2008
The move will help banks control the unusual nature of inter-bank call money rates and know the banks' overall liquidity position, treasurers in different banks said.
Currently, banks have no mechanism to quote rates for inter-bank lending and borrowing, which ultimately forces a bank to borrow at higher rates than that of even the corporate lending.
“We like to implement DIBOR by the year-end. Bangladesh Bank also wants DIBOR to be implemented,” said Syed Abu Naser Bukhtear Ahmed, chairman of Bangladesh Foreign Exchange Dealers Association, the initiator of the move.
The forex trade body has recently formed a technical committee to prepare a report on DIBOR, which will probably be submitted by the month-end.
DIBOR, if implemented, will be the barometer for interest rates that the banks in the country charge each other for term loans ranging from twenty-four hours to five years, according to technical committee members.
This inter-bank market provides a means for financial institutions with excess capital to earn higher rates of return by its lending liquid assets to those in need of funds.
The forex trade body chief, Syed Abu Naser Bukhtear Ahmed, also the chief executive officer of state-owned Agrani Bank Limited, said: “The technical committee is supposed to submit the report this month for a discussion on October 26.”
The meeting will also discuss how DIBOR-based lending and the limit of lending volume would work.
DIBOR is also important because it will be used as the base for variable rates for government and corporate loans and derivative-based products such as credit swaps, according to bank treasurers.
An increase or decrease in DIBOR will result in a corresponding rise or fall in a bank's cost of borrowing.
A treasury official of a private commercial bank who strongly supports DIBOR said the treasury bill rates are no longer reflective of the market-based interest rates.
Source: The Daily Star, October 17, 2008
October 06, 2008
Sri Lankan bank eyes Bangladesh
A Sri Lankan bank is in talks with local non-banking financial institutions to carve out a joint venture, with its focus on investment banking in Bangladesh.
National Development Bank (NDB), headquartered in Colombo, unveiled the plan in a filing to the Colombo Stock Exchange, seeking to operate an investment bank in Bangladesh as a majority shareholder.
NDB's disclosure came after it had conducted a feasibility study to start investment banking.
Over the last one year, the bank has been jockeying for local firms but has yet to make a final deal.
People close to the matter however said the Sri Lankan bank said NDB made progress in talks with some local firms such as Capital Market Services Ltd, a merchant bank.
According to NDB, it has already won approval from the Sri Lankan central bank, subject to obtaining approval from the Controller of Exchange and the Minister of Finance and Planning in the island nation.
But no approval has yet been received from Bangladesh regulators. "We have not received any approval from Bangladesh authorities," the bank said in a statement.
Transactions will take place after NDB gets the required approval and completes the terms and conditions of a joint venture agreement.
NDB is the third Sri Lankan bank, expected to come to Bangladesh, after investments by Commercial Bank of Ceylon and Sampath Bank. Sampath Bank has investment in LankaBangla Finance.
Sources: The Daily Star, October 6, 2008
National Development Bank (NDB), headquartered in Colombo, unveiled the plan in a filing to the Colombo Stock Exchange, seeking to operate an investment bank in Bangladesh as a majority shareholder.
NDB's disclosure came after it had conducted a feasibility study to start investment banking.
Over the last one year, the bank has been jockeying for local firms but has yet to make a final deal.
People close to the matter however said the Sri Lankan bank said NDB made progress in talks with some local firms such as Capital Market Services Ltd, a merchant bank.
According to NDB, it has already won approval from the Sri Lankan central bank, subject to obtaining approval from the Controller of Exchange and the Minister of Finance and Planning in the island nation.
But no approval has yet been received from Bangladesh regulators. "We have not received any approval from Bangladesh authorities," the bank said in a statement.
Transactions will take place after NDB gets the required approval and completes the terms and conditions of a joint venture agreement.
NDB is the third Sri Lankan bank, expected to come to Bangladesh, after investments by Commercial Bank of Ceylon and Sampath Bank. Sampath Bank has investment in LankaBangla Finance.
Sources: The Daily Star, October 6, 2008
September 30, 2008
US Credit Crunch and Global Financial Crisis…
Hi, Friends, Look at the news sources like Economist, BBC News, The Daily Star, Reuters etc. US Credit Crunch and Global Financial Crisis can be look like:
The Federal Reserve gave America’s last two big investment banks, Goldman Sachs and Morgan Stanley, permission to change their status to bank holding firms. They will be subject to stiffer regulation, but allowed to take deposits. Goldman Sachs raised $5 billion to shore up its capital by selling shares to Berkshire Hathaway, the firm run by Warren Buffett, a celebrated investor. The next day, it raised $5 billion more from a share offering. Mitsubishi-UFJ, Japan’s largest bank, agreed to buy up to 20% of Morgan Stanley for $8.4 billion.
Nomura, a Japanese investment bank, offered to buy bits of the European, Middle Eastern and Asian divisions of Lehman Brothers, an American rival that declared itself bankrupt last week, for an undisclosed sum. Barclays, a British bank, bought Lehman’s main American unit for $250m, and several of its properties for $1.29 billion.
The Federal Bureau of Investigation said it was looking into 26 cases of potential fraud related to the collapse of America’s mortgage industry. The financial institutions under investigation are said to include the now-defunct Lehman Brothers, as well as three failing firms recently taken over by the American government: American International Group, Fannie Mae and Freddie Mac.
Moody’s, a rating agency, lowered its outlook for 12 Russian banks, despite a government rescue package worth$120 billion. The state-owned Development Bank said it would take over Svyaz Bank, a struggling private one. Meanwhile a fund controlled by Mikhail Prokhorov, a former mining magnate, agreed to buy half of Renaissance Capital, a big Russian investment bank, for $500m.
Citigroup to take over Wachovia banking assets: Citigroup agreed to a takeover of Wachovia Bank in a deal backed by regulators and which gives the government a stake in one of the nation's biggest banks.
The takeover marks another shakeup for the troubled US banking sector saddled with heavy losses from the bursting of the real estate bubble.
It came as Wachovia faced a near collapse of its share price and weakening confidence because of its exposure to troubled mortgage assets.
First news of the deal came from the Federal Deposit Insurance Corp. the banking industry regulator, which helped facilitate the takeover.
"Wachovia did not fail; rather, it is to be acquired by Citigroup Inc. on an open bank basis with assistance from the FDIC," the government agency said.
The engineered bailout came a day after President George W. Bush's administration and Congress struck a deal on a landmark 700-billion-dollar bailout of the banking system in a bid to avert a wider economic crisis.
The government will get a stake in Citigroup in exchange for guaranteeing a large portion of the distressed Wachovia assets linked to housing.
Citi will assume up to 42 billion dollars of losses from a pool of 312 billion dollars of loans held by Wachovia; the FDIC will absorb losses beyond that and take a stake in Citigroup for the guarantee.
Citigroup granted the FDIC 12 billion dollars in preferred stock and warrants to compensate the agency for bearing this risk.
Under the agreement, Citigroup will pay 2.1 billion dollars in stock to Wachovia and assume the senior and subordinated debt of Wachovia Corporation, the companies said.
Crisis slams European banks: Belgian-French bank Dexia is the latest in line after Fortis and Bradford & Bingley.
Several European banks were being rescued or were under stock market attack Monday, with Belgian-French bank Dexia the latest in line after Fortis and Bradford & Bingley.
Suspicion and fear swept onwards despite the revised bailout for US banking stitched together by US lawmakers, despite European government rescues for Fortis and Bradford & Bingley and despite renewed central bank infusions to sustain interbank funding.
And stock markets slumped in a strong vote of skepticism about prospects for the global economy, and uncertainty about Congressional approval for the bailout. But the dollar jumped, and in London the euro was at 1.4362 dollars from 1.4613 here late Friday.
Barclays Capital analyst David Woo said the bailout deal "reduces the risk of a systemic collapse" but "many downside risks remain -- not least those related to a protracted slowdown in the global economy."
In addition "financial market turbulence is seriously affecting the European financial system" and "weakness in equities ... suggests the market is pessimistic about the likely effectiveness of the (US) Treasury's plan."
UniCredit economist Marco Annunziata said in London that Congressional approval could take a few days and although the package "pulls us back from the brink," extreme dislocations in money markets were a source of "serious stress in the financial sector."
UniCredit said that money market interest rates were "symbolic" rather than meaningful, and central banks "are trying their best" to provide emergency funding.
The European central Bank announced a special 38-day loan to eurozone banks, and the Bank of Japan injected 1.9 trillion yen (17.8 billion dollars) in Tokyo.
Financial shares led European stocks downwards. Shares were down 2.49 percent in London, 2.83 percent in Paris and 2.84 percent in Frankfurt, after falls of 4.3 percent in Hong Kong and 1.26 percent in Tokyo.
"In this market, no-one is taking any chances and we must wait until the vote to confirm it (the plan) has passed," said City Index market strategist Joshua Raymond.
"Then we must see if it ticks all boxes for a recovery, and that means the market understanding how it is going to work fundamentally."
President George W. Bush said the rescue "sends a strong signal to markets around the world that the United States is serious about restoring confidence and stability to our financial system."
But some conservative Republicans and liberal Democrats steadfastly opposed the plan, which includes the immediate release of 250 billion dollars to enable the government to buy up troubled assets.
Central banks again pumped funds into money markets because, analysts say, interbank lending is being strangled to an "apocalyptical" extent, with massive potential repercussions on lending to businesses and consumers. Interbank lending rates rose even further Monday, in defiance of the agreement in Washington.
The Belgian government said it would stand by Dexia bank, a leading European lender to municipalities, as its shares plunged by 23.0 percent and it rushed out a statement assuring "our liquidity is very good."
German Bank Hypo Real estate was rescued by other banks as was small Danish bank Bonusbanken.
Shares in Fortis, one of the biggest banks in northern Europe, plunged again despite the weekend nationalization, and stocks in leading Swiss bank UBS also slumped more than seven percent.
Meanwhile French President Nicolas Sarkozy called a meeting of the heads of top French financial groups to "review the situation of financial institutions and the credit level of households and business," his office said.
The US bailout plan is the biggest state intervention since the Great Depression, but the wave of failure and distress in European banking is also assuming unprecedented proportions.
Any relief internationally from the tentative US rescue agreement came too late for Fortis, rescued by Benelux governments for 11.2 billion euros (16 billion dollars) at the weekend. Fortis shares slumped 18.9 percent in Amsterdam after crashing last week.
Fortis's problems are "weighing on European banking stocks," a Zurich-based trader told AFP, adding "UBS is much more exposed than Fortis."
In Paris, shares in Credit Agricole fell 6.84 percent and in BNP Paribas by 6.27 percent.
In London, Royal Bank of Scotland stock shed 13 percent, HBOS dived 8.94 percent, and Barclays dipped 6.55 percent. Bradford & Bingley was rescued at the weekend with a part takeover by Spanish Santander bank and 612 pounds (773 million euros, 1.1 million dollars) by the British government.
Monday, German banks extended a life-saving multi-billion-euro credit line to Hypo Real Estate (HRE), and small Danish bank Bonusbanken was rescued by Vestjysk bank.
Motomi Hiratsuka, a trader at BNP Paribas, said: "We know that we are most likely to avoid a meltdown in the US financial sector, but what matters now is negative news from new regions."
House rejects $700b bailout in stunning defeat: In a vote that shook the government, Wall Street and markets around the world, the House on Monday defeated a $700 billion emergency rescue for the nation's financial system, leaving both parties' lawmakers and the Bush administration scrambling to pick up the pieces. Dismayed investors sent the Dow Jones industrials plunging 777 points, the most ever for a single day.
"We need to put something back together that works," a grim-faced Treasury Secretary Henry Paulson said after he and Federal Reserve Chairman Ben Bernanke joined in an emergency strategy session at the White House. On Capitol Hill, Democratic leaders said the House would reconvene Thursday, leaving open the possibility that it could salvage a reworked version.
Senate leaders showed no inclination to try to bring the measure to a vote before they could determine its fate in the House. President Bush, meanwhile, was scheduled to make a statement on the rescue plan Tuesday morning, the White House said.
All sides agreed the effort to bolster beleaguered financial markets, potentially the biggest government intervention since the Great Depression, could not be abandoned.
But in a remarkable display on Monday, a majority of House members slapped aside the best version their leaders and the administration had been able to come up with, bucking presidential speeches, pleading visits from Paulson and Federal Reserve Chairman Ben Bernanke and urgent warnings that the economy could nosedive without the legislation.
In the face of thousands of phone calls and e-mails fiercely opposing the measure, many lawmakers were not willing to take the political risk of voting for it just five weeks before the elections. The bill went down, 228-205. The House Web site was overwhelmed as millions of people sought information about the measure through the day.
US President George W Bush warns the US economy is at a "critical moment" after his bail-out plan was defeated.
Last of all, as a student from Finance at Dhaka University and Banker as profession, based on above news, facts, figures, we can sum up as:
1.GLOBAL BANK LOSSES: Banks and other financial institutions could lose $1 trillion from the credit crisis as mortgage-backed assets have lost most of their value.
2.COLLAPSING HOUSING MARKETS: Underlying the financial market wobbles is a real decline in US house prices nationwide for the first time since the 1930s.
3.JITTERY STOCK MARKETS: Stock markets around the world - from Shanghai to London - have plunged, while in the US the Dow Jones industrial average has made big losses this year.
Sources: Economist, BBC News, The Daily Star, Reuters
The Federal Reserve gave America’s last two big investment banks, Goldman Sachs and Morgan Stanley, permission to change their status to bank holding firms. They will be subject to stiffer regulation, but allowed to take deposits. Goldman Sachs raised $5 billion to shore up its capital by selling shares to Berkshire Hathaway, the firm run by Warren Buffett, a celebrated investor. The next day, it raised $5 billion more from a share offering. Mitsubishi-UFJ, Japan’s largest bank, agreed to buy up to 20% of Morgan Stanley for $8.4 billion.
Nomura, a Japanese investment bank, offered to buy bits of the European, Middle Eastern and Asian divisions of Lehman Brothers, an American rival that declared itself bankrupt last week, for an undisclosed sum. Barclays, a British bank, bought Lehman’s main American unit for $250m, and several of its properties for $1.29 billion.
The Federal Bureau of Investigation said it was looking into 26 cases of potential fraud related to the collapse of America’s mortgage industry. The financial institutions under investigation are said to include the now-defunct Lehman Brothers, as well as three failing firms recently taken over by the American government: American International Group, Fannie Mae and Freddie Mac.
Moody’s, a rating agency, lowered its outlook for 12 Russian banks, despite a government rescue package worth$120 billion. The state-owned Development Bank said it would take over Svyaz Bank, a struggling private one. Meanwhile a fund controlled by Mikhail Prokhorov, a former mining magnate, agreed to buy half of Renaissance Capital, a big Russian investment bank, for $500m.
Citigroup to take over Wachovia banking assets: Citigroup agreed to a takeover of Wachovia Bank in a deal backed by regulators and which gives the government a stake in one of the nation's biggest banks.
The takeover marks another shakeup for the troubled US banking sector saddled with heavy losses from the bursting of the real estate bubble.
It came as Wachovia faced a near collapse of its share price and weakening confidence because of its exposure to troubled mortgage assets.
First news of the deal came from the Federal Deposit Insurance Corp. the banking industry regulator, which helped facilitate the takeover.
"Wachovia did not fail; rather, it is to be acquired by Citigroup Inc. on an open bank basis with assistance from the FDIC," the government agency said.
The engineered bailout came a day after President George W. Bush's administration and Congress struck a deal on a landmark 700-billion-dollar bailout of the banking system in a bid to avert a wider economic crisis.
The government will get a stake in Citigroup in exchange for guaranteeing a large portion of the distressed Wachovia assets linked to housing.
Citi will assume up to 42 billion dollars of losses from a pool of 312 billion dollars of loans held by Wachovia; the FDIC will absorb losses beyond that and take a stake in Citigroup for the guarantee.
Citigroup granted the FDIC 12 billion dollars in preferred stock and warrants to compensate the agency for bearing this risk.
Under the agreement, Citigroup will pay 2.1 billion dollars in stock to Wachovia and assume the senior and subordinated debt of Wachovia Corporation, the companies said.
Crisis slams European banks: Belgian-French bank Dexia is the latest in line after Fortis and Bradford & Bingley.
Several European banks were being rescued or were under stock market attack Monday, with Belgian-French bank Dexia the latest in line after Fortis and Bradford & Bingley.
Suspicion and fear swept onwards despite the revised bailout for US banking stitched together by US lawmakers, despite European government rescues for Fortis and Bradford & Bingley and despite renewed central bank infusions to sustain interbank funding.
And stock markets slumped in a strong vote of skepticism about prospects for the global economy, and uncertainty about Congressional approval for the bailout. But the dollar jumped, and in London the euro was at 1.4362 dollars from 1.4613 here late Friday.
Barclays Capital analyst David Woo said the bailout deal "reduces the risk of a systemic collapse" but "many downside risks remain -- not least those related to a protracted slowdown in the global economy."
In addition "financial market turbulence is seriously affecting the European financial system" and "weakness in equities ... suggests the market is pessimistic about the likely effectiveness of the (US) Treasury's plan."
UniCredit economist Marco Annunziata said in London that Congressional approval could take a few days and although the package "pulls us back from the brink," extreme dislocations in money markets were a source of "serious stress in the financial sector."
UniCredit said that money market interest rates were "symbolic" rather than meaningful, and central banks "are trying their best" to provide emergency funding.
The European central Bank announced a special 38-day loan to eurozone banks, and the Bank of Japan injected 1.9 trillion yen (17.8 billion dollars) in Tokyo.
Financial shares led European stocks downwards. Shares were down 2.49 percent in London, 2.83 percent in Paris and 2.84 percent in Frankfurt, after falls of 4.3 percent in Hong Kong and 1.26 percent in Tokyo.
"In this market, no-one is taking any chances and we must wait until the vote to confirm it (the plan) has passed," said City Index market strategist Joshua Raymond.
"Then we must see if it ticks all boxes for a recovery, and that means the market understanding how it is going to work fundamentally."
President George W. Bush said the rescue "sends a strong signal to markets around the world that the United States is serious about restoring confidence and stability to our financial system."
But some conservative Republicans and liberal Democrats steadfastly opposed the plan, which includes the immediate release of 250 billion dollars to enable the government to buy up troubled assets.
Central banks again pumped funds into money markets because, analysts say, interbank lending is being strangled to an "apocalyptical" extent, with massive potential repercussions on lending to businesses and consumers. Interbank lending rates rose even further Monday, in defiance of the agreement in Washington.
The Belgian government said it would stand by Dexia bank, a leading European lender to municipalities, as its shares plunged by 23.0 percent and it rushed out a statement assuring "our liquidity is very good."
German Bank Hypo Real estate was rescued by other banks as was small Danish bank Bonusbanken.
Shares in Fortis, one of the biggest banks in northern Europe, plunged again despite the weekend nationalization, and stocks in leading Swiss bank UBS also slumped more than seven percent.
Meanwhile French President Nicolas Sarkozy called a meeting of the heads of top French financial groups to "review the situation of financial institutions and the credit level of households and business," his office said.
The US bailout plan is the biggest state intervention since the Great Depression, but the wave of failure and distress in European banking is also assuming unprecedented proportions.
Any relief internationally from the tentative US rescue agreement came too late for Fortis, rescued by Benelux governments for 11.2 billion euros (16 billion dollars) at the weekend. Fortis shares slumped 18.9 percent in Amsterdam after crashing last week.
Fortis's problems are "weighing on European banking stocks," a Zurich-based trader told AFP, adding "UBS is much more exposed than Fortis."
In Paris, shares in Credit Agricole fell 6.84 percent and in BNP Paribas by 6.27 percent.
In London, Royal Bank of Scotland stock shed 13 percent, HBOS dived 8.94 percent, and Barclays dipped 6.55 percent. Bradford & Bingley was rescued at the weekend with a part takeover by Spanish Santander bank and 612 pounds (773 million euros, 1.1 million dollars) by the British government.
Monday, German banks extended a life-saving multi-billion-euro credit line to Hypo Real Estate (HRE), and small Danish bank Bonusbanken was rescued by Vestjysk bank.
Motomi Hiratsuka, a trader at BNP Paribas, said: "We know that we are most likely to avoid a meltdown in the US financial sector, but what matters now is negative news from new regions."
House rejects $700b bailout in stunning defeat: In a vote that shook the government, Wall Street and markets around the world, the House on Monday defeated a $700 billion emergency rescue for the nation's financial system, leaving both parties' lawmakers and the Bush administration scrambling to pick up the pieces. Dismayed investors sent the Dow Jones industrials plunging 777 points, the most ever for a single day.
"We need to put something back together that works," a grim-faced Treasury Secretary Henry Paulson said after he and Federal Reserve Chairman Ben Bernanke joined in an emergency strategy session at the White House. On Capitol Hill, Democratic leaders said the House would reconvene Thursday, leaving open the possibility that it could salvage a reworked version.
Senate leaders showed no inclination to try to bring the measure to a vote before they could determine its fate in the House. President Bush, meanwhile, was scheduled to make a statement on the rescue plan Tuesday morning, the White House said.
All sides agreed the effort to bolster beleaguered financial markets, potentially the biggest government intervention since the Great Depression, could not be abandoned.
But in a remarkable display on Monday, a majority of House members slapped aside the best version their leaders and the administration had been able to come up with, bucking presidential speeches, pleading visits from Paulson and Federal Reserve Chairman Ben Bernanke and urgent warnings that the economy could nosedive without the legislation.
In the face of thousands of phone calls and e-mails fiercely opposing the measure, many lawmakers were not willing to take the political risk of voting for it just five weeks before the elections. The bill went down, 228-205. The House Web site was overwhelmed as millions of people sought information about the measure through the day.
US President George W Bush warns the US economy is at a "critical moment" after his bail-out plan was defeated.
Last of all, as a student from Finance at Dhaka University and Banker as profession, based on above news, facts, figures, we can sum up as:
1.GLOBAL BANK LOSSES: Banks and other financial institutions could lose $1 trillion from the credit crisis as mortgage-backed assets have lost most of their value.
2.COLLAPSING HOUSING MARKETS: Underlying the financial market wobbles is a real decline in US house prices nationwide for the first time since the 1930s.
3.JITTERY STOCK MARKETS: Stock markets around the world - from Shanghai to London - have plunged, while in the US the Dow Jones industrial average has made big losses this year.
Sources: Economist, BBC News, The Daily Star, Reuters
Bangladesh Bank set to make bank services less costly
Customers will be able to take balance confirmation certificates from banks for free twice a year, according to a decision of Bangladesh Bank (BB).
Also, the banks will be allowed to charge only Tk 100 for a certificate to be used to open a beneficiary owner account, down from a rate that ranges between Tk 200 and Tk 500 now.
“The BB has taken the decision in consultation with the Bankers Association of Bangladesh (BAB) and Association of Banks, Bangladesh (ABB),” a senior official with the central bank told The Daily Star yesterday.
A circular is expected to come out today.
The central bank's directives asked all scheduled banks to rationalize its charges, fees and commissions, which businessmen say are too high.
Different banks charge customers for 51 categories of service in transactions, which, according to the BB, increases the prices of both export products and local consumer items.
BB officials said the banks take 25 types of charges and commissions for import-related transactions and 14 types for export transactions. In addition, 12 types of fees are charged for local transactions.
The new BB directives said the banks must issue balance confirmation certificates for free twice a year. "If anyone asks for a statement more than twice a year, they may be charged a maximum of Tk 200," the BB said.
The central bank lifted charges on foreign correspondence (local part) and cancellation of letters of credit (LCs) or expired LCs.
Costs of mailing, courier, telex and SWIFT must be on the basis of actual expenditure for LC transmission, amendment, confirmation, cancellation and foreign correspondence charge, according to the BB instructions.
The central bank also reset the quarterly commission for LC opening at 0.50 percent.
LC advising charges may be a maximum of Tk 1,000 and the charges for LC acceptance will be 0.40 percent on a quarterly basis. The charges for issuing back-to-back LCs, C&F certificates and certificates for realization of export prices have been set at Tk 500.
“Banks will be asked to send in a list of the charges and fees on a half yearly basis -- in July and January,” the draft of the circular said.
In case of any change in charges and fees, banks have to inform the related division about it and post information on banks' websites.
The BB could further rationalize the charges in consultation with banks, it said.
Although the BB cut some charges, it did not take any move on "high charges" for closing a bank account, customers said.
Earlier in a report, the central bank said a government-owned bank did not charge clients for account closure while private commercial banks charge from Tk 300 to Tk 500. Foreign commercial banks took as high as Tk 1,000.Source: The Daily Star, Dhaka, Bangladesh, September 30, 2008
Also, the banks will be allowed to charge only Tk 100 for a certificate to be used to open a beneficiary owner account, down from a rate that ranges between Tk 200 and Tk 500 now.
“The BB has taken the decision in consultation with the Bankers Association of Bangladesh (BAB) and Association of Banks, Bangladesh (ABB),” a senior official with the central bank told The Daily Star yesterday.
A circular is expected to come out today.
The central bank's directives asked all scheduled banks to rationalize its charges, fees and commissions, which businessmen say are too high.
Different banks charge customers for 51 categories of service in transactions, which, according to the BB, increases the prices of both export products and local consumer items.
BB officials said the banks take 25 types of charges and commissions for import-related transactions and 14 types for export transactions. In addition, 12 types of fees are charged for local transactions.
The new BB directives said the banks must issue balance confirmation certificates for free twice a year. "If anyone asks for a statement more than twice a year, they may be charged a maximum of Tk 200," the BB said.
The central bank lifted charges on foreign correspondence (local part) and cancellation of letters of credit (LCs) or expired LCs.
Costs of mailing, courier, telex and SWIFT must be on the basis of actual expenditure for LC transmission, amendment, confirmation, cancellation and foreign correspondence charge, according to the BB instructions.
The central bank also reset the quarterly commission for LC opening at 0.50 percent.
LC advising charges may be a maximum of Tk 1,000 and the charges for LC acceptance will be 0.40 percent on a quarterly basis. The charges for issuing back-to-back LCs, C&F certificates and certificates for realization of export prices have been set at Tk 500.
“Banks will be asked to send in a list of the charges and fees on a half yearly basis -- in July and January,” the draft of the circular said.
In case of any change in charges and fees, banks have to inform the related division about it and post information on banks' websites.
The BB could further rationalize the charges in consultation with banks, it said.
Although the BB cut some charges, it did not take any move on "high charges" for closing a bank account, customers said.
Earlier in a report, the central bank said a government-owned bank did not charge clients for account closure while private commercial banks charge from Tk 300 to Tk 500. Foreign commercial banks took as high as Tk 1,000.Source: The Daily Star, Dhaka, Bangladesh, September 30, 2008
April 28, 2008
Orange, SK Telecom, Etisalat eye investment
Delegates of three big telecoms companies-- UK-based Orange Telecom, South Korean SK Telecom and UAE's Etisalat -- start meeting telecoms regulator tomorrow to investigate investment opportunities in Bangladesh.
High officials of the three companies will meet Bangladesh Telecommunication Regulatory Commission (BTRC) chief between tomorrow and Wednesday to explore investment potentiality in submarine cable and WiMAX technology and mobile phone as well.
The news came at the moment when the BTRC forecast that the number of mobile phone subscribers would be doubled to 7 crore by 2010 and the sector's turnover would also reach to Tk 50,000 crore by 2011."We have got huge responses from the world's telecoms giants. And the visit of these companies to the country means how Bangladesh has become a significant hub for telecoms," Major General (retd) Manzurul Alam, chairman of BTRC, told reporters yesterday.
The telecoms regulator said perhaps the companies are coming to explore opportunities in WiMAX, private submarine cable and joint ventures in existing mobile operators."We will introduce a service for telecoms investors under which maximum procedures will be completed by the BTRC so that investors can decide to invest here sitting in one office," Alam said.BTRC has taken up initiatives to bring back discipline in the telecoms sector.
The BTRC is working hard to introduce the latest technologies like WiMAX and third generation mobile phone, Alam said.India's Reliance, Tata and Singapore-based Singtel also visited Bangladesh and basically investigated the potentiality to participate in the bidding process of private submarine cable. BTRC said some 65 companies including 15 foreign ones already showed their interest to participate in the submarine cable bidding.
Orange could show interest in introducing Wimax technology in Bangladesh, BTRC officials said. WiMAX is a wireless digital communications system, that is intended for wireless "metropolitan area networks". WiMAX can provide broadband wireless access up to 30 miles (50 km) for fixed stations, and 3 to 10 miles (5 - 15 km) for mobile stations. SK Telecom already showed interest to buy stakes in the state-run Teletalk, BTRC officials said but failed to confirm Etisalat's intention.
Bangladesh's telecoms sector has been growing since 1991 after introducing mobile telecommunications. With having telecoms penetration rate of 29 percent, at present, the country has 38million mobile and 11 million land phone customers. The revenue from the telecoms sector also increased to Tk1345crore till yesterday, which was Tk500crore in the last fiscal year.
The telecom regulator said this year revenue basically increased mainly because of getting compensation of Tk631crore from different mobile and fixed line operators for their illefgal involvement in international call termination through using VoIP technology.However, the regulator hope the average revenue from telecoms sector will be Tk1500crore a year.
Source: The Daily Star, April 27, 2008
Source: The Daily Star, April 27, 2008
January 05, 2008
Bangladesh among least free economies, 143rd among 157 countries
Bangladesh's economy is one of the least free in the world, according to Heritage Foundation, a right-wing American think tank.
The organisation in its Index of Economic Freedom based on 10 criteria, said Bangladesh secured 27th position out of 30 countries of Asia and the Pacific Rim and secured 143rd place out of 157 countries brought under the survey.
According to the foundation, Bangladesh's position in economic freedom appeared nearly at the bottom of the ranking mainly due to "extreme barriers to trade, excessive corruption, bureaucratic procedures, underdeveloped financial system and weak property rights."
The foundation, however, also focused on Bangladesh's positive areas of economic freedom in its 2007 assessment.
It said Bangladesh's economy was relatively free in terms of fiscal measures and freedom from the government. Monetary freedom, labour freedom, and business freedom are also relatively positive, it said.
The foundation examined openness of Bangladesh's economy based on business freedom, trade freedom, fiscal freedom, freedom from government, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labour freedom.
It said Bangladesh has extreme barriers to trade freedom and tariffs are prohibitively high. It is also weak in investment freedom, property rights, and financial freedom.
"Corruption is rampant," the Heritage Foundation said, adding that chaotic regulations and restricted market sectors also impede greater foreign investment in the country as does a haphazard and politicised approach to the rule of law.
The banking sector is plagued with similar problems, the foundation observed.
It, referring to Bangladesh's weighted average tariff rate at 55.8 percent in 2005, said barriers to trade include prohibitions and restrictions on imports, restrictive labelling requirements, and ineffectively operated customs procedures.
Referring to "widespread corruption", the think tank said, "Corruption serves as a non-tariff barrier… It [corruption] is cancerous to all other economic freedoms, this is the key area that needs improvement.”
"Starting of a business in Bangladesh takes an average of 37 days, compared to the world average of 48 days. Entrepreneurship should be easier for maximum job creation. Obtaining a business licence is relatively simple but closing a business is difficult."
It said the overall freedom to start, operate, and close a business is relatively well protected by the national regulatory environment.
Source: The Daily Star Website, January 2, 2008.
The organisation in its Index of Economic Freedom based on 10 criteria, said Bangladesh secured 27th position out of 30 countries of Asia and the Pacific Rim and secured 143rd place out of 157 countries brought under the survey.
According to the foundation, Bangladesh's position in economic freedom appeared nearly at the bottom of the ranking mainly due to "extreme barriers to trade, excessive corruption, bureaucratic procedures, underdeveloped financial system and weak property rights."
The foundation, however, also focused on Bangladesh's positive areas of economic freedom in its 2007 assessment.
It said Bangladesh's economy was relatively free in terms of fiscal measures and freedom from the government. Monetary freedom, labour freedom, and business freedom are also relatively positive, it said.
The foundation examined openness of Bangladesh's economy based on business freedom, trade freedom, fiscal freedom, freedom from government, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labour freedom.
It said Bangladesh has extreme barriers to trade freedom and tariffs are prohibitively high. It is also weak in investment freedom, property rights, and financial freedom.
"Corruption is rampant," the Heritage Foundation said, adding that chaotic regulations and restricted market sectors also impede greater foreign investment in the country as does a haphazard and politicised approach to the rule of law.
The banking sector is plagued with similar problems, the foundation observed.
It, referring to Bangladesh's weighted average tariff rate at 55.8 percent in 2005, said barriers to trade include prohibitions and restrictions on imports, restrictive labelling requirements, and ineffectively operated customs procedures.
Referring to "widespread corruption", the think tank said, "Corruption serves as a non-tariff barrier… It [corruption] is cancerous to all other economic freedoms, this is the key area that needs improvement.”
"Starting of a business in Bangladesh takes an average of 37 days, compared to the world average of 48 days. Entrepreneurship should be easier for maximum job creation. Obtaining a business licence is relatively simple but closing a business is difficult."
It said the overall freedom to start, operate, and close a business is relatively well protected by the national regulatory environment.
Source: The Daily Star Website, January 2, 2008.
Private banks Profit shoots up 41pc in the year 2007
Despite a stagnant situation in the country's business sector, private commercial banks (PCBs) made 41 percent more profit last year compared to that in 2006 mainly by charging high interest rates on loans.
Available data of 26 PCBs, out of 30, show that the banks made a total of Tk 4,814 crore operating profit in 2007 while that of all the PCBs in the previous year totalled Tk 3,404 crore.
“High interest rates on credits is the main reason for such a huge business by the private commercial banks,” said a top banker.
He said there were hardly any expansion plans by the big business groups of the country last year, and 'we did not see any take out of big loans by any business group'.
According to Bangladesh Bank (BB) data, credit growth in commercial banks decreased by 8.01 percentage points in the first 10 months of 2007 compared to the corresponding period of 2006.
In July-October period of the current fiscal year, import of capital machinery decreased by 8.33 percent, which illustrates the downward trend in investment.
“Decrease of import of capital machinery means there were low investments in the business sector last year,” said a top official of the central bank. The PCBs and foreign commercial banks (FCBs) made the profit on very high interest rates on credits.
As per the BB data, the average lending rate of banks was 12.60 percent in December 2006 while the figure was 12.77 percent in June last year.
On the other hand, average deposit rate during this period declined. The rate was 6.99 percent in December 2006 and it reduced to 6.85 in June 2007.
The Annual Report (2006-2007) of the BB, released last week, said aggregate Net Interest Income (NII) of the PCBs and FCBs has been very high over the period 1999 through 2006.
“Overall industry NII shows a consistently upward trend. The trend of NII indicates that the PCBs and the FCBs are charging interests at very high rates on their lending as compared to the interest they are paying to the depositors,” the BB report says.
The PCBs' NII in 1999 was Tk 300 crore, which jumped to Tk 2,540 crore in 2006. In the case of FCBs, the NII in 1999 was Tk 180 crore, which jumped to Tk 820 crore in 2006
The spread (difference between interest rates on lending and deposit) is much higher in Bangladesh compared to international standard. Normally, 'spread' in banking business should be 2-3 percentage points but in Bangladesh the rate is 6-7 percentage points, and in June 2007 it was 5.93 percentage points.
BB sources said they have initiated steps to reduce the spread of banks in a bid to decrease business costs.
The PCBs and FCBs have already been asked to give a work plan on how they would reduce their spread.
Source: The Daily Star Website, January 2, 2008.
Available data of 26 PCBs, out of 30, show that the banks made a total of Tk 4,814 crore operating profit in 2007 while that of all the PCBs in the previous year totalled Tk 3,404 crore.
“High interest rates on credits is the main reason for such a huge business by the private commercial banks,” said a top banker.
He said there were hardly any expansion plans by the big business groups of the country last year, and 'we did not see any take out of big loans by any business group'.
According to Bangladesh Bank (BB) data, credit growth in commercial banks decreased by 8.01 percentage points in the first 10 months of 2007 compared to the corresponding period of 2006.
In July-October period of the current fiscal year, import of capital machinery decreased by 8.33 percent, which illustrates the downward trend in investment.
“Decrease of import of capital machinery means there were low investments in the business sector last year,” said a top official of the central bank. The PCBs and foreign commercial banks (FCBs) made the profit on very high interest rates on credits.
As per the BB data, the average lending rate of banks was 12.60 percent in December 2006 while the figure was 12.77 percent in June last year.
On the other hand, average deposit rate during this period declined. The rate was 6.99 percent in December 2006 and it reduced to 6.85 in June 2007.
The Annual Report (2006-2007) of the BB, released last week, said aggregate Net Interest Income (NII) of the PCBs and FCBs has been very high over the period 1999 through 2006.
“Overall industry NII shows a consistently upward trend. The trend of NII indicates that the PCBs and the FCBs are charging interests at very high rates on their lending as compared to the interest they are paying to the depositors,” the BB report says.
The PCBs' NII in 1999 was Tk 300 crore, which jumped to Tk 2,540 crore in 2006. In the case of FCBs, the NII in 1999 was Tk 180 crore, which jumped to Tk 820 crore in 2006
The spread (difference between interest rates on lending and deposit) is much higher in Bangladesh compared to international standard. Normally, 'spread' in banking business should be 2-3 percentage points but in Bangladesh the rate is 6-7 percentage points, and in June 2007 it was 5.93 percentage points.
BB sources said they have initiated steps to reduce the spread of banks in a bid to decrease business costs.
The PCBs and FCBs have already been asked to give a work plan on how they would reduce their spread.
Source: The Daily Star Website, January 2, 2008.
Tk 500cr Jamuna Bridge securitised bonds proposed
Investment Corporation of Bangladesh (ICB), responsible for offloading shares of government entities, recently proposed to the government to securitise Jamuna Bridge, the country's largest civil engineering project, by issuing Tk 500 crore bonds to be traded on the stock market.
Of the total amount, Tk 450 crore will be raised through issuance of bond securitisation in private and institutional placement, while Tk 50 crore will be raised from public.
Of the money to be raised, Tk 200 crore will be invested as equity for construction of Padma Bridge, while the rest of the amount will be invested in other areas such as building infrastructure and developing tourism.
Securitisation is a structured finance process in which assets, receivables or financial instruments are acquired, classified into pools, and offered as collateral for third-party investment. It involves the selling of financial instruments, which are backed by the cash flow or value of the underlying assets.
As per the proposal, the JMBA will raise Tk 300 crore against the security of its future tolls receivable in the next 10 years, while Tk 200 crore will be raised against the security of JMBA's fixed deposit receipt (FDR) worth Tk 200 crore.
Jamuna Multipurpose Bridge Authority (JMBA), which supervises the operational activities of the bridge over the Jamuna River, pursued the ICB to formulate the modalities for offloading shares.
The communications ministry has also sent a letter to the finance ministry for its consent to start the Jamuna Bridge securitisation process.
Earlier the JMBA, a concern of communications ministry, has submitted the securitisation proposal, sources said.
“After getting the approval, we will start the securitisation procedures,” said a JMBA official.
The securitised bonds will be offloaded as 'approved security' so that the financial institutions can keep the bonds as statutory liquidity requirement (SLR), according to the proposal.
Welcoming the initiative, Chief Executive Officer of Dhaka Stock Exchange Salahuddin Ahmed Khan said through securitisation the country can reduce its dependency on donors to build big infrastructure projects such as Padma Bridge or Karnaphuli Bridge.
Jamuna Bridge was inaugurated in June 1998. With a length of 4.8 kilometer and width of 18.5 meter it is the longest bridge in Bangladesh as well as in South Asia. Around Tk 3900 crore was spent on construction of the bridge.
Revenue from the bridge was Tk 107 crore in 2001-02, while the income was Tk 170 crore in 2002-03, Tk 160 crore in 2003-04 and Tk 180 crore in 2004-05, according to sources. Of the income, 70 percent came from toll collections.
Source: The Daily Star Website, January 1, 2008.
Of the total amount, Tk 450 crore will be raised through issuance of bond securitisation in private and institutional placement, while Tk 50 crore will be raised from public.
Of the money to be raised, Tk 200 crore will be invested as equity for construction of Padma Bridge, while the rest of the amount will be invested in other areas such as building infrastructure and developing tourism.
Securitisation is a structured finance process in which assets, receivables or financial instruments are acquired, classified into pools, and offered as collateral for third-party investment. It involves the selling of financial instruments, which are backed by the cash flow or value of the underlying assets.
As per the proposal, the JMBA will raise Tk 300 crore against the security of its future tolls receivable in the next 10 years, while Tk 200 crore will be raised against the security of JMBA's fixed deposit receipt (FDR) worth Tk 200 crore.
Jamuna Multipurpose Bridge Authority (JMBA), which supervises the operational activities of the bridge over the Jamuna River, pursued the ICB to formulate the modalities for offloading shares.
The communications ministry has also sent a letter to the finance ministry for its consent to start the Jamuna Bridge securitisation process.
Earlier the JMBA, a concern of communications ministry, has submitted the securitisation proposal, sources said.
“After getting the approval, we will start the securitisation procedures,” said a JMBA official.
The securitised bonds will be offloaded as 'approved security' so that the financial institutions can keep the bonds as statutory liquidity requirement (SLR), according to the proposal.
Welcoming the initiative, Chief Executive Officer of Dhaka Stock Exchange Salahuddin Ahmed Khan said through securitisation the country can reduce its dependency on donors to build big infrastructure projects such as Padma Bridge or Karnaphuli Bridge.
Jamuna Bridge was inaugurated in June 1998. With a length of 4.8 kilometer and width of 18.5 meter it is the longest bridge in Bangladesh as well as in South Asia. Around Tk 3900 crore was spent on construction of the bridge.
Revenue from the bridge was Tk 107 crore in 2001-02, while the income was Tk 170 crore in 2002-03, Tk 160 crore in 2003-04 and Tk 180 crore in 2004-05, according to sources. Of the income, 70 percent came from toll collections.
Source: The Daily Star Website, January 1, 2008.
Cellphone subscriptions reach 33.1m until November, 2007
The total number of mobile phone subscribers of the country's six cellphone operators has reached 33.10 million at the end of November 2007.
According to the latest update by the website of Bangladesh Telecommunication Regulatory Commission (BTRC), Grameenphone Ltd leads the subscriber mark with 16.01 million users followed by AKTEL with 6.53 million and Sheba Telecom Ltd (Banglalink) with 6.51 million.
The newcomer, Warid Telecom International LLC (Warid), was placed in the fourth position as it bagged 1.95 million subscribers followed by CityCell with 1.38 million and state-run Teletalk with 0.72 million.
The subscribers' numbers were declared by the mobile phone operators themselves, according to the BTRC website.
Source: BTRC Website, January 1, 2008.
According to the latest update by the website of Bangladesh Telecommunication Regulatory Commission (BTRC), Grameenphone Ltd leads the subscriber mark with 16.01 million users followed by AKTEL with 6.53 million and Sheba Telecom Ltd (Banglalink) with 6.51 million.
The newcomer, Warid Telecom International LLC (Warid), was placed in the fourth position as it bagged 1.95 million subscribers followed by CityCell with 1.38 million and state-run Teletalk with 0.72 million.
The subscribers' numbers were declared by the mobile phone operators themselves, according to the BTRC website.
Source: BTRC Website, January 1, 2008.
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