THE local banking industry is gradually turning into a role model for the bankers of the emerging countries thanks to offering innovative products and services through adopting global best practices.
The banking sector now starts getting international recognition and eyeing more accolades from global arena.
“We are in the limelight in the international arena due to our adoption of global best practices for satisfying customers' financial needs,” said K Mahmood Sattar, managing director and CEO of The City Bank.
The bank was recentiy conferred the prestigious 'Best Bank in Bangladesh for 2012' award by FinanceAsia, a leading financial publication in the Asia Pacific region.
“We are extremely delighted with the award,” said Sattar at an exclusive interview with The Daily Star at the bank's head office in Dhaka recently.
The award came thanks to City's successful adoption of global best practices of the banking sector.
“This is the first year we are awarding in this category and have selected City Bank for its leadership in risk management and its plan for steady and sustainable growth," said the FinanceAsia award citation.
“It might not be the best bank in the country in terms of network and balance sheet size or even profitability, as there are some bigger and more profitable banks operating in Bangladesh."
But it is the best bank in terms of adopting global best practices, which in an emerging market is extraordinarily important, as the commercial banking system is the backbone of the economy, according to the citation.
The transformation began when
senior banker Sattar stepped up to the helm of the bank in mid-2007 as the managing director and CEO.
He spearheaded several innovative steps to turn the bank into a modern financial supermarket using the latest technologies.
“Since its establishment in 1983, City Bank's main endeavor has been to increase its shareholders' value and be respected as a compliant organisation,” Sattar says, while explaining the main philosophy of this first generation bank.
But under Sattar's leadership the bank has gone beyond those targets.
Sattar joined the local banking industry after 20 years of senior management experience across the globe with banks such as SCB and ANZ.
His core management team also came with extensive foreign banking backgrounds — and they brought international standards to the table.
They focused on remodelling the business along a customer value segmented line and created separate tailor-made services for each segment such as corporate, retail, SME, cards and treasury.
The decentralised branch-based banking system, steeped in irrational cost and non-transparency, was shunned for a centralised business plan overseen by top industry professionals.
But City did not just streamline operations: they improved the overall quality of assets, re-launched the brand, leveraged the potential of technology potential, improved the quality of product offerings and put in place much higher benchmarks for service excellence.
“We have brought an international standard in risk management and improved service standards," said Sattar. “So now we are getting international recognition.”
Earlier in 2010, Asian Banker, another esteemed international financial publication, honoured City
with 'The Strongest Bank in Bangladesh' award in recognition of successful 'change management processes'.
The bank also collected other awards such as the American Express Marketing Award for 'Outstanding New Card launch' in 2010, MoneyGram International's 'Best Corridor Collaboration in South Asia for 2011' for its inward remittance business growth.
“We actually got the international attention in 2009, when American Express nominated City Bank as its sole franchisee in Bangladesh,” said Sattar, a former chairman of the Association of Bankers Bangladesh, a professional body for senior bankers.
He said American Express, after a six-year long search, finally selected City as its sole franchisee in Bangladesh, thanks to the bank's strong
corporate governance, transference and sound credit risk management.
Considering the overall negative outlook for the global economy and the many challenges Bangladesh that faced in meeting its macroeconomic goals for fiscal 2011-12, City Bank's solid performance during the year becomes all die more impressive.
Despite liquidity pressures, the bank was able to maintain its credit deposit ratio at a satisfactory level.
City's statutory liquidity ratio, by the end of December 2011, according to the annual report, stood at 20.90 percent against the 19 percent demanded by the central bank.
Earnings per shares of the bank rose to Tk 3.99 in 2011, from Tk 3.66 of the previous year, despite the share market crash.
In 2011, capital adequacy of the
bank stood at 12.79 percent against the Basel II and regulatory requirement of 10 percent, while profit before tax rose to Tk 3,468 million from the previous year's Tk 2,999 million.
Non-performing loans dropped from 4.42 percent to 3.44 percent in 2011, indicating further improvement in asset quality.
City has been awarded an AA3 for long-term rating in 2011, one notch higher than that of the previous year, by the credit rating agency of Bangladesh.
As part of the restructuring plan, the bank introduced various innovative services and products: brokerage business, merchant banking arm, SME centres and numerous SME and Agro-products and a full-fledged Islamic banking business under the brand name of City Manarah.
Currently City has 104 online branches and 132 ATM booths; it has around 1 lakh Amex cardholders, with plans to launch two new Amex cards this year.
The bank also plans to launch mobile banking both for rural and urban people. It also aims to open at least 10 financial kiosks this year.
“Once the kiosks go in full operation a customer need not go to the bank branches. From the kiosks, customers can satisfy all their banking needs, such as applications for Ioan and credit card, deposit and cash withdrawal,” said Sattar.
“The accolade is not only for City Bank but for the whole country,” said Sattar, adding that the award will encourage other banks in the country to adopt global best practices.
Sattar feels the award had notified the international community of Bangladesh's strong banking system — and will now consider Bangladesh as an emerging market for investment.
“Banking is the backbone of an economy. If a local bank gets international recognition, it portrays a positive image among the prospective investors. It will encourage them to invest more in that country.”
“So local industries will get the opportunities to form more jointventure companies with foreign partners,” Sattar said.
He said the luring of foreign investment, however, depends on opportunities and regulations, citing examples of African countries where there are plenty of opportunities but no regulations — and hence there have not been that many significant investments.
“But we have both opportunities and regulations to attract foreign investments,” he added.
The City Bank will continue to put emphasis on organisational excellence, the bank chief stressed.
suman.saha@thedailystar.net