Bahrain Bangladesh Finance and Investment Company Limited

Bahrain Bangladesh Finance and Investment Company Limited (BBFICOL) a joint venture non-bank financial institution, incorporated as a public limited company in 1996, and registered with the Registrar of Joint Stock Companies, chittagong. The name of the company was changed to Oman Bangladesh Leasing and Finance Ltd on 1 August 2001. The company started functioning from May 1996 with an authorised capital of Tk 250 million. Its paid up capital was Tk 25 million. Although the company's registered office is in Chittagong, its only functional branch is located in dhaka. With the purchase of shares of the company by some leading businessmen and some investment companies of Oman, the paid up capital of the company increased to Tk 85 million in 2000. The company is under the regulation of the bangladesh bank.

The company has been incorporated to (a) provide loans and advances for industry, commerce, agriculture, housing and transport sectors; (b) underwrite or make acquisition of, or, invest and reinvest in securities issued by the government or any local authority; (c) conduct hire purchase transactions, including leasing of machinery, equipment or mechanical vehicles of all types; (d) finance venture capital; and (e) invest capital in other companies. 

Sources of the funds of the company in 2000 were share capital, bank borrowings, and borrowings from public in the form of term-deposits and promissory notes. Its liabilities in 2000 totaled Tk 87.90 million, which comprised lease assets (Tk 6.15 million), stock on hire and short term finance (Tk 32.86 million), investment in shares (Tk 14.06 million), tangible assets (Tk 4.22 million), net current assets (Tk 13.28 million), miscellaneous assets (Tk 0.49 million), and coverage of accumulated losses (Tk 16.82 million). The cumulative amount of total assets of the company stood at Tk 190 million on 31 December 2000. During the year 2000, it disbursed Tk 75 million as loans and recovered Tk 20 million. The total incomes and expenses of the company in 2000 were Tk 26 million and Tk 30 million respectively.

The management of the company is vested in a 9-member board of directors. Its chief executive is the managing director, who is assisted by 21 employees of different cadres in the company's head office at Chittagong and its branch office at Dhaka.

American Life Insurance Company

American Life Insurance Company (Alico Bangladesh) started full service branch operations in Bangladesh on 15 January 1974 and has since then been marketing individual and group life insurance products under the Insurance Act 1938, Insurance Rules 1958, and other applicable laws. Alico, incorporated in 1921 in Wilmington, Delaware, USA, is the largest international life insurance Company in the world. It is a member company of the American International Group (AIG) that operates life insurance businesses in more than 135 countries. American Life Insurance Company Bangladesh (referred to as the company hereafter) runs its business through its agency offices scattered mostly in big cities such as dhaka (43), chittagong (9) and khulna (3). Over 2700 career agents are working for the company. The company has a trained and dedicated work force of 223 employees in Bangladesh. 

 

Net premium income received by the company from direct business in 1999 was Tk 1,896.75 million as against Tk 21.12 million in 1981. The figures include both new or first year premiums and renewal premiums derived from its various life insurance plans/schemes such as ordinary life policies, personal accident protection, group life, group medical, and ordinary term insurance. Re-insurance premium paid by the company to its re-insurer abroad was Tk 0.32 million in 1999, when it paid a net amount of commission of Tk 333.94 million. Net claims settled by the company during the year amounted to Tk 75.11 million.

Apart from net premium income derived from direct life insurance business, the company earned Tk 514.81 million in 1999 as interest, dividend, and rent income. Major investments of the company were in short term deposits with banks, national investment bonds, Pratirakkha Sanchaya Patra, shares of companies, ICB-mutual funds, policy loans to holders, fixed deposits and permanent investment in real estate. The assets of the company were valued at Tk 5,900.27 million and the revenue surplus stood at Tk 1,042.29 million in the reference year. 

The regional office of the company at Sharjah, Dubai, oversees the administrative and business affairs of Alico Bangladesh. It invests its entire investable surplus locally, mostly in government securities/banks and shares/stocks of companies, thereby allowing usage of its progressively increasing fund in such public interests as infrastructure development, industrialisation and employment generation.

Ansar-VDP Unnayan Bank

Ansar-VDP Unnayan Bank established on 16 September 1995 as a body corporate under the Ansar VDP Unnayan Bank Ordinance, 1995. The bank commenced its activities in November 1996 with an authorised and paid up capital of Tk 1,000 million and Tk 100 million respectively through opening a local office in Dhaka. Of its total paid up capital, 25% was paid by the government of Bangladesh and the remaining 75% by members and officials of Ansar and VDP and the employees of the bank itself. On 30 June 2000, the bank's paid up capital increased to Tk 130 million. The bank was set up basically to provide microcredit facilities to Ansar-VDP members for house building and other economic activities with or without collateral and for performing other activities under specific instruction of bangladesh bank.

In March 2000, the bank had 72 branches with a total of 388 employees, including 325 officers working under the overall governance of the managing director at its head office at Dhaka. A manager accountable to the managing director, the chief executive officer of the bank, heads each branch. The bank follows group-based multipurpose micro-credit lending policies to finance various rural income generating activities. List of these activities includes beef fattening, poultry farming, fish and shrimp culture, small and cottage industries, light engineering workshops, trade in grocery items, buying sewing machines and marketing of agricultural products. The bank plans to expand credit facilities to at least 60 types of income generating activities. To avail the credit facilities of the bank, a borrower must be a member of a group of five. A member is given a maximum loan of Tk 15,000 without any security or collateral, but the group is to provide a guarantee for the credit. It has been made mandatory for every member of a group to make a compulsory weekly deposit of Tk 5 with the bank. The bank pays interest @ of 7% per annum on group savings. 

The principal objective of such savings schemes is to let members understand the impact of savings in the long run and develop their savings habit. In addition to its group-based micro credit facilities, Ansar VDP Unnayan Bank also provides project loans with or without equity participation and collateral depending upon the feasibility of projects. Up to March 2000, the bank disbursed a total of Tk 470 million as credit to its 78,633 members throughout the country. The installment-based recovery of these credits in the mean time stood at Tk 37 million registering a 99% recovery rate.

The bank started its operations in 1996 with total assets of Tk 31.87 million. The value of the bank's total assets stood at Tk 185.46 million on 30 June 1999. The investment of the bank is its balance with other banks and financial institutions kept in various savings accounts and stood at Tk 39.75 million on 30 June 1999 compared to Tk 27.90 million in 1996. Major sources of operating funds of the bank are savings from its members and loans from the PKSF (Palli Karma Sahayak Foundation, the apex government organisation to promote micro-credit programmes). In 1998-99, the bank earned an income of Tk 27.11 million against its total expenses of Tk 30.79 million. Up to 30 June 2000, accumulated losses of the bank amounted to Tk 8.94 million.

American Express Bank

American Express Bank a subsidiary of American Express, a travel agency as well as a bank incorporated in the USA, conducting business in 37 countries including Bangladesh. The bank provides services to corporations, well-to-do entrepreneurs, financial institutions and other wholesale and retail customers. The bank started its operations in East Pakistan in February 1966 when it opened a branch at Motijheel, Dhaka with a capital of Tk 20 million. It opened a new branch in Chittagong in 1967. After the independence of Bangladesh in 1971, these branches continued to operate in the country. In February 1999, a third branch was opened at Dhanmondi, Dhaka. Foreign banks operating in Bangladesh are required to bring US$10 million each as capital from their parent offices and keep the money with the bangladesh bank. The capital reserve of American Express Bank deposited with the Bangladesh Bank is, however, US$13.07 million equivalent to Tk 533 million. On 31 December 2000, total capital and liabilities of the bank were Tk 10.08 billion.

The functions of the American Express Bank in Bangladesh were initially confined mainly to commercial and correspondent banking, and treasury services to multinational companies, but were later expanded to include local entrepreneurs and financial institutions. The American Express Travel Related Services (TRS), an affiliate of the bank, provides the public with travel management services. The bank pioneered the use of SWIFT in Bangladesh. It has participated in two syndicated industrial loans of Tk 200 million each. The bank participates in charitable activities in the country. It has arranged a number of training programmes on corporate banking, foreign exchange dealing and treasury management for local bankers and corporate officials. It also sponsors overseas training and seminars for Bangladeshi bankers. The total volume of foreign exchange business handled by the bank in servicing imports and exports of goods and remittances during 1999-2000 amounted to Tk 12.29 billion, 15.5% of which was related to exports, 6.3% to imports and 78.15% to remittances. Currently, the bank has correspondent relationships with 1995 foreign banks/bank offices throughout the world.

The American Express Bank in Bangladesh is controlled by its headquarters in New York in conformity with the stipulations laid down by the Banking Companies Act, 1991 of Bangladesh and also the directives issued by the Bangladesh Bank from time to time. The Asia Pacific Regional Office of American Express Bank in Singapore oversees the overall operational activities of the bank's branches in Bangladesh. The country manager, appointed by its headquarters, is the CEO of the bank in Bangladesh. In December 2000, the number of employees of the bank in Bangladesh was 150.

Total deposits of the bank in different accounts in December 2000 were Tk 8.464 billion as against Tk 93 million in 1974. In 1974 the loans and advances of the bank were Tk 97 million and in 2000, these stood at Tk 1.769 billion. Its credit-deposit ratio was 34.68% in 2000. Total assets of the bank, excluding off-balance sheet items, were Tk 153 million in 1974 and Tk 10.008 billion in 2000. The bank's involvement in off-balance sheet items was Tk 13.62 billion in 2000. Its increased participation in off-balance sheet items has caused lower credit-deposit ratios between 1980 and 2000. The bank's investment other than loans and advances increased from Tk 20 million in 1974 to Tk 2.483 billion in 2000. Most of these investments were in government securities, including treasury bills.

In July 1998, the interest rate offered by the bank on savings deposits was 6.50%, while the average lending rate charged by it on loans to different sectors was 12.07%. The bank's lending rate on agricultural credit varied between 10% and 14%; rates on term loan varied from 9.25% to 14.25%; and the lending rate on other commercial purposes was between 12.5% and 15.5% per annum. Total outstanding loans of the bank upto 30 June 2000 amounted to Tk 1.031 billion, of which Tk.21 million was overdue. The rate of its classified loan was 1.07% in 2000. The bank has no direct loans to the government of Bangladesh except its investments in various government securities. The value of all assets of the bank, including off-balance sheet items, in December 2000 was Tk 23.81 billion, of which liquid assets accounted for Tk 8.11 billion.

The major economic areas to which the American Express Bank has lent most of its funds upto 30 June 2000 included industry (both large and medium) - Tk 1.358 billion and others, mainly trade and commerce and export/import - Tk 237 million. It has made no loans to the agricultural sector of the country. Up to 1999, the bank lent Tk 639 million to 10 industrial projects.

As on 31 December 2000, the total and net income of the American Express Bank was Tk 1.07 billion and Tk 280 million respectively. Its total operating expenditure in 2000 was Tk 260 million. The bank's interest income and income from commission and exchange were greater than its total interest and operating expenses in almost every year in the 30 years of its activities in Bangladesh. It has earned greater amount of non-interest income from off-balance sheet activities throughout the nineties. On the other hand, increase in the recovery of classified loans has reduced its provision requirements, which has also contributed to increase in its total income in the late 1990s. 

As the oldest foreign commercial bank in Bangladesh, the American Express Bank has contributed greatly to the reorganisation of the country's banking system after independence in 1971. The bank played a significant role in the revival of the country's banking structure shattered by the war of liberation. Its lending in industry and trade made a significant contribution to the growth of the economy through mobilisation of funds and financing value addition sectors.

Al Baraka Bank Bangladesh

Al Baraka Bank Bangladesh now renamed Oriental Bank Ltd, is a joint-venture banking enterprise of Al Baraka Investment and Development Co. of Jeddah, Islamic Development Bank, a group of Bangladeshi entrepreneurs, and the government of Bangladesh. The bank was incorporated on 30 April 1987 as a public limited company to undertake and carry out banking, financial and business activities in strict compliance with the rules of Islamic Law (Shariah) relating to business activities and in particular, by avoiding usury in credit and sale transactions. It commenced banking operations on 20 May 1987 as a scheduled bank with an authorised capital of Tk 600 million and paid up capital of Tk 150 million divided into 150,000 ordinary shares of Tk 1,000 each. The authorised capital of the bank remained unchanged till 30 April 2001, while the paid up capital increased several times and stood at Tk 259.55 million in 2000. The bank is listed with the Dhaka and Chittagong stock exchanges. The statutory reserve and capital reserve of the bank amounted to Tk 386.4 million in December 2000 as against Tk 2.01 million in 1987. 
 

The management of the bank is vested in a board of directors consisting of 11 directors, a vice-chairman, and the chairman. The executive president is the bank's chief executive officer. In 2000, the bank has a total of 644 employees including 469 officers. The bank has a 3-member shariah council to ensure compliance with Islamic rules in all spheres of its banking and financial activities. In March 2001, the bank had 35 branches. Its head office is at Dhaka.

On 31 December 1987, the deposits of the bank were Tk 708.5 million. This increased to Tk 10,736.49 million in December 2000. The types of deposits accepted in the bank include mudaraba term deposits, mudaraba deposits, current deposits, contingency deposits, and deposits in other accounts. On 31 December 1987, total lending in the form of investment of the bank was Tk 413.9 million registering an investment-deposit ratio of 58.42%. The amount of investment grew each year to register at Tk 3,654.3 million in 1990 and Tk 8,760.6 million in 2000, when the investment comprised mudaraba investment - Tk 1,713.80 million, bai-muajjal - Tk 3,781.18 million, hire purchase - Tk 2,118.62 million, commodity finance - Tk 790.98 million, investment in shares - Tk 4 million and other investments - Tk 352 million. The total amount of classified investment of the bank was Tk 1,636.6 million or 30.66% of total investment in 1997 and Tk 1,252.30 million (or 14.29%) in 2000, showing an improvement in the recovery of non-performing investment. Nevertheless, the classified loans had degraded the asset quality of the bank. Major investments of the bank were made in small scale industries including garments, iron and still mills, edible oil refinery, ship breaking, specialised textile, food and beverage, real estate development, transport, trade sector and other investments.

The volume of foreign exchange business handled by Al Baraka Bank during business year 2000 amounted to Tk 4,700 million as against Tk 3,418 million in 1998. Foreign exchange business in 2000 comprised export servicing (23.4%), import financing (63.83%) and remittance facilities (12.77%). The bank has foreign correspondent relationship with 130 foreign bank/bank offices and other financial institutions throughout the world and it maintains nostro accounts with them for settling foreign exchange transactions.

The assets of the bank, excluding off-balance-sheet items, were valued at Tk 1,027.40 million in 1987 and Tk 1,1014.5 million in 2000. Growth ratio of total assets of the bank was 4.48% in 1997 and 9.77% in 2000. The off-balance-sheet assets contributed to the enhancement and improvement of the quality of the bank's assets throughout the entire period of operations. The growth ratio of the off-balance-sheet assets was 45.31% during the year 2000.

The performance of Al Baraka Bank in terms of overall profitability has been unsatisfactory as it suffered losses almost each year of its operation excepting the initial 3 years and the years between 1998 and 2000, when the bank earned a negligible amount of net profit. The factors that caused lower rate of total and net income included low interest income against high interest expenses and large operating expenses. The bank's fee-based income was also low because of limited participation in various services selling activities. Compulsory maintenance of provisions for classified loans has severely deteriorated the income level of the bank. Along with classified loans, non-recovery of interests accrued have also been responsible for its unsatisfactory level of profitably.