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.