SME in Bangladesh: Prospects & Problems

City EVALUATING CONSUMER BANKING SERVICES OF CITIBANK, N.A. IN BANGLADESH COMPARED TO MAJOR COMPETITORS

Part - 1 1. Organization Profile As a requirement for the completion of the BBA Program of the North South University, this internship report has been prepared by me, Faiza Taskin Nahar, student of BBA Fall 2002.

After the completion of four-year academic BBA program, I joined Citibank N.A., Bangladesh for the internship program under the guidance of my faculty advisor Mr. M. Masrur Reaz.

My internship attachment at Citibank N.A. was with Ms. Rizwana Ameer, Implementation & Relationship Manager of Global Transactional Services Department.

During the internship program besides my designated unit, I have consulted with other departments of Citibank N.A. namely, Cash Management Services Department, Financial Institutions Department and Credit Administration Department. Although Citibank, N.A has a diversified basketful of products all over the globe, In Bangladesh their activity is limited to Corporate Banking. They also have a limited number of personal accounts mainly confined to the payroll account of top officials of their respective corporate client. However, recently they have started to include accounts of some local individuals as part of their limited consumer banking known as accommodation accounts.

Part 1: Chapter 1 1.1 Citigroup Citigroup, principally through Citibank, has a long and unrivaled history as a provider of financial services throughout the world. Citigroup’s global footprint includes more than 100 countries in North and South America; Asia and the Pacific; Western, Central, and Eastern Europe; the Middle East; and Africa. Citigroup Inc., today’s leading financial services company, with some 200 million customer accounts in more than 100 countries across six continents, dates back to the history of Citibank, which began in 1812; Travelers, since 1864; Smith Barney, founded in 1873; and Banamex, which was formed in 1884 as a result of the merger of Banco Nacional Mexicano and Banco Mercantil Mexicano.

It is the first financial services company to bring together banking, insurance and investments under the same name. It provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, insurance, securities brokerage, and asset management. Citigroup, ranked the world’s 10th most respected

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companies, has the most diverse array of products and the greatest distribution capacity of any financial firm in the world.

1.2 Citigroup Family Tree Major brand names under Citigroup's trademark red umbrella include Citibank, Smith Barney, Banamex, Travelers, Primerica, Citi Cards, CitiFinancial, CitiMortgage, CitiInsurance, Primerica, Diners Club, Citigroup Asset Management, The Citigroup Private Bank and CitiCapital.

Figure 1.1: Citigroup Family Tree Source: www.citigroup.com In the following table, Citigroup’s financial performance snapshot is shown: 2003 $17.9 billion

2004 $17.0

2005 $17.9 billion

$1.3 trillion 19.80% $104.1

billion $1.5 trillion 17.00% $115.5

$1.3 trillion 19.80% $104.1

billion

billion

billion

NET INCOME Global Consumer Group

2004 $11.8

2003 $9.6 billion

Global Corporate & Investment Bank Smith Barney (Private Client Group) Global Investment Management

billion $2.0 billion $1.2 billion $1.3 billion

$5.4 billion $0.8 billion $1.7 billion

Net Income Assets Return on Common Equity Stockholders’ Equity

2002 $15.3 billion $1.1 trillion 18.60% $92.9 billion

Table 1.1: Citigroup’s Financial Performance Source: Citigroup Annual Report 2005

Citigroup has always had its place in the top financial services providers of the world; but the vastness of the company came especially through one of the most outstanding mergers of the decade - between Citicorp and Travelers Group that created the Citigroup.

Citicorp is the parent company of Citibank, which serves consumer and corporate customers in over 100 countries around the world. Its Global Consumer Business is the world’s largest issuer of credit cards with 60 million bankcards and provides financial services through more than a thousand Citibank branches in over 40 countries. Through its international network of offices, Citibank also provides funding and transaction services for global corporations and local growth companies in emerging markets.

Travelers Group is a diversified, integrated financial services company engaged in investment services, asset management, life insurance and property casualty insurance and consumer lending. Its operating companies include Salomon Smith Barney, Salomon Smith Barney Asset Management, Travelers Life & Annuity, Primerica Financial Services, Travelers Property Casualty Corp and Commercial Credit.

Citigroup Inc. is the merged form of the above two entities and it uses the trademark Travelers red umbrella as its logo. The principal thrusts of the company are in traditional banking, consumer finance, credit cards, investment banking, securities brokerage and asset management, and property casualty and life insurance. The combined company serves over 100 million customers in 104 countries around the world.

In the following, Citigroup’s Geography-wise Activity Concentration is shown:

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Geography-wise Activity Concentration Asia (Excluding Japan), 9% Mexico, 8% Japan, 7% Western Europe, 6%

North America, 65%

Ceemea, 5% Latin America, 0%

Figure 1.2: Geography-wise Activity Concentration Source: Citigroup Treasury Overview, Citigroup Finance University 2005 Citigroup Entities For financial reporting and internal operational purposes, Citigroup is largely organized into five groups: Citigroup Global Consumer Group, Citigroup's Global Corporate And Investment Bank, Citigroup Global Investment Management, Citigroup International, and Smith Barney. For the purposes of quarterly and year-end earnings reports, Citigroup International results are divided between the Global Consumer Group and Citigroup's Global Corporate and Investment Banking Group, depending on the nature of the business activities. Citigroup entities have earned the following ratings in the year 2005: Entities Citigroup Senior Debt Subordinated Debt Trust Preferred Preferred Stock Commercial Paper Citicorp Senior Debt Subordinated Debt Preferred Stock Commercial Paper Citibank, N.A.

Ratings Moody's Aa1 Aa2 Aa2 Aa3 P-1

S&P AAA+ A A A-1+

Aa1 Aa2 Aa3 P-1

AAA+ A A-1+

Senior Debt Subordinated Debt Short-Term Obligations Financial Strength Rating Citibank International Plc Senior Debt Short-Term Obligations Citigroup Global Market Inc. Short-Term Travelers Insurance Company Financial Strength Rating Commercial Paper

Aa1 P-1 A-

AA AAA-1+

Aa1 P-1

AA A-1+

P-1

A-1+

Aa1 P-1

AA A-1+

Table 1.2: International Ratings of Citigroup Concerns Source: www.citigroup.com/citigroup/fin/rate.htm

The following figure depicts many of the most significant business activities found within each group.

Figure 1.3: Division of Citigroup’s Activity

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1.3 Citibank at Early Days Citibank was formerly (1967–74) known as First National City Corporation, American holding company incorporated in 1967, with the City Bank of New York, National Association (a bank tracing to 1812), as its principal subsidiary. The latter's name changed successively to First National City Bank in 1968 and to Citibank, N.A. (i.e., National Association), in 1976. Citicorp was the holding company's popular and trade name from its inception but became the legal name only in 1974.

In 1811, the U.S. Congress refused to renew the charter of the First Bank of the United States, the country's central bank, which had branches in such cities as New York. Thus on June 16, 1812, some of the First Bank's New York shareholders and other investors secured state incorporation of the City Bank of New York, which was later established in the branch banking rooms of the old First Bank. The bank grew as New York City became the nation's commercial and financial capital, and in 1865, it was chartered under the National Bank Act and renamed the National City Bank of New York. In 1897 it became the first large American bank to open a foreign department, and in 1915 it became America's leading international bank upon the purchase of International Banking Corporation (founded 1902), which had 21 overseas offices in 13 countries and territories.

Other mergers and acquisitions in the United States and overseas expanded the bank.

Notably, in 1931 it acquired the Bank of America, N.A. (another descendant of the First Bank of the United States and no relation to the California-based bank), and in 1955 it merged with the First National Bank of the City of New York (founded 1863). Upon this latter merger, the consolidated company took the name of First National City Bank of New York. In 1967 the holding company Citicorp was created to hold the stock of the First National City Bank of New York—renamed City Bank of New York—and to hold the stock of subsidiaries to be newly acquired or split off from the bank, such as a finance company, a traveler's check company, and other related financial operations.

The holding company setup improved the company's long-range conglomerating possibilities. In the late 1970s Citicorp pioneered the installation of a network of

automated teller machines throughout its branch offices. The company secured an important share of the American credit card business by purchasing Carte Blanche Corporation in 1978 and Diners Club, Inc., in 1981. In 1982 and 1983 Citicorp made three major acquisitions—Fidelity Savings and Loan Association of San Francisco, First Federal Savings and Loan of Chicago, and New Biscayne Savings and Loan Association of Florida —which increased its assets by more than $8,500,000,000 and expanded its interstate banking operations significantly. By the late 20th century Citicorp was the largest American bank and one of the largest financial companies in the world, with about 3,000 branch offices worldwide.

1.4 Formation of Citigroup The merger of Citicorp and the Travelers Group--creating Citigroup--combined for the first time in the U.S. a major banking organization and an insurance company. The merger took place in 1998 in response to the global financial crisis and intense efforts to prepare for the introduction of the European Union common currency (the euro) and industry wide consolidation both within and across national borders in order to reshape the financial services landscape.

Before the merger took place in 1998, Citicorp had a number of organizations under it, of which, Citibank constituted of 90% of the business. Owing to a banking rule that not more than 10% of deposits can be invested in equity, Citibank was restricted in such ventures. Citibank Investment Limited was there for equity investments. Other than these, the group also included some other organizations: Citibank Overseas Software Limited, i-flex that served other than Citibank units, Citi Banking Corporation etc. The Citicorp-Travelers merger included one of the largest American investment banks, Salomon Smith Barney Inc. At the time of merger, it was not legally allowed that a bank and insurance company merges. The legal framework has changed now though and the entire merging process took one and a half years to smoothly take place. The transaction value for this was over US$140 billion. Citicorp has always had its place in the top financial services providers of the world; but the enormity of the company came especially through one of the most 8

outstanding mergers of the decade-between Citicorp and Travelers Group, which created the Citigroup.

Figure 1.4: Formation Of Citigroup Salomon Brothers Citibank Smith Barney Primerica Travelers Life & Annuity Citicorp Travelers Group Citigroup

1.5 Background of Citicorp & Travelers Group Citicorp is the parent company of Citibank, which serves consumer and corporate customers in over 100 countries around the world. Its Global Consumer Business is the world’s largest issuer of credit cards with 60 million bank cards and provides financial services through more than a thousand Citibank braches in over 40 countries. Through its international network of offices, Citibank also provides funding and transaction services for global corporations and local growth companies in emerging markets.

Travelers Group is a diversified, integrated financial services company engaged in investment services, asset management, life insurance and property casualty insurance

and consumer lending. Its operating companies include Salomon Smith Barney, Salomon Smith Barney Asset Management, travelers Life & Annuity, Primerica Financial Services, Travelers Property Casualty Corp and Commercial Credit.

The merged company is named: Citigroup Inc. and it uses the trademark Travelers red umbrella as its logo. The principal thrusts of the company are in traditional banking, consumer finance, credit cards, investment banking, securities brokerage and asset management, and property casualty and life insurance. The combined company serves over 200 million customers in 104 countries around the world.

1.6 Units under Citigroup Red Umbrella The units operating under the red umbrella- signifying the unity under the same parent group include: 1.6.1 Citibank Citibank has its presence in more than 110 countries worldwide. The Financial Center Network of Citibank is wide and comprises of local offices complemented by electronic delivery system, including ATMs and the World Wide Web. Specific products and services include basic banking accounts, investment services through Citicorp Investment services, Citi Team Life Insurance, Citi Phone Banking, and Citi Gold Accounts, which integrate banking, borrowing and investing services.

1.6.2 Travelers Travelers are a leading provider of a full range of insurance products and services.

Through Travelers, Citigroup has become the principal source of homeowners and auto insurance for customers with more than 5.3 million polices in force. Travelers Commercial Lines offer a broad range of insurance for commercial markets, including workers compensation integrated disability, property, liability, specialty lines, surety bonds, inland/ ocean marine, and boiler and machinery.

1.6.3 Salomon Smith Barney Salomon Smith Barney counts among its client’s base affluent individual investors, small to mid-sized businesses, as well as large corporations, non profit organizations and family foundations, through its team of more than 12,000 financial consultants in more 10

than 500 offices, the firm services more than 7.1 million client accounts representing nearly $1 trillion in client assets.

1.6.4 Primerica With more than 100,000 full and part-time representatives, Primerica is the largest financial services marketing organization in North America, Primerica offers consumers array of financial services and products, including term life insurance underwritten Primerica Life. The company also markets other Citigroup products, including Smith Barney Mutual Funds, Travelers Insurance Company annuities and CitiFinancial loans and mortgages.

1.7 Citigroup’s Marketwise Segmentation Citigroup is composed of four discrete business divisions: Citigroup Corporate and Investment Bank, Global Investment Management and Private Banking Group, Consumer Group and Emerging Markets.

1.7.1 Citigroup Corporate and Investment Bank Citigroup's Corporate & Investment Bank (CCIB) has emerged as the premier organization for meeting all the financial services needs of corporations, governments, and institutional and individual investors around the globe with a broad range of financial products and services. The services include investment advice, financial planning, retail brokerage services, equity & fixed income underwriting, risk management, lending, and financial services and commercial insurance products. CCIB is composed of The Global Relationship Bank, Citi Capital, Investment Banking & Capital Markets, and Smith Barney Private Client Group.

Global Relationship Bank Under this segment, corporate clients use the investment banking services, including M&A advisory, structured/corporate finance, debt and equity capital raising, risk management, transaction services, consumer banking, insurance, pension, asset management and commercial banking services such as lending, treasury services and foreign exchange. Also, top-ranked trading capabilities are offered for institutional clients. The Global Relationship Bank's mission is to serve global customers around the world. GRB has a focused target market that deals with Corporations that have revenues

of $1B or more with growing international sales. Additionally, GRB targets financial institutions in the Organization for Economic Cooperation and Development (OECD) that are large public, private and government owned operations that are growing in cross border capital needs and trade flows.

Products ♦ Core Corporate Banking Services ♦ Project Finance ♦ Structured Trade Finance ♦ Global Equipment Finance ♦ Structured Loans ♦ Bank/Bridge Financing ♦ Securitization ♦ Capital Structuring ♦ Asset Finance ♦ Treasury Services ♦ Foreign Exchange ♦ Derivatives ♦ E-business (cash management services) ♦ E-solutions (Web enabled solutions) ♦ Security Services Target Market Global Relationship Banking in the OECD countries, Global Corporate Banking has a specific target audience of around 1,800 clients.

Top Tier Local Corporate (TTLC) GRB serves the top-tier companies in more than 60 emerging-market countries, amounting to a client base of over 25,000 companies.

Emerging Local Corporate (ELC) GRB offers emerging local corporate companies a range of banking services that include loans, cash management and international trade finance. ELC includes 6,000 clients.

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CitiCapital This includes transport, construction, material handling, business technology, fleet leasing, healthcare and office equipment finance, relocation services and as well as franchise and municipal finance. With a current global portfolio of over $35 billion, CitiCapital provides a full range of financing solutions and services to over 500,000 customers throughout the world. It has global presence in United States, Canada, Puerto Rico, United Kingdom, France and Spain.

Citigroup's Investment Banking and Capital Markets Citigroup's Investment Banking and Capital Markets include global and U.S. underwriting of equity and debt, as well as U.S. municipal and other public debt, and merger and acquisition advisory. Products and Services include strategic advising in connection with mergers and acquisitions, leveraged buyouts, divestitures privatization, financial restructuring etc.

Smith Barney Smith Barney is the global private wealth management and equity research unit of Citigroup. It is a leading provider of comprehensive financial planning and advisory services to high net worth investors, institutions, corporations and private businesses, governments and foundations. With more than 300 research analysts around the globe and nearly 12,400 financial consultants in some 500 offices, Smith Barney offers a full suite of investment services, including asset allocation, private investments and lending services, hedge funds, cash and portfolio management, as well as retirement, education and estate planning. A division of Citigroup Global Markets, Smith Barney currently serves more than 7.5 million client accounts, representing nearly $900 billion in client assets.

Smith Barney Private Client Groups Global Private Client Group offers wealth management and financial planning services for affluent and high-net-worth private investors, small-to-mid-sized businesses, large corporations, non-profit organizations and family foundations. It provides capital raising, advisory, research and other brokerage services to private investors, and executes securities and commodities futures brokerage transactions on all major U.S. and international exchanges. Smith Barney also trades for its own account in various markets

throughout the world involving a broad-spectrum of financial and derivative products.

The products and services are advisory, alternative investments, brokerage services, block trading, cash management, defined benefit and defined contribution plans, estate planning, financial planning, M&A advisory services and so on.

Travelers Property Casualty Commercial Lines Insurance for commercial markets, including workers’ compensation, integrated disability, property, liability, specialty lines, and surety bonds.

1.7.2 Global Investment Management and Private Banking Group Citigroup Asset Management provides investment management and related services to a broad spectrum of clients around the world, from beginning investors to wealthy individuals to large institutions, both public and private. It has one of the most impressive research teams on Wall Street and some of the most well known brands in money management – Smith Barney, Salomon Brothers and Citibank. With offices in 59 cities around the world, it is one of the world's most global private banks. Global Retirement Services provides for the retirement and pension needs of clients around the world. The Global Investment Management and Private Banking Group is composed of Citigroup Asset Management, CitiInsurance, Citigroup Private Bank, Global Retirement Services, and Travelers Life & Annuity.

Citigroup Asset Management Citigroup Asset Management includes Smith Barney Asset Management, Salomon Brothers Asset Management, and Citibank Asset Management along with the pension administration business of Global Retirement Services. It was formerly known as the SSB Citi Asset Management Group and Global Retirement Services. These businesses offer a broad range of asset management products and services from global investment centers around the world, including mutual funds, closed-end funds, managed accounts, unit investment trusts, variable pension administration, personalized wealth management services catering to the needs of every class of investor.

CitiInsurance CitiInsurance is Citigroup's international insurance business, which currently distributes insurance products in 43 countries and manufactures insurance in six countries.

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CitiInsurance focuses on life and retirement-related products, including variable and fixed annuities and other unit-linked products; an array of credit-related products, including personal accident and health; term, whole and endowment life insurance. In many countries, Citigroup also distributes property and casualty products.

The Citigroup Private Banks The Citigroup Private Bank provides personalized wealth management services for affluent clients through more than 90 offices in 31 countries and territories. Clients include many of the world's most influential entrepreneurs, families, and senior corporate executives. The Private Bank provides trust services, structured lending and banking, foreign exchange, equity derivatives and private equity.

Global Retirement Services Global Retirement Services (GRS) provides pension and retirement that includes defined-benefit, defined-contribution and health and welfare services to large and small businesses and organizations worldwide.

Travelers Life and Annuity This Institution is specialized in life insurance and individual and group annuity products that address the asset protection, retirement planning, corporate-owned life insurance and estate preservation needs of the customers.

Travelers Life & Annuity offers

individual annuity, group annuity, individual life insurance, and (COLI). The individual products include fixed and variable deferred annuities, payout annuities and term and universal life insurance.

Citigroup Alternative Investments It creates and delivers a broad offering of alternative investments, including hedge funds, credit structures, and private equity, real estate, and other private placement and special investment opportunities.

Travelers Life and Annuity This specializes in life insurance and individual and group annuity products that address the asset protection, retirement planning and estate preservation needs of our customer.

1.7.3 Citigroup Global Consumer Group The Consumer Group businesses comprise the financial service sector’s most diverse consumer product offerings — banking services, credit cards, loans and insurance, investment services, and personal insurance products in 51 countries and territories.

The Consumer Group creates products and platforms to meet the expanding needs of the world's growing middle class. These products and services are delivered to the Consumer Group's worldwide clientele through Citibank, Citi Cards, CitiFinancial, Diners Club, e-Consumer, Primerica Financial Services, and Travelers Property Casualty.

Citibanking Citibank provides banking, lending, and investment services to individual consumers, as well as small businesses with up to $10 million in annual sales. Citibanking North America delivers banking, lending, and investment services to customers through Citibank's Financial Centers and through electronic delivery systems. Specific products and services include basic banking accounts, investment services through Citicorp Investment Services, CitiTerm® life insurance, CitiPhone® banking, and Citigold® accounts, which integrate banking, borrowing, and investing services. Client Financial Analysts are available at the bank’s Financial Centers and trained to use Citipro® and CitiBusiness® Solutions Review – financial needs analysis tools that enable Citibank to bring tailored solutions to every customer. These tools allow bank’s analysts to assess customer needs and diagnose their financial situations. Japan is one region of three major Citigroup regions outside of the United States. Citigroup's (Japan) financial service network allows for customers to bank on a corporate, consumer, and private level, including global asset management, wholesale securities, and credit services. Consumer Bank operations in Western Europe provide banking, lending and investments services, including credit and charge cards, to customers across Europe, with continuous focus on the development of Internet banking and investments products.

CitiCards CitiCards provides over 93 million card members worldwide with more than 100 million accounts in 46 countries with MasterCard, Visa, and private-label credit cards, as well as access to a broad array of financial and lifestyle-related products and services. New

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accounts are primarily acquired through direct marketing efforts, over the Internet, and through portfolio acquisitions.

CitiFinancial CitiFinancial is composed of three divisions - CitiFinancial (consumer lending), CitiFinancial Mortgage, and the Auto Division - and provides lending services that include real estate-secured loans, loans to finance consumer goods purchases, mortgages, home equity loans, and automobile financing. CitiFinancial (Consumer Lending) provides community-based lending services through its branch network system. CitiFinancial Mortgage specializes in mortgage and home equity lending in the non-conforming sector and is recognized as the largest provider of these services in the United States.

CitiFinancial's Auto Division provides auto financing for franchised and independent auto dealers.

Diners Club Worldwide, Diners Club Cards are issued in more than 60 currencies and accepted in more than 200 countries, Diners Club acquires new card members via direct sales on the corporate card side, and via Internet and direct marketing on the personal card side.

E-Consumer E-Consumer offers customers a comprehensive suite of consumer financial products and services available and accessible anywhere, on any device, at any time, in a secure and private manner. It extends the reach of Citigroup's products and services to new customers via the internet.

Primarica Financial Service Primerica is the largest financial services marketing organization in North America, with more than 100,000 full and part-time licensed representatives who help people plan their financial futures and resolve challenges along the way. The company also markets a variety of products "manufactured" by other Citigroup units, including Smith Barney mutual funds, CitiFinancial loans, and Travelers Insurance Company’s variable annuities.

Travelers Property Casualty This institution offers commercial and personal property and casualty insurance products, along with coverage for special circumstances such as umbrella liability,

personal articles, boats, and floods. Travelers Property Casualty is the fifth largest provider of insurance products to individuals, businesses, institutions and government entities. The company offers a broad range of commercial products, including workers' compensation, integrated disability, property, liability, specialty lines, fidelity/surety, inland/ocean marine, and boiler and machinery.

CitiCapital CitiCapital provides truck, construction, material handling, healthcare and office equipment finance, as well as franchise and municipal finance.

Global Equities It provides excellent global equity capabilities for corporate, institutional, and retail investors through a dominant equity sales and trading platform, industry-leading Global Equity Research capabilities, top-tier institutional distribution capabilities, and the second-largest retail brokerage network in the U.S. Global Securities Services Global Securities Services is a global leader in cross-border transaction services for leading investors and issuers. With a leadership position in virtually every market served, Global Securities Services offers clients a full spectrum of custody, trust and safekeeping services.

Cigroup Cash, Trade and Treasury Services Citigroup Cash, Trade, and Treasury Services offer integrated cash management, treasury, and trade finance and e-commerce solutions to corporations, financial institutions, intermediaries, and governments around the world. It holds award-winning leadership positions in just about every market it serves. Web-based cash management, electronic invoice presentment and payment, and supplier finance solutions empower clients to re-engineer receivables and payables processes, integrate more tightly with their supply chain, and manage working capital more effectively. The trade services and financing techniques allow clients to conduct, monitor, and control documentary trade and commercial transactions and mitigate associated risks. Citigroup Cash, Trade and Treasury Services provide access to Citigroup's full range of capabilities and solutions

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along with an on-the-ground presence and in-depth knowledge of 90 local markets for clients who transact over U.S. $1 trillion per day.

1.7.4 Emerging Markets Citigroup, principally through Citibank, provides financial services throughout the world this includes 80 emerging market countries in Asia Pacific, Central and Eastern Europe, the Middle East and Africa (CEEMEA also includes Indian Subcontinent), Latin America and Mexico. The Emerging Markets (EM) brings together both consumer and corporate businesses, delivering a full range of banking services to corporations, financial institutions, the public sector, and individual customers. The customers are offered personal service and the advantages of a local bank, while the global platform continuously introduces a stream of new and innovative products quickly and more costeffectively than the competitors. The EM has more than 90,000 employees around the world, providing services to 32 million customers and 10 million pension fund participants.

Asia Pacific Asia Pacific network (excluding Japan) provides commercial, investment and retail banking services, including credit and charge cards to corporate and consumer customers throughout the region. Extensive Asian branch network, with specialists and banking professionals who speak the local language, provides local and cross-border solutions and superior technology to customers with offices in the following countries: Australia Brunei China Guam Hong Kong Indonesia Korea Macau Table 1.3: Asia Pacific network

Malaysia New Zealand Philippines Singapore Taiwan Thailand Vietnam

CEEMA In CEEMA Citibank provides commercial,

investment, and retail banking services, including credit and charge cards, to corporate, institutional, and consumer customers throughout the region. CEEMEA provides a

variety of financial solutions—from the most basic cash and trade collection services through to complex regional treasury solutions. The countries under this region are: Algeria Angola Bahrain Bangladesh Bulgaria Cameroon Congo, Democratic Cote d'Ivoire Czech Republic Egypt

Gabon Ghana Hungary India Israel Jordan Kazakhstan Kenya Lebanon Morocco

Nepal Nigeria Oman Pakistan Poland Romania Russia Saudi Arabia Senegal Slovak

South Africa Sri Lanka Tanzania Tunisia Turkey Uganda Ukraine UAE Zambia

Table 1.4: The Countries under CEEMA Region

Latin America Latin American offices of Citibank provide commercial, investment, and retail banking services, including credit and charge cards, to corporate and consumer customers throughout the region. Specialized retirement services are also provided within the Latin America and Mexico regions. Countries under this region are: Argentina Aruba Bahamas Barbados Bolivia Brazil Cayman Islands Chile Colombia Costa Rica Dominican Republic Ecuador El Salvador

Guatemala Haiti Honduras Jamaica Panama Paraguay Peru Puerto Rico Trinidad and Tobago U.S. Virgin Islands Uruguay Venezuela

Table 1.5: The Countries Under Latin American Region

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Mexico Citigroup acquired Banamex, the leading bank in Mexico in 2001. With this acquisition, Citibank has become the leading bank in Mexico in terms of corporate banking, retail banking, and issuing of credit cards. Citibank in Mexico provides a full range of services to both individuals and businesses, from bank accounts, loans and credit cards for consumers, to sophisticated corporate finance for corporations. Key services include: liquidity management, cross-border services (foreign exchange), trade services (documentary collections), trade finance, leasing/asset-based finance etc.

1.8 Financial Performance 2005 Citigroup is the most profitable financial solution provider in the world with net income of US$ 22.48 billion in 2005. It also has the highest market capitalization among all financial institutions with total asset exceeding US 1.9 Organization Address

Citigroup Inc. 399 Park Avenue New York, NY10043 Phone: (212) 559-1000 Fax: (212) 793-3946 E-mail: nvestrrelations@citigroup.com Web Site: http://www.citigroup.com

Part 1: Chapter 2 2.1 Citibank, N. A 2.1.1 Business Description Citigroup’s businesses are exceptionally diversified by customer, product and geography, and the firm also has the most global distribution platform of any major bank Citigroup has a well-recognized brand, and management has built leading global franchise in credit cards, consumer finance, international consumer banking, wealth management and wholesale banking. These businesses have produced strong and consistent earnings even during difficult economic or market conditions. As a result, Citigroup produces good risk-adjusted profitability compared to most A/AAA-rated. Citibank NA accounted for roughly 45 per cent of Citigroup’s profits in 2005, and is an integral booking entity for many wholesale and consumer banking products offered by Citigroup. Moody’s Investors Service has upgraded the ratings of Citibank NA to AAA for long-term deposits and to A for financial strength. Both ratings are at the top of their respective scales.

The global nature of the bank gives it a competitive advantage especially in the developing and emerging markets because they are able to offer similar first class products and services as in New York and London. Citibank aspires to be known as a customer centered institution. Their customer relationship management (CRM) ensures that there is a relationship manager for a given number of clients who becomes integral in the client’s financial undertakings, from inquiry to post-transaction services.

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It delivers a wide array of banking, lending, and investment services to individual consumers, as well as to small businesses with up to $10 million in annual sales. Citibank offers a full range of financial services products to serve the needs of small and large corporations, governments, and institutional and individual investors. The Financial Center Network of Citibank is wide and comprises of local offices complemented by electronic delivery systems, including ATMs and the World Wide Web. The company divides its operations into three sectors: personal finance, small business and corporate/institutional. There is some overlap in the products between the divisions. For example, products such as credit cards and insurance are offered in more than one sector, but this is all part of Citibank’s policy to offer solutions to cater for any financial

situation.

Citibank’s financial center network is comprised of local offices and complemented by the group’s electronic delivery systems, including ATMs and the World Wide Web. Specific products and services include basic banking accounts and investment services offered through Citicorp Investment Services, CitiTerm life insurance, CitiPhone banking, and CitiGold accounts, which integrate banking, borrowing, and investment services.

Among the many credit card solutions for individuals and businesses are the Citi Smart Card, Citi Advantage Card, Citi Platinum Select Card, and Citi Platinum Select Advantage Business Card.

Citibank also operates an Internet banking site offering consumer and small business products and services. At Citibank.com, consumers may sign onto their Citi card, bank and brokerage accounts, locate Citibank Financial Centers and ATMs globally, access personal finance content and use a wide variety of financial tools, among other functions.

As well as operating within its domestic market, the company has extensive operations in Asia, covering China, Hong Kong, India, Japan, the Philippines and Singapore. It also has offices in Europe, Latin America, the Middle East and Africa.

Citibank focuses substantial resources on growth in emerging markets. The company offers two transaction-banking businesses for these areas - eBusiness, eCommerce, cash-management and electronic-banking business; and Citibank global securities services, which provide securities-related services such as custody, clearing, agency and trust, and depositary receipts. In addition, its sales and trading business provides capital markets products to clients.

2.1.2 Specific Products and Services Specific products and services include basic banking accounts, investment services through Citicorp Investment Services, CitiTerm® life insurance, CitiPhone® banking, Moreover, Citigold® accounts, which integrate banking, borrowing, and investing services. Client Financial Analysts are available in the Financial Centers and trained to use Citipro® and CitiBusiness® Solutions Review – financial needs analysis tools that enable Citibank to bring tailored solutions to every customer. These tools allow the analysts to assess customer needs and diagnose their financial situations.

2.1.3 History of Citibank, N.A. The timeline below represents the history of this business until it became a part of the Citigroup family.

On June 16, 1812, with $2 million of capital, City Bank of New York (now Citibank) opened for business in New York City. Through many different leaders and economic environments over the course of its rich history, Citibank continues to grow and prosper.

In 1968, First National City Corporation (later renamed Citicorp), a bank holding company, became the parent of Citibank.

In 1998, all Citicorp divisions merged with all divisions of Travelers Group to form Citigroup Inc. Citibank continue as a strong brand under the Citigroup umbrella.

1812



June 16: New York State charters City Bank of New York with

authorized capital of $2 million and paidin capital of $800,000.  24

September 14: City Bank opens for business to serve a group of New

York merchants.

1813 1822

  

Samuel Osgood is elected president (1812–1813).

First dividend is paid.

Farmers' Fire Insurance and Loan Company is founded, the first

incorporated trust company in the U.S. Its name becomes Farmers' Loan 1827 1856 1865

and Trust Company in 1835, and it merges with National City Bank in 1929.  Isaac Wright is elected president (1827–1832).  Moses Taylor is elected president (1856–1882).  City Bank joins the new U.S. national banking system and

1882 1891

becomes The National City Bank of New York.  Percy Pyne is elected president (1882–1891).  James Stillman is elected president (1891–1909). He also serves

1894 1897

as chairman (1909–1918).  Becomes the largest bank in the U.S.  First major U.S. bank to establish a foreign department; begins

1902

foreign exchange trading.  Expands into Asia, Europe and India, with offices from Shanghai

1904

to Manila.  Introduces traveler's checks. 

The bank moves to larger quarters at 55 Wall Street, its

1909

headquarters until 1961.  Frank Vanderlip is elected president (1909–1919); James Stillman is

1913

elected the first chairman (1909–1918).  The bank is the first contributor to the Federal Reserve Bank of New

1914

York.  November 10: National City inaugurates the first foreign branch of any

1915

U.S. national bank, in Buenos Aires.  Opens National City Bank office in Rio de Janeiro, Brazil.  Now America's leading international bank, with the largest overseas

1918

branch network of any U.S. bank.  International Banking Corporation, a U.S. overseas bank, becomes a

1919

wholly owned subsidiary of National City.  First U.S. bank with $1 billion in assets.  James A. Stillman, son of chairman James Stillman, is elected president

1921

(1919-1921).  National City is the first major U.S. bank to offer compound interest on savings accounts. 

Charles E. Mitchell is elected president (1921–1929) and later chairman

1928

(1929–1933).  May 3: First major American bank to offer unsecured personal loans to its depositors.

1929

 National City Bank is the first to open a Personal Loan Department.  The bank becomes the largest commercial bank in the world.  Expansion is accelerated with a merger: the Farmers' Loan and Trust Company becomes the City Bank Farmers Trust Company. 

Gordon S. Rentschler is elected president (1929-1940) and later

1933 1935 1936

appointed chairman (1940-1948).  James H. Perkins is elected chairman (1933–1940).  The bank develops monthly payment loans for small businesses.  First bank in New York City to offer consumer checking accounts with no

1939

minimum-balance requirement.  Citibank has opened 100 offices in 23 countries outside the U.S., forming

1940

the largest international bank.  William Gage Brady, Jr. is elected president (1940–1948) and later

1945

chairman (1948–1952).  The bank handles more than $5.6 billion in U.S. Treasury securities in a

1948

series of war loan and victory loan drives.  Howard C. Sheperd is elected president (1948-1952) and later chairman

1952

(1952-1959).  James Stillman Rockefeller is elected president (1952–1959) and later

1955 1959

chairman (1959–1967).  The bank changes its name to The First National City Bank of New York.  George S. Moore is elected president (1959–1967) and later chairman

1961

(1967–1970).  Invents the

negotiable

certificate

of

deposit

(CD).

A new subsidiary, First National City Overseas Investment Corporation, becomes the bank's holding company for non-U.S.-based subsidiaries and affiliates.

1962

 The new home office, 399 Park Avenue, is completed.  The bank marks its 150th anniversary by shortening its name to First

1964 1965 1966

National City Bank.  Enters the leasing business.  Enters the credit card business.  Citibank introduces Dollar Certificates of Deposit in the London market,

1967

the first new negotiable instrument in the London market since 1888.  Walter B. Wriston is elected president (1967–1970) and later serves as

26

chairman (1970–1984). 

Introduces Citibank's first credit card the "First National City Charge

1968

Service" popularly known as the "Everything" card.  First National City Corporation, a bank holding company, becomes the

1969

parent of First National City Bank.  The "Everything" card is converted to Master Charge (today's

1970 1974

MasterCard).  William I. Spencer is elected president (1970–1982).  The First National City Corporation holding company changes its name to Citicorp to better suit its global businesses. Citicorp introduces the

1976

floatingrate note into the U.S. financial market.  First National City Bank becomes Citibank, N.A. (for National

1977

Association).  Citibank launches Citicard Banking Centers, anchored by ATMs and the Citicard. The 24-hour ATMs are for the first time used for more than

1979 1981 1982

emergency cash.  Becomes the world's leading foreign exchange dealer.  Acquires Diners Club.  Savings & Loan acquisitions in California, Florida, Illinois and

to

Washington, D.C. make Citicorp the largest bank holding company in the

1984 1984

U.S.  John

S.

Reed

is

elected

chairman

(1984-1998).

Citibank London is a founding member of CHAPS Clearing Company, one of the largest real-time gross settlement systems in the world, second only to 1985

Fedwire in the U.S.  Introduces Direct Access® in New York, linking personal computers in

1986

homes and offices with Citibank.  Introduces unique touch-screen automated teller machines in New York

1989

City and Hong Kong.  Becomes the leading issuer of securitized credit card receivables.

1992

A new skyscraper at Court Square, Long Island City, New York, is built.  Citibank, N.A. becomes the largest bank in the United States.

1993

Citicorp's global reach links branches and offices in more than 90 countries.  Becomes the largest credit card and charge card issuer and servicer in the world. 

Merges savings banks acquired in the 1980s and begins operating them

as Citibank, FSB under a single charter.

1994 1995

 Opens the first fully foreignowned commercial bank in Russia.  Celebrates the 20th anniversary of the Consumer Banking Business.

Opens the first fullservice branch in China in 45 years and branches in

1996

Vietnam and South Africa.  Has largest number of credit cards in Asia. Taiwan becomes the first

1998

country outside the U.S. with over 1 million credit cards.  October 8: All Citicorp and Travelers Group divisions merge to become Citigroup Inc.

2.1.4 Key Facts

Miscellaneous financials of New York Citibank, N.A.

Fiscal year end: December 2005 Sales (in mil.) $83,642 2005 Net Income (mil.) $24, 589 2006 Employees 300,000 2005 Year End Assets $1.5 Trillion

Part 1: Chapter 3 3.1 Citibank N.A., Bangladesh Citibank, N.A. Bangladesh is a member company of Citigroup, the largest and the most diversified provider of financial services in the world. In Bangladesh with an almost decade of presence, Citibank today has a network of 4 branches across 2 cities. Cash Management was pioneered by Citibank and we provide a comprehensive range of financial services including treasury management, transaction services, foreign exchange and structured finance to corporate clients, governments and financial institutions. The bank has been offering its customers the highest standard of financial services backed by sophisticated technology and innovative product solutions. Citibank, N.A. Bangladesh 28

has one dedicated branch to serve the financial needs of high net worth individuals. The bank also provides remittance services to the expatriate community all across the world and largely in the Middle East.

Citibank N.A. started its operation in Bangladesh during 1987, by opening of a representative office. The main function of the bank at that time was limited to correspondent banking, L/C confirmation, and credit appraisal of companies for Citibank Hong Kong, Singapore, India etc. Based on the strengths with respect to global network, expertise in financial services and technology based delivery capabilities, Citibank N.A. Bangladesh had been able to establish as one of the largest overseas correspondents for the nationalized banks in Bangladesh. Full-fledged operation of Citibank started on June 24, 1995. Citibank N.A. is a 100% owned branch office of Citibank, New York. Then on June 18, 2000 a new full service branch was opened in Chittagong, the commercial capital of Bangladesh. The branch is now operating business in a commercial hub of the city side-by-side most of its other counterparts. 3rd branch of Citibank N.A. has opened at Gulshan, Dhaka in 2003. The fourth branch has opened on 16th December, 2006.

The operation of Citibank in Bangladesh is still conservative and limited to serving financial needs of the leading business and corporate houses (through treasury operations, cash management, lending etc) although the bank has a plan to go for fullfledge consumer banking in near future.

3.1.1 Organization Profile Head Office Gulshan Branch

Motijheel Branch

Chittagong Branch

Dhanmondi Branch

109, Gulshan Avenue

23, Motijheel C/A

NIB House

Plot – 39/ A

Dhaka-1212

Dhaka-1000

32 Agrabad C/A

Road – 14 A

Tel:

Tel:

Chittagong-4000

Dhanmondi

+88 (02) 8850321

+88 (02) 9550060

Tel:

Dhaka – 1209

+88 (02) 8855139-41 Fax:

+88 (031) 724830-1

Tel:

+88 (02) 8833567

+88 (031) 71425-1

+88(02)9111152

Fax:

Fax:

+88(02)9111162

+88 (02) 8850479

+88 (031) 724867

Fax:

+88 (02) 9562236

+88 (02)8144136

Table 3.1: Organization profile Currently Citigroup has seven regions through which it operates almost all over the world. Africa, Asia-Pacific (ASPAC), Central America / Caribbean, Europe, Middle East, North America, South America. Bangladesh belongs to the ASPAC (Asia Pacific) region, earlier Bangladesh was in CEEMEA (Central Eastern Europe Middle East Africa), which includes 22 countries: Australia

Macau

Bangladesh

Malaysia

Brunei

Nepal

China, People’s Republic of

New Zealand

Guam

Pakistan

Hong Kong

Philippines

India

Singapore

Indonesia

Sri Lanka

Japan

Taiwan

Kazakhstan

Thailand

Korea

Vietnam

In each of the seven regions, countries belong to different clusters; a cluster forms with 4/5 geographically close countries and the representative from the largest country in the 30

cluster is chosen to be the Cluster Head. The cluster in which Bangladesh belongs to also includes India, Nepal, Sri Lanka and Bangladesh. Table 3.3 gives an overview of the organization structure of Citibank N. A., Bangladesh –

Mamun Rashid CEO Kamal Khan Office Administrator Mamdudur Rashid VP, SCOO, HO FCU Mahbubur Rahman VP, Head of FI Kanti Kumar RVP Zulfiker Khan RM Nuzhat Anwar RM Assistant Officers (2) Latif Hasan Asst. Manager Omar Faruque HO CM Ops Munir Molla Asst. Manager Md. Rafique Asst. Manager Authorized Signer-3 Assistant Officer-1 Auth. Sign- 2 Asst. Off.- 1 Asst. Off. - 1 Iqbal Ahmed HO ICU Authorized Signer Asst. Off. - 1 Abrar A Anwar VP & HO Corporate Banking Abed Islam RVP-GRB Yusuf Saeed HO SF Reza U Ahmad RVP- TTLC

Javed Ahmed RM -TTLC Adnan Masud RM-TTLC Sajed ul Islam RM Yaser Ali RM Arnab Bhattyacharya / Rashed Maqsood HO Cash Management & GTS Parvez Murshed PSM Rossanna Rahman, PSM

Iftekhar Hossain Manager Hasan Imam HO Credit Admin. (Manager)

Ziaur Rahman HO HR Mehreen Mahiuddin Corporate Affairs Mukhlesur Rahman Head of Branches MA-1 ; AS-1, AO- 3 Bashar Tareq Country Treasurer, VP Zaid Amin RM- GRB Authorized Signer M G Hafiz HO Trade & Treasury Ops. Asif Islam Asst. Manager Tofael Ahmad HO Technology Sd Tofael Ali SBOO Manager Shams Zaman

Corp Sup. Manager Shawar HO Legal and Complience

3.1.2 Organogram

Table 3.3: Organogram

3.1.3 Bangladesh: As a Part of Citibank’s Global Market Citibank has been present in Bangladesh for 18 years now, although we are celebrating the 10th anniversary of our operations here. Prior to 1995, it had a representative office in Bangladesh.

Citibank worldwide is structured in two divisions: GRB (Global Relationship Banking), which includes all the markets in the developed world and deals with those MNCs that are Citibank’s clients all over the world; and EM (Emerging Markets), which basically includes the markets in the developing world. Emerging Market is again divided into three geographic segments: Latin America, Asia Pacific and CEEMA (Central and Eastern Europe, Middle East and Africa).

Bangladesh is one of 74 countries that fall under the head of Emerging Markets.

Bangladesh belongs to the region, CEEMEA (Central Eastern Europe Middle East Africa), which includes 38 countries. In each of such regions, countries belong to different clusters; a cluster forms with 4/5 geographically close countries and the representative from the largest country in the cluster is chosen to be the Cluster Head. The cluster in which Bangladesh belongs to also includes India, Nepal, Sri Lanka and Bangladesh. The regional head office of Citibank N.A. Bangladesh is located at Mumbai, India.

3.1.4 Structure of the Bank The bank is structured according to the four product divisions: Corporate Banking, Financial Institutions, Cash Management, and Treasury. There are also four other departments that can be termed as support and these are Operations, Credit Administration, Financial Control and Human Resource.

Corporate Banking Corporate Banking in Citibank is divided into two main segments: a. GRB 5 (Global Relationship Banking), in which the RMs basically deal with the clients (multinational companies in Bangladesh) with whom Citibank has global relationship.

There is a single Parent Account Manager (PAM) in the country of origin of that MNC who is responsible for looking into the credit relationship between Citibank and the

company worldwide. Any credit extended to the company has to be approved by the PAM. b. TTLC (Top Tier Local Corporate), as the name suggests is the segment in which only the top performers (basically the first three ranked companies) of any industry are approached to be Citibank’s clients.

Citibank provides both deposit products and loan products to its corporate clients. The loan products are of varying tenor and purpose. Citibank N.A. Bangladesh also provides structured finance products. The main activities involved in Corporate Banking division of the bank include: communication with customers and calls. The RMs (Relationship Mangers) tries to establish contact with key CBG customers; know about the status of their capabilities. The next step is to collect customer information and make a detailed analysis of the needs of the client matched with what the bank can offer. After agreement of both parties, the bank gets approval from the lending unit. Once a company has become a client with credit relationship, the RMs then has to monitor the performance of the company and ensure that no classification of credit occurs.

Every year, Citibank, Bangladesh has to submit to the cluster head the macro-economic indicators of the country and also the performance of the sub-sectors, and based on these, the portfolio is revised as to how much Citibank can get involved in each sector.

A new program targeting the RMG Manufacturing & Exporting units was started with customized credit facilities and trade charges for the clients. It is called the Vendor Marketing program (VMP) headed by a product champion. This also falls under the TTLC segment despite this would go under the Emerging Local Corporate segment once this starts operation in Bangladesh.

Every year, Citibank, Bangladesh has to submit to the cluster head, the macro-economic indicators of the country and also the performance of the sub-sectors, and based on these, the portfolio is revised as to how much Citibank can get involved in each sector.

The main activities involved in Corporate Banking division of the bank include communication with customers and calls: The RMs try to establish contact with key CBG

customers; know about the status of their capabilities. The next step is to collect customer information and make a detailed analysis of the needs of the client matched with what the bank can offer. After agreement of both parties, the bank gets approval from the lending unit. Once a company has become a client with credit relationship, the tasks are not yet over; the RMs then have to monitor the performance of the company and ensure that no classification of credit occurs.

The Products Offered by the Corporate Banking Division Unlike other banks, Citibank N. A. ensures the Customers ‘Ring-Fencing’ protection --

Cash Management Products Treasury Products Trade Products Structured Finance Products Regulatory Affairs & Advising

Customers Corporate Finance Corporate finance and other credit products constitute the core of commercial banking services. Citibank offers a full range of financing options that are tailor-made to each of the circumstances of each client. The lending products are customized based on purpose, tenor, currency and other criteria. The products and services offered are: Figure 3.2: Citibank’s Uniqeness Structures enhanced by Export Credit Agencies 

Commercial Paper or Fixed Income Securities



Syndicated Loans



Project Finance



Working Capital Finance



Credit

This is basically the funding provided for financing of a particular working capital need, which can either be short-term loan or overdrafts. Some common forms of working capital finance are financing of inventory or raw material purchase, receivable financing for both export and domestic etc. The products and services offered are: 

Pre-export and Import Finance



Receivable Financing



Trade Finance

Citibank has another major business with its business community, which is Trade Services. With its online system available globally, Citibank N.A. Bangladesh can offer its customers swift processing service, which is crucial to any trade customer of a bank.

Besides customers can open, amend, and transmit L/Cs online from their own premises using Citibanking system.

Major trade finance products and services are: 

Letters of Credit



Export L/C Advising & Transfer



Guarantees: Bid, Performance, Financial



Discounting / Refinancing of Acceptances and L/C



L/C Confirmation



Documentary Collections / Negotiations

Financial Institutions The Financial Institutions department caters for the need of various banks and non-bank financial institutions as well as NGOs, not-for-profit organizations and diplomatic missions. The core product is the correspondent banking services. Besides there are various electronic banking services, which enable FI, clients perform large domestic and international transactions efficiently and safely.

With presence in more than 100 countries in the world, Citibank N.A. is one of the largest correspondent banks for international trade services. Citibank N.A. is one of the leading global correspondent banks of financial institutions operating in Bangladesh. The FI customers include the largest nationalized commercial banks, which account for approximately 50% share of the country’s financial market, as well as top tier private sector commercial banks.

Citibank is a member of CHIPS and the largest processor of US dollar payments in New York. There are more than 28,000 US Dollar accounts of financial institutions and corporate maintained in Citibank, NY. On average, Citibank NY transfers funds worth $500 billion per day to beneficiaries all over the world. Customers can avail a variety of account services such as payments processing in US Dollar and other currencies, check collections, investment of funds in overnight or long term money market products, view / download daily account statements etc.

Primary Activities of FI Departmen FI department mainly facilitates international trade conducted by Citibank N.A., Bangladesh.

Citibank does L/C advising, confirming, transferring, guranting and

negotiating and reimbursing. In order to do so the FI department of the bank provides the local banks direct facilities or credit lines that includes OSTBT (Ordinary Short-term Banking Transaction), Local bill discounting, CTC credit line etc. Credit line for treasury purpose includes PSR facilities. Like the CBG Department, the FI-RMs also tries to establish contact with FI customers. After that, the RMs collects customer information and makes a detailed analysis of the needs of the client matched with what the bank can offer. After agreement of both parties, the bank gets approval from the lending unit.

In order to provide credit facilities to the banks the basic responsibility of the FI department is to: ďƒ¨To Know the Customer FI Department prepares EDD (Enhanced Due Diligence) forms in order to preserve basic information regarding their customers. The EDD includes customer account information, commercial information, financial information, checklist of Anti

Money Laundering, product and services information and additional compliance checklist. Ranking With the help of the sophisticated software FI team ranks the banks based on their financial performance.  Preparing Target Market Risk Acceptance Criteria: The criteria or the requirements vary for NCBs and different generations PCBs. The key points to analysis are: Size (Total asst volume, net worth, profit etc.), Financial Profile, Management / Ownership, Financial wallet size etc.  Obtaining Credit Approval In order to get the credit approval a thorough customer analysis is done by the FI team. The analysis includes macro economic aspects, key success factors of the industry, in detail financial performance of the clients. Based on the financial performance and relationship with the customers / banks the proposed credit line gets approved.

Once a bank has become a client with credit relationship the RMs then have to monitor the performance of the company and ensure that no classification of credit occurs.

Major FI products and services US Dollar Demand Deposit Account with Citibank NY With this NOSTRO account FI customer can check the daily statements of transactions. The statement lists all debits, credits and the closing balance and also contains pertinent details necessary for immediate reconcilement. The statements are downloaded electronically by Citibank, Dhaka from overseas branch office’s system and printed on hard copy and delivered to customer’s office. In response to the customers’ needs Citibank is also in a position to maintain additional accounts in other currencies (EURO / ACU).  Sweep and Investment Services / Overnight Investment Facility

Overnight Investment facilities are provided for any balance with Citibank, NY in excess of USD 50,000. This facility enables the customers to earn interest in their operating accounts.  Automated Funds Transfer Facility With state-of-the-art technology (SWIFT interface) available to Citibank, the bank is able to pass on customers’ instructions to transfer FCY funds and inter-bank FX settlement to its overseas branch where NOSTRO account is maintained.  Reimbursement Authority Processing The reimbursement facility is linked to the customer’s proposed NOSTRO account. The LCRA (L/C Reimbursement Authority) instructions are picked up from the designated branch of the customers and pre-processed in Dhaka and Chittagong offices and transmitted to overseas unit where NOSTRO account is maintained. The Dhaka and Chittagong offices of Citibank N.A Bangladesh coordinate with the branches and the overseas counterpart to resolve the issue in order to provide superior services to the clients.  Letters of Credit Advising / Advising With the aid of test-key arrangement, SWIFT Key exchange and/or exchange of authorized specimen signature booklet, Citibank’s global network is available for advising L/C. Citibank also provides L/C amendments service.  Pre-Debit Advice A pre-debit advice is also provided on daily basis at free of cost for funding customers’ accounts smoothly once they start using the account for reimbursement purpose. Customers receive pre-debit advice through SWIFT directly from Citibank N.A. New York.  Electronic Banking / e-Business Citibank e-Business offers the customers an innovative approach to domestic, cross-border and regional banking solutions. In Bangladesh Citibank primarily offers Paylink, Citibanking, and Citi Direct as e-solutions.

New Citibanking (NCB) is software, which is designed specifically for catering to the needs of financial institutions. The system offers direct link with all trade capable branches of Citibank allowing FI customers to: 

Transmit authenticated letters of credit for advising through the global network of Citibank.



Automatically create and transmit reimbursement authorities at the time of L/C issuance.



Send free format message to overseas branches for routine correspondence / inquiries.

NCB also allow financial institutions to operate their accounts with Citibank New York by sending authenticated payment messages, and view daily transaction reports / account statements online. NCB offers lucrative cost saving opportunities for financial institutions in Bangladesh, which are primarily dependent on manual telexes or international couriers to transmit their L/Cs. Using NCB they can transmit their transactions electronically at the cost of a local telephone call.

Paylink is software which provides an efficient interfacing between customers and the central banking system of Citibank to facilitate speedy disbursement / local payment.

The latest and most innovative global e-solution to Citibank customers is CitiDirect Online Banking. It is an Internet based banking system with common worldwide delivery channel for Citibank’s cash and trade products. The system has a single point of access and common user interface for all customers worldwide. It is a sophisticated, usercentered interface offering customers global access, customized reporting capabilities and online technical and customer services support. The benefits offered to the customer through this software are:



Viewing of account activities maintained with Citibank, NY.



Account reporting in a new direction by offering browser-based access to customer account information from anywhere in the world.



End-to-end service, including online technical and customer service support.



Global Access.



Instant and automatic application upgrades.

To summarize major electronic banking products and services are: 

MTMS32



Paylink32



NCB Cash



NCB FI Trade



NCB Corporate Trade



Citi Direct Online Banking.

Global Transaction Services Cash Management Citigroup brings Cash Management solutions unrivalled among banks. No one else has the global capabilities and nor provide total solutions tailored to meet clients' specific requirements. It is highly attuned to client’s needs and responsive in actions. Adopting a partnership approach, the aim is to work with customers as a trusted advisor in a professional relationship based on mutual respect.

Cash Management deals mainly with deposit collection i.e. is involved in liability management of the bank. For this, the team has to go out on calls to bring about customer deposits and get companies to open account with Citibank. Cash Management team works closely with the corporate division and with FI department (For NGOs, NBFIs, Insurance Companies and Diplomatic mission).  The products and services offered from this department include:  Online fund transfer between Dhaka and Chittagong.  Efficient collection mechanisms at different outstation points.

 Secured electronic payment mechanism at over 100 locations across the country.  Innovative and competitive deposit products.  Web-based electronic banking services.  Prompt distribution of inward remittance at competitive rates.  Mobile banking.

Citibank is in a position to offer customized services with the help of state-of-the-art technology to support high volume of payments and collections. The Citibank products such as World link enable effective payment in more than 40 currencies through drafts or wire transfers. Simultaneously, the strong relationships of Citibank N.A., Bangladesh with the nationalized commercial banks within the country enables payments to reach virtually to all the corners of Bangladesh.

On the collection side, the New York based automated check processing capability of Citibank assists in obtaining proceeds of clean checks with the minimal of turn-around time. With well-structured courier arrangement and relationships with other banks, Citibank is capable of substantially reducing transit time for local collections and thereby, assisting in better management of funds.

Besides, Citibank is playing an important role in facilitating fund remittance by expatriate Bangladeshi workers. In collaboration with Saudi-American Bank (SAMBA), Agrani Bank and Islami Bank as local counterpart, Citibank N.A. Dhaka office introduced new products called Speed Cash and Safe Draft to facilitate quick funds transfer for the Bangladeshi expatriates working in K.S.A. Citibank N.A., Bangladesh is now exploring the opportunities of extending similar services to other parts of the globe, especially in Middle East countries Great Britain and Malaysia where the number of Bangladeshi workers are high.  Major cash management products and services are: 

Account Services



Domestic and International Payments & Collections



Outstation Check & Cash Collections



Cash Pick-up & Delivery



Travelers’ Cheques



World link



Pay link



Speed Cash



Safe Draft

Figure 3.3: Citibank Bangladesh – Cash Management Speed Collect - Receivables Management Solution Citigroup's Receivables Management Solutions use various collection channels to collect your receivables quickly and at reduced cost, delivering information through a variety of reports using its secure online banking platform. Citigroup's SpeedCollect helps one to collect and manage local receivables across Bangladesh in simple and efficient way for better control of Cash flow.

Pay Link - Payable Management Solution Citigroup's Payables Management solutions improve productivity, security and control across your entire payments processing. Citigroup has the strength and vision to address

ones payments requirements both now and into the future. PayLink offers a secure, efficient and flexible solution for managing domestic local currency payments. With Citigroup's comprehensive Payables Management solutions, one can outsource all noncore payments processes and free up skilled resources to focus on business development.

Citibank leverages its global network and world-class technology to bring in remittances by non-resident Bangladeshis from overseas in a fast and reliable way and delivering the drafts in Bangladesh through dedicated courier network. Citibank has dedicated remittances professionals and customer service lines to answer queries of customers.

Account Services Citibank N.A. brings to its clients a simple and convenient way to manage ones everyday banking needs. The Bank offers superior MIS facility along with various investment options for idle balances taking care of its client’s entire daily banking requirement.

Treasury The treasury of Citibank Bangladesh meets all the foreign exchange related requirements of the valued corporate customers. Citibank Bangladesh Treasury has been giving excellent and innovative services to the clients since its inception in 1995.

These clients can establish direct contact with the treasury for their foreign exchange requirements. Their local and global strength in treasury products enables them to offer the most competitive foreign exchange rates for Spot and Forward transactions. Apart from competitive foreign exchange rates Citibank has other value added treasury services:  The products and services offered by this department include: 

Foreign Exchange  Ready & Spot  Forward  Currency Swaps  Deposits for Various Maturities  Bills Discounting

 Inter-bank Term Deposits 

Money Market



Overnight Deposits



Term Deposits



Discounted Securities

Citibank is also a very active player in the country’s Swap Market. They are always working very closely with Central Bank and other regulatory organizations to offer their local and international expertise for the development of new products and markets.

Other Departments Credit Admin This department deals with credit risk or market risk of projects. Other responsibilities of the department include monitoring credit facility, checking the credit approvals prepared by the Relationship Managers, monitoring the Relationship Managers’ activities relating to plant visits. The Head of this unit reports to the Country Risk Manager (in case of Citibank, Bangladesh, it is the Chief Country Officer).

Financial Control The activities of this department include managing the financial books of the bank; checking all entries of the book are according to standards, preparing daily reports for Bangladesh Bank, revenue appropriation and calculations, setting the internal pricing rates etc.

Operations, Technology & ICU (Internal Control Unit) The Operations department of the bank deals with account opening, deposit management, loan booking, L/C opening etc; the Technology part involves processing of transactions and maintenance; and ICU is involved in reconciliation of Nostra accounts and also making sure that every day the suspense account balance is 0.

Human Resource The responsibilities involved in the Human Resource department include recruitment, selection, employee performance evaluation etc. Being a multinational bank, besides

Citigroup policies, certain US laws are applicable to the operation of Citibank in Bangladesh; anti money laundering and adhering to such general compliance issues of the bank are other major responsibilities of this department. Although compliance and human resource are two different sides, in Citibank Bangladesh, both are headed by one individual.

3.1.5 SWOT Analysis

Strengths 

Senior Local Management with local market experience



Global strong image of Citibank



Global product strength/success transfer



Heightened Customers/ Market Awareness



Strong controlled environment



Increased cluster support

Weaknesses 

No long years of presence in this country



Not huge marketing campaign taken in hand to market the Citibank image



Inadequate physical presence



Absence of consumer banking

Opportunities 

Un-explored GRB/TTLC market for credit and non-credit products



Un-explored NFI/ NGO segment



Overall improvement in the banking sector



New innovative products (already tested in other markets) can be brought to Bangladesh



Cheaper liability source to fund asset growth by starting retail banking



Growing upper middle class and upper class population



Growing need for alternative banking channels (ATMs, POS, tele-banking etc.)

Threats 

Slowdown in global economy



Weak legal structure



Inadequate market information



Low FX reserves with falling exports



Large non-performing assets of public sector banks



Margin squeezes because of high competition



Low AML preparedness of banking sector



Product range needs to incorporate mobile banking, executive package, supplier financing etc.



Emergence of private banks with pooled ATMs/ EFTPOS, extended branch network, high rates and ex-foreign banks.

3.1.6 Legal Issues of Citibank, N.A. Citibank, N.A. is not involved in any legal complexity currently. They operate as per the rules of Bangladesh Bank and the Government of Bangladesh. For its own insurance they take at least one external legal party’s advice to recheck the verification of the security documents of parties’ who enjoy Citibank’s credit facilities. In this respect, internationally reputed Lee, Khan Associates works as Citibank’s external legal advisor.

3.1.7 Asset-Liability Portfolio of Citibank, N.A. The asset portfolio of Citibank N.A., Bangladesh is as follows:

Type of Asset Cash Balance with Bangladesh Bank Balance with other banks Money at call and short

2005 Balance (BDT % MM) 52.59 0.48% 1,279.23 11.72%

2004 Balance (BDT % MM) 35.62 0.34% 2,201.33 21.30%

(247.50) 1,661.82

141.94 707.00

-2.27% 15.22%

1.37% 6.84%

notice T-Bills Loans and Advances Fixed Assets Other Assets Total

1,246.00 6,558.77 41.85 324.29 10,917.04

11.41% 60.08% 0.38% 2.97% 100.00%

1,290.02 5,827.70 29.42 104.12 10,337.16

12.48% 56.38% 0.28% 1.01% 100.00%

Table 3.1: Asset portfolio of Citibank N.A., Bangladesh Source: Annual Report of Citibank N.A., Bangladesh The loans and advances portfolio of a bank indicates the areas of concentration of the bank and its exposure in the economic activities. The following table shows the industry wise distribution of the loans and advances portfolio of Citibank N.A., Bangladesh.

Industries Textiles Food Processing Pharmaceuticals Cement Power Generation Batteries Computer & Accessories Import/Trading Automobiles Toiletries & Personal Care Electronics Tobacco Grand Total

Percenta ge 39.00% 13.05% 10.26% 9.80% 8.25% 6.94% 3.87% 3.53% 2.48% 2.35% 0.38% 0.09% 100.00%

Table 3.2: Loans & Advance Portfolio of Citibank N.A., Bangladesh Source: Citibank, N.A Bangladesh Corporate Portfolio Report Jan-March 2005 On

liabilities

side

the

total shareholder’s equity was of BDT 1538 million in 2005, which constitutes 14.09% of the total assets. Different type of deposits covered 66.16% of the assets while other liabilities accounted for the remaining 8.67% of the assets. In 2004, shareholder’s equity (BDT 1159 million) covered 11.21% of the asset. Deposit volume covered 75.99% of total

asset. Rest 5.13% was covered by other liabilities. If we look at the deposit side, we see the following distribution: Type of Deposit Current and other NIB accounts Bills Payable Savings Deposit Term Deposit Total

2005 Balance MM) 3,931.81

54.44%

2004 Balance MM) 3818.94

4.85% 2.47% 38.24% 100.00%

283.73 103.15 3,648.96 7,854.78

(BDT %

350.43 178.18 2,762.14 7,222.56

(BDT % 48.62% 3.61% 1.31% 46.46% 100.00%

Table 3.3: Types of Deposit Account offered by Citibank N.A., Bangladesh Source: Annual report of Citibank, N.A Bangladesh The

Credit

Deposit

Ratio of the bank increased from 74.19% in 2003 to 90.81% in 2005. The reason behind this is the huge increase in the credit portfolio. Total deposit decreased by 8.05% whereas, growth of total credit was 12.54%. Although bank’s liquidity has been decreased the bank was successful kept cost of deposit low (7.73% in 2005 compared to 4.76% in 2004). The current deposit / NIB grew by 2.96% from previous year and holding about 54.4% of the total deposit volume.

3.1.8 Financial Performance of the Bank The analysis of Citibank is based on the audited financials of the years 2003, 2004 and 2005.

The Balance Sheet (or the Report of Condition of the bank) In the following a common sized view of the Balance sheet is given: Citibank, N.A. Bangladesh Branch Common Sized Balance Sheet 31-Dec- 31-Dec- 31-Dec- Aver 05 04 03 age

Property & Assets (Accumulated Uses of Funds) Cash: (Primary Reserves) In hand (including foreign currencies) With Bangladesh Bank (including currencies) Balance with institutions

other

banks

and

foreign

0.48%

0.34%

0.15%

12%

21%

20%

0.32 % 17.5 7%

1.12%

1.15 %

financial

In Bangladesh

0.81%

1.53%

Total Cash & Deposits in other institutions Investment Securities: Liquid Security Holdings (Secondary Reserves)

-2%

23%

21%

13.9 1%

Money at Call and Short Notice Investment:

15%

7%

5%

9.07 %

Government

11%

12%

13%

Others

0%

0%

0%

Total Investment Securities Loans and Advances:

11%

19%

18%

Loans, Cash Credits, Overdrafts, etc.

52%

56%

59%

Total Loans and Advances

60%

56%

59%

12.1 2% 0.02 % 16.1 4% 55.6 9% 58.3 6%

Fixed Assets

0%

0%

0%

Other Assets

3%

1%

2%

Non-Banking Assets

0%

0%

0%

Total Assets

100%

100%

100%

0.13 % 1.99 % 0.00 % 100.

00%

18% 1%

23.6 7% 1.74

Liabilities & Capital (Accumulated Sources of Funds) Deposits & Other Accounts: Current and other accounts, etc.

Bills Payable

36% 3%

17% 1%

Savings Deposits

1.63%

Term Deposit 25% Non-Deposit Borrowing: Borrowing from other banks and financial institutions 11%

0.40%

0.34%

58%

57%

% 0.79 % 46.7 7%

8%

4%

7.69 %

Other Liabilities

9%

5%

6%

Total Liabilities

86%

89%

87%

Capital/Shareholder's Equity:

6.56 % 87.3 0%

Fund deposited with Bangladesh Bank

10%

8%

9%

Other reserve

0.00%

0.12%

0.11%

Profit & Loss Account

4%

3%

4%

Total Shareholder's Equity

14%

11%

13%

8.88 % 0.08 % 3.81 % 12.7 0%

Total Liabilities and Shareholder's Equity

100%

100%

100%

100.

00%

Table 3.4: Balance Sheet (2003-2005) Source: Audited Financial Statements of Citibank, N. A. 2003-2005 In the asset side of the balance sheet of Citibank N. A., both Cash in hand & with different financial institutions inside/outside Bangladesh have increased in absolute terms from 2004 to 2005. Moreover the Local Currency cash with Bangladesh Bank has shown a considerable amount of decrease in 2005. Investment in government securities increased during 2005 while the Loans, Advances as cash credits, overdrafts etc. have increased significantly showing the increase in the bank’s operation inside Bangladesh in volume. Investment in Government securities has decreased by 3.9% from Tk. 1290 million to Tk. 1240 million and “Loans and Advances” which increased by 16.2% from Tk.4.89 billion to Tk.5.68 billion in 2005. Balance with other banks and Financial Institutions in Bangladesh hugely decreased by -274.4% from Tk. 142 million to Tk.

(247.5 million) in 2005. This was due to huge negative outstanding balance with foreign banks related to LC payments and other payments at the end of the year. On the other hand, balance with other financial institutions outside Bangladesh increased greatly by 68.68% from Tk.52.3 million to Tk.88.24 million.

The increase in Money at Call and Short Notice has also increased by 117.46% (from Tk.707 million to Tk.1, 662 million). The figure was 15% of total assets in 2005 compared to 7% in 2004. Such lending has been a source of interest income for the bank since the volatility of the rate is very high.

The decrease in mandatory cash reserve requirement by the government has enabled it to decrease the balance from other financial institutions because a large amount of cash is freed up. One important issue to be mentioned regarding this item is that, Citibank had no classified (substandard or loss) loans in the last 3 years.

In the liability side of the balance sheet, borrowing from other banks and financial institutions has gone up by 38.54% and it made up only 11% of total liabilities & capital of the bank in 2005.

The capital / shareholders’ equity of the bank was only 14% of total liabilities & capital in 2005 and was 11% for 2004, although there has been an increase in the total shareholders’ equity in absolute figure. The increase mostly came from the earnings of the bank.

Deposits constituted of 76.4% of total liabilities and capital in 2004 and the figure declined to 65.6% in 2005 with a decrease in the deposit balance of BDT 632 MM from 2004 to 2005. The decrease in deposit was due to a huge decline of BDT 887 million in the fixed deposit and the increase occurred to two sources: the savings deposit and term deposit as a result of concerted marketing efforts of the cash management team of the bank.

The other liabilities of the bank are increased by 73.41%, which consists of 11% of the total liabilities in 2005. One important component of this is the “Provision for loans and advances�. Although the financials of the bank shows that it had no classified loans in the last three years (the years for which the analysis is being done) such a provision is still maintained by the bank. This amount is 1% of gross loan (requirement by Bangladesh Bank).

Off-balance sheet items are mainly contingent liabilities arising from unpaid commitments made by the bank. These items decreased a substantial 69.5% in 2005.

The major constituents of this contingent liability in 2005 were the Letters of Guarantee, Letters of Credit and Foreign Exchange Contracts.

The Profit & Loss Account (or the Report of Income of the bank) The interest income of the bank has increased by 9.61% although the loan amount has increased by about 7.28%. In 2005, interest income of the bank made up 56% of total operating income.

The other earnings of the bank came from income from investments made in the Treasury Bills, commissions and other operating income. The latter constituted mainly of consultancy fee, which was totally absent in the following year. Of the other two items, commission, exchange and brokerage fees have decreased by 10.13% whereas income from investment increased by 9.61%. In the following, there is a common sized income statement shown: Citibank, N.A. Bangladesh Branch Common Sized Income Statement 31-Dec-05 31-Dec-04 31-Dec-03 Average Net Interest Income Income from Investment Commission, exchange and brokerage Other operating income Total Operating Income

11% 56% 0% 100%

10% 62% 0% 100%

16% 55% 0% 100%

12% 58% 0% 100%

Salaries and Allowances

12%

12%

13%

12%

Rent, taxes, insurance, lighting, etc.

Legal Expenses Postage Stamp, telegram and telephone Auditors Fee Printing, stationery and advertisement Chief Executive's Salary Repair, Maintenance and Depreciation Other Expenses Total Operating Expenses Profit before provision

3% 0% 2% 0% 2% 2% 1% 7% 27% 73%

2% 0% 2% 0% 2% 2% 4% 8% 31% 69%

1% 0% 2% 0% 2% 2% 3% 6% 29% 71%

2% 0% 2% 0% 2% 2% 3% 7% 29% 71%

Provision for Loans and Advances Profit before tax Provision for tax Profit after tax Appropriations Retained earnings

2% 75% 34% 41% 23% 52%

4% 65% 24% 41% -1% 40%

6% 65% 33% 32% 0% 32%

4% 68% 30% 38% 7% 41%

Table 3.5: Common Size Income Statements) 2003-2005) Source: Audited Financial Statements of Citibank, N. A. 20032005 The

operating

expenses of the bank decreased by 4%; it had been 31% in 2004 and 27% in 2005 of the total income although; there has been an increase in the absolute value by 14.6%.

A provision for loans and advances was deducted from the operating profit of the bank despite the bank’s stringent credit policies and having no classified loans. The PBT of the bank has increased by 5.62% and the Net Profit increased by 0.4%.

Ratio Analysis Citibank, N.A. Bangladesh Branch Ratios 31-Dec-05 31-Dec-04 Growth Profitability Measures 1 2 3 4

ROA ROE Net Profit Margin Asset Utilization

3.49% 24.80% 41.00% 10.85%

2.14% 19.07% 40.36% 10.52%

63.08% 30.05% 1.59% 3.14%

5 6 7 8 9

Equity Multiplier Net Interest Margin Net Operating Margin Non-interest Margin Earnings Spread Measuring Risk

7.09 2.85% 6.23% 3.38% 4.72%

7.9 1.92% 4.79% 2.87% 2.87%

-10.25% 48.44% 30.06% 17.77% 64.46%

Credit Risk 10 Nonperforming loans to total assets 11 Net Charged off to total loans 12 Annual Provision for loan loss to Total Loan 0.44% 0.31% 13 Allowance for loan loss to Total Loans 14 Total Loans to Total Deposits 90.81% 15 Provision (as a % of Total Loans) 0.31% Liquidity Risk

--0.50% -0.74% 76.46% 0.74%

-11.29% 141.59% 18.77% -58.41%

16 Total Loans and Adv. to Total Assets

60.08%

58.85%

2.09%

17 Cash and Balance to Total Assets

14.47%

21.34%

-32.21%

18 Cash Assets and Govt. Investment to Total Assets

41.05%

34.23%

19.92%

19 Net Worth to Total Assets

14.09%

12.65%

11.36%

20 Purchased Funds to Total Liabilities

12.90%

5.08%

153.96%

21 Equity Capital to Risk Assets of bank

23.45%

19.80%

18.43%

Solvency (or Default) Risk

Table 3.6: Ratios of 2003-2005) Source: Audited Financial Statements Profitability Measures of Citibank, N. A. 2003-2005 ROE of Citibank The ROE of the bank was 24.80% in 2005 compared to 19.07% in 2004. The increase in profitability is because of a growth in net income compared to that in equity. The different component ratios are:

Net Profit Margin The net operating profit margin of the bank increased from 4.79% to 6.23% from 2004 to 2005. The main contributor to this increase was income from commission, exchange & brokerage which was 55.72% of total operating income in 2005 which indicates a growth of 34.2% over the same in 2004. The interest income also rose by 14% in the year. The increase in the margin also shows the bank’s expertise in cost control; regarding which, it is seen that there is an operating expense decrease of 4% in the last year. All the other costs had increased in real terms over the years, but despite that, when seen as a percentage of total revenue, total operating expenses in 2005 was only 27% compared to 31% in the previous year. This margin also reflects the bank’s effective pricing policy.

Asset Utilization The degree of asset utilization has gone up from 10.52% to 10.85% over the period; the reason is the new regulatory policy of maintaining a balance of US$10 million with Bangladesh Bank. However, the liquid asset of the bank has gone down except for the balance with Bangladesh Bank which has increased by 43%. Cash and balance with other Financial Institution (FI) is made up 23% of total assets of the bank and thus the utilization has increased.

Equity Multiplier The financial leverage of the bank has marginally decreased from 7.90 to 7.09 from 2004 to 2005 and it shows that the bank’s asset base has not far exceeded the increase in the equity capital, the growth of which came mainly from the addition from the profit & loss account of the bank.

ROA The ROA of Citibank, as can be seen, is much lower than the ROE: 3.49% in 2005 and 2.14% in 2004. The reason obviously is the much higher assets base of the bank compared to equity capital. The component ratios of the ROA are: Net Interest Margin

This ratio measures the spread between the interest income and expense of the bank and it has increased from 1.92% in 2004 to 2.85% in 2005.

Non-interest Margin This measures the non-interest income and expense spread as a percentage of total assets. It has increased from 2.87% to 3.38%. Although the non-interest income has increased by 17.77%, the operating expense has also gone down by 12.51%; the net of the two as a percentage of total assets has increased because of 5.60% increase in Total Assets of the bank.

The total assets of the bank has increased because of a higher business volume through loans and advances, higher cash balance maintained with Bangladesh Bank and also because of higher investment in Government securities.

Earnings Spread The earnings spread of the bank was 4.72% in 2005 and 2.87% in 2004. It measures the difference in interest income to interest earning asset ratio and interest expense to interest bearing liabilities, which basically measures profitability from earnings assets and “direct” expense owing to the deposits mainly. The increase in spread shows the effectiveness borrowing and lending of money.

Ratios measuring Credit Risk  Ratio of Non-performing Assets to Total Loans For Citibank N.A. in Bangladesh, the credit policy is much stringent and there are lots of compliance issues that must be adhered to; there has been no classification of loans in the two years of analysis of the bank.  Ratio of Provision for Loan Losses to Total Loans This figure has been seen to be 1% of total loans in 2004 and almost 1% in 2005 since the Bangladesh Bank requirement is to maintain a provision for unforeseen loan losses. The difference in balance of the provision that results from increase in loan amount is subtracted from the income to come to the profit before tax figure.

Liquidity Measures Net Loans to Total Assets Net Loans (total loans minus the provision for loan loss) to total assets were 60.08% in 2005 and 58.85% in 2004. Although the loan amount has increased by 3% from 2004 to 2005 and despite there being no classified loans, the ratio increased because of the higher increase in total assets and a large part of it went in balance (with Bangladesh Bank) decreases as well. This shows the bank’s risky asset portfolio is moderate; the bank has moderate liquidity.

Cash & Balance With Other FIs to Total Assets Total cash and balance with other banks of Citibank as a percentage of total assets was 14.47% in 2005, a decrease from 21% in 2004. This has improved both the bank’s liquidity position and bank’s earning capability. In the case of this bank, the ratio has been fluctuating not because of excess or lack of investment opportunity but because Citibank prefers to be conservative.

Solvency (or Default) Risk Measures Ratio of Total Equity Capital to Total Assets Capital account of a bank absorbs losses if the bank happens to have large bad loans in the portfolio. Such a ratio of equity capital to total asset sees how much cushion the depositors have against the assets of a bank.

For this bank, this ratio is has increased from 12.65% in 2004 to 14.09% in 2005, owing to a increase in equity capital (14%) as that of total assets. Although the “cushion” has become decreased, the bank’s advantage is in being a foreign bank with an unmarred reputation; the parent, Citigroup is there to make up for any loss that may incur if the worst happens.

Ratio of Equity Capital to Risk Assets This ratio delves much deeper by looking at the equity capital of the bank compared to only its risk assets: it was 18.5% in 2005 and 19.80% in 2004.

3.1.9 Composition of Market Share of Foreign Banks in Bangladesh The current market shares of Foreign Banks are as follows – Banks SCB & SCG Amex C.A.I. HSBC Citibank, N.A. Others (Commercial Bank of Ceylon

Market Share 60% 8% 8% 10% 4% 10%

Woori Bank, Shamil Bank, Mashrek Bank, State Bank of India etc.)

Table 3.7: Market Shares of Foreign Banks in Bangladesh Source: Audited Financial Statements of Citibank, N. A. 2003-2005

Citibank, N. A. has the brand image of World’s No. 1 Bank. But in Bangladesh, it is walking slowly but steadily. In this year, Citibank, N. A. has opened the new Gulshan Branch and is steadily going towards the consumer banking from where most share of the Citigroup earning comes. In terms of market penetration & aggressiveness Citibank N. A. Bangladesh has not yet done anything titled but in terms of gaining efficiency & preparing strong foundation, they are miles ahead of the other foreign banks.

Part - 2 Part 2: Chapter 1 1. Project Specifications 1.1 Background Banking system occupies an important place in a nation’s economy because of its intermediary role; it ensures allocation and relocation of resources and keeps up the momentum of economic activities. A banking institution is indispensable in a modern society. It plays a pivotal role in the economic development of a country and forms the core at the money market in any country. In a developing country like Bangladesh the banking system as a whole has a vital role to play in the progress of the economic development. Citibank N.A is a 100% owned branch office of Citibank, New York. It had its presence in Bangladesh from 1987, with the opening of a representative office. Fullfledged operation of Citibank started on June 24, 1995. Since then they have opened two more branches across the country. It has it major presence and a well-known name across the world. Their reputation for innovation and quality enables them to stay one step ahead of the competition. Citibank N.A. has been dealing with mainly corporate banking and investment banking in Bangladesh previously. After that Citibank N.A. has expanded its operations to better serve personal banking needs of individual customer’s mainly corporate executives through its state-of-the-art Gulshan Branch in Dhaka, which was opened in 2003. However, in 2006 they have decided to narrow down their consumer banking services to their corporate clients only in order to maintain their pay roll accounts. Still today Citibank N.A. has some personal accounts of local individuals.

Nevertheless they are not intending to close their individual client’s accounts (those were not related to their corporate clients) that were opened earlier. It discloses that

they were not totally unwilling to continue their consumer banking services and still examining theist feasibility. Many strong competitors like Standard Chartered bank and Hong Kong and Shanghai Banking Corporation (HSBC) Limited in Bangladesh has been enjoying a huge success in their consumer banking operations. Hence, looking at the huge potential of consumer banking services, there is still a possibility that in the long run Citibank N.A. will start full-fledged consumer banking in Bangladesh.

Therefore, my chosen internship project topic was “Evaluating Consumer Banking Services of Citibank N.A. in Bangladesh compared to major competitors.”

1.2 Objective As consumer, banking is quite a new phenomenon for Citibank N.A. and it is operating on a limited customer segment, naturally, it would take time to build customer awareness as well as satisfaction. On the other hand, as many strong competitors were already in play in the market for quite a long time, consumer banking services offered by Citibank N.A. still needs to be upgraded based on customer demand, even though the operation is limited to its corporate clients mainly. According to the current statistics, relatively small number of consumer banking clients in comparison to huge corporate banking clients is the primary reason for this assumption. Therefore, Citibank N.A. may need to incorporate some new strategies as well as products to overcome that problem.

As a result it is my firm belief that my research would bring huge new arena to look at by Citibank N.A. in order to expand its consumer banking services to its full length.

Throughout my internship period hence I devoted myself to evaluate consumer banking services of Citibank N.A. The goals of the research were as follows: •

To conduct consumer designation study.

•

To identify current situation of consumer banking in Bangladesh.

•

To determine the current positioning, target market, strategies and diverse array of products and services offered by Citibank N.A. to its consumer banking clients.

•

To identify both the similarities and dissimilarities of Citibank N.A.’s current consumer banking offers and propositions with other vital strong competitors namely Standard Chartered bank and Hong Kong and Shanghai Banking Corporation (HSBC) Limited.

•

To evaluate customer satisfaction through carrying out a survey of their present clients.

•

To find out strength, weakness, opportunities and threats of Citibank N.A.’s present consumer banking services.

•

To recommend suitable positioning, strategies and products that can be adopted

by Citibank N.A. to overcome their conical view of consumer banking potential in Bangladesh.

The ultimate aimed results of the research was to identify whether Citibank N.A. would get any advantage by expanding its consumer banking services beyond its corporate clients through the adaptation and implementation of some new and suitable positioning, strategies and products.

1.3 Significance of the Study Implementation of my research was expected to bring following significance to the Citibank N.A.’s operation.

•

Consumer designation study and current consumer banking scenario in Bangladesh would either encourage or discourage Citibank N.A. to go for expansion of its consumer banking services depending on the outcome of research.

•

As evaluation of customer satisfaction would discover a true scenario of the effectiveness of its consumer banking services offered by Citibank N.A., it would definitely help it to determine on its future proposition regarding consumer banking services.

•

As a result, it can be easily detected whether any future potential lies in the expansion of its consumer banking services.

•

Alternatively it would suggest whether it should discontinue this service, and run their banking operation only based on other areas like corporate and investment banking that have already got huge acceptance in Bangladesh.

1.4 Scope The scope of the report has been confined to the few selected foreign commercial banks, namely Citibank, N.A., Standard Chartered Bank and Hong Kong and Shanghai

Bank Limited (HSBC). In particular, the study has dealt with three international banks.

However, for better understanding purpose of competitive positioning of Citibank, N.A. in some places of the report information of some other banks’, including local ones, have been incorporated.

1.5 Defining the problem For conducting any research, an appropriate problem definition is must. In Citibank, N.A.’s current situation and problem, I have undertaken interview with Citibank, N.A.’s personnel, secondary data analysis, and qualitative research including depth interview.

1.6 Problem Definition “Due to increasing competition in the consumer banking sector, Citibank, N.A. is falling behind because of inadequate consumer banking services.”

1.7 Developing an approach to the problem Developing an approach to the problem involved finding objective evidence that is relevant findings from secondary sources (Empirical Findings). It also involved analytical mode - variables and interrelationships. According to my understanding for my first hypotheses market share was the dependent variable, and full-fledge consumer-banking service was the independent variable. My first hypothesis was intended to identify consumer-banking potential in Bangladesh. For my second hypotheses, I had taken Customer satisfaction as the dependent variable and service quality, service loyalty, switching cost, and customer perceived value as the independent variables. My second hypothesis was anticipated to evaluate present condition of consumer banking services of Citibank, N.A. based on customer satisfaction level. Research Questions, and hypotheses derived from the research question would ultimately lead me to specification of the information needed.

1.8 Hypotheses For this research, I have considered the following hypotheses.

1. Null Hypothesis: “Having full-fledge consumer banking services in Bangladesh does not enable Citibank, N.A.’s Competitor to have high market share.”

Alternative Hypothesis: “Having full-fledge consumer banking services in Bangladesh does enable Citibank, N.A.’s Competitor to have high market share.”

2. Null Hypothesis: “Customers of Citibank, N.A. are not highly satisfied with its consumer banking services.”

Alternative Hypothesis: “Customers of Citibank, N.A. are highly satisfied with its consumer banking services.”

Supporting Hypotheses: The hypotheses derived from research questions are as follows: i) Null Hypothesis: There is not any significant relationship between Service Quality and Customer Satisfaction in context of Citibank, N.A. Alternative Hypothesis: There is a significant relationship between Service Quality and Customer Satisfaction in context of Citibank, N.A. ii) Null Hypothesis: There is not any significant relationship between Service Loyalty and Customer Satisfaction in context of Citibank, N.A. Alternative Hypothesis: There is a significant relationship between Service Loyalty and Customer Satisfaction in context of Citibank, N.A. iii) Null Hypothesis: There is not any significant relationship between Switching Cost and Customer Satisfaction in context of Citibank, N.A. Alternative Hypothesis: There is a significant relationship between Switching Cost and Customer Satisfaction in context of Citibank, N.A. iv) Null Hypothesis: There is not any significant relationship between Customer Perceived Value and Customer Satisfaction in context of Citibank, N.A. Alternative Hypothesis: There is a significant relationship between Customer Perceived Value and Customer Satisfaction in context of Citibank, N.A. 1.9 Research Design The Type of Research was descriptive and exploratory. Both quantitative and qualitative methods were used. With the given resource and time constraints, I decided to use an exploratory research and descriptive research. For my research purpose exploratory research included qualitative research as well as secondary data analysis. Moreover, descriptive research included survey, collecting, and analyzing secondary data.

1.10 Methodology Data collection for the research employed two sources – primary and secondary.

1.10.1 Primary data collection: A survey was carried out to evaluate the consumer banking services offered by Citibank, N.A. For collecting primary data I conducted three in-depth interviews of about one hour each on a one-to-one basis with three personnel of the bank regarding their activities, as part of my qualitative analysis. Besides that I talked with my respective faculty to solve my problems. I also discussed with seniors of my current organization to get ideas and information. Primary information collection of SCB and HSBC also involved interviews.

Depth interviews with the following personnel in the organization were conducted: 1. Ms. Rizwana Ameer

Implementation Manager & Relationship Manager of Accommodation Account,

2. Mr. Fayaz Mowla

Department: Global Transactional Services (GTS) Senior Manager & Head of CitiService

2. Ms. Safira Shahreen Ahmed

Department: Global Transactional Services (GTS) Senior Officer, CitiService

Department: Global Transactional Services (GTS) Personal interviews with the following personnel in the organization were conducted: 1. Mr. Shahed, Abdullah

Assistant

Officer,

Personal

2. Mr. Musharraf, Mir Mustafa

Department, HSBC Assistant Officer,

Personal

3. Ms. Shirin Wadud

Department, HSBC Customer Relationship Officer, Consumer Banking

4. Nafis Ahmed

Department, Standard Chartered Bank Manager, Credit Risk Control Department, Standard Chartered Bank

Financial Financial

Service Credit

1.10.2 Secondary data collection It was consisted of the followings: 

Articles and publications on the subject area of interest (Publications of Bangladesh Bank like “Bank Porikroma” and “Economic Trend”)



Relevant text books and references



Materials provided by the contacts



Consultation of pertinent case studies



Annual Report, and Brochures



Websites

In completing the report, an analysis of the financial performance of Citibank N.A. has been conducted over the last three years (2003-2005). The analysis has been carried out by studying the Asset Portfolio, Liability Portfolio, Balance Sheet, and Income Statement and looking at some key ratios that are important to gauge Citibank’s performance.

Next, some general and specific qualitative criteria have been used to report the consumer banking operations of the three banks. The general criteria used reflect basic information about the company and the specific criteria used capture the details of their consumer banking operations. Both are used as a basis for analysis. The criteria are as follows: General Criteria  Company Background



Specific Criteria Consumer Banking Operation



Products and Services 1.10.3 Limitations Limitations in completing the report include:



To begin with, non disclosure of classified information by the banks that were studied



Financials for the year ended 31 December 2005 were used since annual reports for the financial year ended 2006 had not been published at the time of writing the report



It was time consuming and spontaneous response from the respondents for the questionnaires developed were hard to find.



Data collection was confined to only two branches of Dhaka city because short time span of the research.

1.10.4 Activity & Budget Schedule The activity and budget schedules for completion of this term paper have been tabulated below: Serial 1 2 3 4 5 6 7 8 10

Activity Brainstorming on viable research topics Selecting topic, preparing & approving proposal Contacting & arranging appointments Gathering information from the various field trips Sifting & filtering of information collected Compiling information in a report format Analyzing and interpreting findings Proof reading, editing & referencing Printing & binding Report submission Table .1: Activity Schedule

During the course of this

research,

the

faculty

advisor and my supervisor in Citibank, N.A. has been consulted to report the progress of and obtain feedback regarding the internship project.

1.10.5 Ethics The ethical guidelines in completing this report include transparency and honesty in carrying out the study, timely data collection and compilation to finish the work within

the deadline and consultation and feed back with the faculty advisor and internship supervisor as and when required.

In conducting the work, misrepresentation or disclosure of any confidential data has been strictly prohibited. Appropriate references have been included for materials obtained from secondary sources.

Lastly, in writing the paper, caution has been exercised to avoid plagiarism of any written material or otherwise.

1.10.6 Report Preview The organization of the report is as follows: there are three major segments namely, the Organization Segment, the Project Segment and the Appendix.

The organization segment consists of a brief introduction giving details of the internship program, brief introductory notes on the company’s operations and businesses and lastly an analysis of the company’s financial performance over the last three years (2003-2005).

The first chapter in the project segment starts with a background to the internship project, objectives, scope, methodology, limitations, activity and budget schedule and ethics. In the subsequent chapters, the report proper is compiled and presented.

The second chapter provides details of consumer banking potential in Bangladesh.

Growth prospects of the consumer banking in Bangladesh have been discussed in an attempt to project the total consumer-banking scenario. Third chapter details consumerbanking services offered by Standard Chartered Bank (SCB) and HongKong and Shanghai Banking Corporation Limited (HSBC), and Citibank, N.A. In the chapter that follows, the consumer banking services have been discussed using both the general as well as the specific criteria.

Fourth chapter described the current scenario of consumer banking services of Citibank, N.A. by presenting competitive positioning of Citibank, N.A. In the next chapter methodology, limitations, results supported by interpretation and graphical presentation of the survey are illustrated.

Next, as part of the analysis, a SWOT analysis is done for consumer banking services at Citibank N.A., where mainly the bottlenecks have been identified and some recommendations put forth. An overall conclusion was drawn to wrap-up the report.

Bibliography was given following the conclusion.

In the appendix, questionnaires, reference table for formula used and selected data generated through SPSS were presented.

Part 2: Chapter 2 2. Evaluating Consumer Banking Potential in Bangladesh 2.1 Consumer Banking Potential from Country Perspective Bangladesh's progress is a unique example of economic resilience and stable growth in the face of many challenges, political and natural. The country's GDP growth has risen by roughly 1 percentage point on an average every decade from 3 percent a year in the 1970s to 5 percent annually in the 1990s supported by steady rise in the flow of remittances from workers abroad and the garments sector. In the year 2006 which is reported as 6.89% by Bangladesh Bureau of Statistics. Over the years, Bangladesh could reduce inflation, preserve exchange rate stable and kept a low external debt servicing ratio and a low debt overhang. It is impressive that the country has achieved more social progress than most countries with similar per capita income. Besides, poverty declined significantly in the rural areas.

The country's achievement in human development is largely due to the environment where NGOs and community-based organizations were able to expand and reach the poor. The micro-finance institutions have not only provided informal loans to rural households but also raised social awareness in general and enhanced the decision making role of women.

Recently, there is a raised liquidity issues with foreign currency leading to devaluation of local currency, which seem to be temporary. The foreign reserve scenario is stable. The banking sector, particularly nationalized commercial banks, has been one of the weakest segments in the country's development. Although infrastructure development, such as power, ports, and telecommunications has been made a priority, implementation can only be expedited through adequate policy reforms. Corporate governance and capital markets require more focus to generate local financing for large infrastructure projects.

In the changing global economic scenario, initiatives taken by the policy makers to manage key challenges, the recent increase in oil prices for instance, are encouraging. In addition, the FDI marshalling efforts by the government are also noteworthy. The recent investment commitment by Indian Tata Group is an indicator of the same. However, the encouraging growth of foreign banks provides a clear indication of the reliance of foreign country’s upon Bangladesh economy.

2.2 Evaluating Consumer Proposition for Bangladesh Designation Study Determining consumer banking potential in Bangladesh requires an in-depth dissection of the countries geographic, and economic profiles. However, due to time constraints only a brief summary of the findings has been presented. A concise description of the countries financial sectors have also been appeared in this respect. All the presented data were taken from various financial and economical statistical year books.

(All data is of statistical year end of 2005 mentioned otherwise)

2.2.1 Bangladesh- A Snapshot Key Statistics  148 M sq km land mass  133 MM population Income Estimates  Per capita GDP - $ 445  Per Capita National Income- $ 470  GDP growth rate – 5.4 % (Year 2005 ) and 6.89% (Year 2006) Key Cities and population  Dhaka – 12 MM  Chittagong – 6 MM  Khulna – 3 MM  Rajshahi – 2.5 MM  Sylhet – 2. 5 MM  Currency -- Taka (BDT) $1=BDT 68 Income Distribution-Urban Households  High degree of urban wealth is concentrated in Dhaka/ Chittagong 

1.5 MM Income Tax payers, increasing by 200 M per annum.



72% of Urban population in Dhaka / Chittagong



Underreporting of Income widely prevalent

Dhaka/ Chittagong market status  9 MM Mobile phone users 

700 M households with CTV’s, and yearly sales 130 M CTV's



65 Internet service providers



600 M personal computers (150M per annum), 500 M access the internet.



4.5 MM daily newspaper readership across English/ Bengali papers



4 MM cable viewers

High degree of urban wealth is concentrated in Dhaka / Chittagong.

85%

75~85% 65~70% 65~70% 65~70% Official Income Level Tk. 121.9 M pm avg.

Upper Class 5% Tk. 34.7 M pm avg.

Upper Middle Class 5% Tk. 22.9 M pm avg.

Middle Class 20% Tk. 14.0 M pm avg.

Lower Middle Class 20% Tk. 7.2 M pm avg.

Lower Class 50% 325 M 325 M 1300 M 1300 M 3250 M

Equity Market Snapshot

SECTORAL BREAKDOWN Others 10% Fuel & Pow er 4% Insurance 5%

Banks 34%

Engineering 6% Textiles 6% Food & Allied 10% Cement 11%

Pharmaceuticals 14%

The above graph shows that banking sector dominates the market followed by pharmaceuticals, cement, and food and allied.

There are two stock exchanges in Bangladesh: I. Dhaka Stock Exchange – DSE (the country’s major bourse) II. Chittagong Stock Exchange – CSE (the second bourse, however turnover value on CSE is less than 20% of DSE’s) Facts on DSE: Total number of listed securities

268

Total number of companies

249

Total number of mutual funds

11

Total

number

of

listed 8

debentures P/E ratio

8.59%

Dividend Yield

6.59%

Market Capitalization

US$ 2.1MMM

Average daily turnover

US$ 6.3 MM

Table 2.1 : Facts on DSE Target Market Sizing Total Population Average Household Size Total House hold # Total Urban Household # (23.4%) Population

No. of towns/cities

133 MM 4.8 27.8 MM 6.5 MM No. of households

2 MM + Towns < 2 MM Rural

6 12 Rest of Country

5.3 MM 2.8 MM 15.9 MM

Urban

Distribution

#

7% 12% 12% 25% 44%

(M) 387 616 612 1328 2358

Household Sec A Sec B Sec C Sec D Sec E

of

Household

Table 2.2, 2.3, 2.4: Facts on DSE Source: Sirius National Research

Target Market Sizing

Business

Target Market

Target

Opportunity Liabilities- top end Opportunity Personal Loan/

Top 2% Household of top 2 cities Salaried Employees Employees with more than Tk. 20 M

Mortgage Card

p.m. (TTLC/ GRB) Top 2 Cities 20-60 age group

Customers No. 72 350 46 600

population. Middle class- salaried/ Consumer Finance

self-employed.

Top 2 Cities Household with > Tk. 60

1242

M income p.a.

Table 2.5: Target market Sizing Target

Market

Bangladeshis Total Estimated NRBs 4 MM No. of persons migrating per year 235 MM Profile -Majority workers are unskilled/ semiskilled labour Table 2.6: Target market Sizing â&#x20AC;&#x201C; Non Resident Bangladeshi

Sizing:

Non-Resident

Market Sizing- Liabilities Tk Crore

CA Sep

Others Pension

-05

s

Foreign bank Private

SA

FCY STD

Tide

Total

149

sector - Sept 05 Manufacturing Commerce/trade/impo

929 139

9 2

917 813 73 89

1652 146

192 24

6002 473

rt export Others (NGO's) Professionals/Self

235 122

42 24

61 64

69 118

137 288

131 7

675 623

Employed Wage/Salary earners Foreign/ Individuals Other local Individuals

222 21 48 142

978 213 6 234

205 48 341 125

83 8 411 35

588 141 168 184

9 1 19 1

2085 432 993 721

Private

Private

365

680

sector - Sept 05 Agriculture Manufacturing Commerce/trade/impo

7 14 131 202

7 119 65 132

315 5 1 0 39 51

9668 37 311

2821 15 40

.5 186 637

rt export

4

4

110 508

2292 1220.

765

7023

Others (NGO's) Professionals/Self

85

88 193

78

196

5

103

1771

Employed

418

1 115

23

122

2190

486

5170

Wage/Salary earners Foreign Individuals

146 28

7 43 208

14 33

50 27

945 59.5

657 7

2969 197.5

Other local Individuals 811 0 17 241 2613 748 Exclude deposits in public sector - Source: Bangladesh Bank Statistics

6510

bank

Consumer Book with Foreign bank: Tk 4200 Cr SCB Tk. 2200 Cr, HSBC Tk. 350-400 Cr

Table 2.7: Target market Sizing â&#x20AC;&#x201C; Liabilities

119

24463

Consumer Book with Private bank: Tk 14800 Cr of which Tk. 10600 Cr in Dhaka and Chittagong

2005 Estimated Remittances by country Country Saudi Arabia

Tk. Cr. 6615

UAE

1026

UK

405

Kuwait

1755

US

1620

Qatar

459

Oman

594

Bahrain

311

Malaysia

351

Others

364

Total

13500

Table 2.8: Estimated Remittances by country

Competitors- At a Glance Key Competitors Competitor Name Standard Chartered Bank (Foreign)

Key Factors Distribution Channels

Comments Branch, Direct Sales, Account Officer

Pricing Position Service Reputation Products Offered

Low Price High Credit Card, Consumer Loan, Car Loan, Small Business Loan, Mortgage, Debit

HSBC (Foreign)

Strengths Weaknesses Opportunities

Card Competitive and Customized Slow Approval Process Benefit from Category Growth

Distribution Channels Pricing Position Service Reputation Products Offered Strengths

Branch, Direct Sales, Account Officer Low Price High Credit Card, Consumer Loan, Car Loan Fast Approval Process

American Express Bank (Foreign)

Islami bank

Weaknesses Opportunities

Not enough product flexibility Channel Expansion

Distribution Channels

Branch, Account Officer

Pricing Position Service Reputation Products Offered Strengths Weaknesses Opportunities

Low Price High Consumer Loan Competitive and Attractive Single Product Product Offering, Expansion

Distribution Channels

Branch

Pricing Position Service Reputation Products Offered

High Price Good Consumer

Strengths Weaknesses Opportunities

Business Loan Extensive Branch Network Inconvenient Application Process Branding and Customization

Distribution Channels Pricing Position Service Reputation Products Offered

Branch High Price Good Credit Card, Consumer Loan, Car Loan,

Strengths Weaknesses Opportunities

Small Business Loan Branch Network Inconvenient Application Process Customization

Bangladesh (Local)

Prime Bank (Local)

Loan,

Car

Loan,

Small

Table 2.9: Key Competitors of Citibank, N.A. Competitor Overview â&#x20AC;&#x201C;Foreign

Banks

Number of Branches Number of ATMâ&#x20AC;&#x2122;s Liability CIF Liability book Size Assets CIF Asset Book Size % Secured Cards CIF

SCB 18 25 195 M Tk. 2870 Cr 40 M Tk. 1580 Cr. 70% 130 M

HSBC 5 10 55 M Tk. 800 Cr 13 M Tk. 350 Cr. 75% 500 M

ANR

Tk. 100 Cr.

Tk. 4.5 MM

Table 2.10: Competitors overview – Foreign Banks Lifestyle Development Auto  13,000 cars imported and sold per annum, of which an increasing portion (currently 25%) is of new cars, 70% cars are purchased by private individuals/ institutions, no manufacturers, two assemblers. 

Most banks disburse auto loans as part of PL.



SCB, Prime bank, HSBC, Pubali Bank, Islami Bank, Dhaka Bank ase the major players.

Taxi Cabs  20,000 taxi cabs are available in Dhaka and Chittagong (service introduced only in 1998).

Consumer Durables  Annual Sales- CTV- 250M, Refrigerators- 200 M, Mobiles- 800 M, Air Conditioners- 40M, Washing Machines- 25 M, PCs- 150 M. 

Industry size 1,200Crore of which 500Crore are through hire purchase program of the vendors who are generally not interested to be involved in the financing and collection process.



Organized penetration by the financial industry- low

Consumer Durables  Annual Sales- CTV- 250M, Refrigerators- 200 M, Mobiles- 800 M, Air Conditioners- 40M, Washing Machines- 25 M, PCs- 150 M. 

Industry size 1,200Crore of which 500Crore are through hire purchase program of the vendors who are generally not interested to be involved in the financing and collection process.

 Leisure

Organized penetration by the financial industry- low



Number of full-fledged theme parks has gone up to 3 from 1 in Dhaka two more in smaller towns.



US$ 65 MM was spent in 2002 holidayers’ flying abroad.



Dhaka’s airport has been tripled in physical capacity.



Chittagong airport is rebuilt and along with Sylhet airport, functioning as regular and direct international destinations



The other 8 domestic airports are increasingly having heavier traffic.

Life Style  4 more 5-star hotels coming up (Radisson, Westin, Holiday Inn, Intercontinental) taking the tally to 6 including Sheraton and Pan Pacific. 

Number of exclusive and high end clubs in Dhaka has gone up to 8 from 3 in last 4 years.



7000 apartments and 6000 plots are sold after development every year within organized real estate sector with an estimated turnover of BDT 75 MMM.



20 plus top end Shopping Malls in past 4 years in Dhaka and Chittagong.



Top 325 M households’ average disposable income BDT 122 M per annum.

Medicare  US$ 39 MM was spent in 2002 for health related travel abroad. 

Domestic private medical and allied service sector is booming.



Appolo Hospital has already opened the largest (333 bed) and most advanced private hospital in 2004.



Bumrungrad and Escot India are also developing joint ventures.

Education  4000 students every year enroll into average BDT 400 M programs at private universities, Telecom  6 cell phones operators (GrameenPhone, Citycell, Aktel, Bangla Link, and Teletalk including upcoming Warid) , 9 MM mobile phone users, 850 M land line subscribers.



Market for cell phones growing at an internal rate of 90% plusper annum over the last six years.



Airtel and Reliance from India and SOE BTTB, is setting up Mobile telephony ventures.



4 private operators to start land telephony businesses soon.



Country in the process of getting connected to submarine information highway.

Mortgage  15 major developers, local players include HBFC, Delta Brac Housing, IDLC, National Housing Finance, Islami Bank, Agrani Bank, Rupali Bank. 

Buying for self occupation; preferred borrowers are service holders/ independent professionals.

Personal Loans  HSBC, SCB- mostly secured lending portfolio. However, the secured niche is reducing as central bank is not allowing loan against Govt. savings certificates.

Credit Cards  200 M credit cards, 4,000 merchants, 1,500 connected online 

SCB (130 M), P (15 M), Vanik (13 M)



SCB ANR @ Tk 8 M per card, on average

Recent Entry of Franchises Mercedes Benz

Volvo

Nissan (which is also

BMW Alpha Romeo

Setting up assembly Plant- 800 cars per annum) Opel

Bosch

Sony-Ericsson

Pizza Hut

Baskin 31 Robbins

Movenpick

Financial Industry Snapshot Banks Nationalized Banks Specialized Banks Local Private Banks Local Islamic Banks

4 (3396 branches) 5 (1308 branches) 25(1194 branches) 4 (229 branches)

Foreign banks Total Deposits Total Advances

10 (32 branches) US $ 18 MMM US $ 15 MMM

Insurance Companies  General- Revenue 7.5 MMM Life- BDT 14 MMM, 1.4 MM policy holders 

Major Players- ALICO of AIG (BDT 3.6 MMM, 350M policy holders)

NBFIs  28 companies with BDT 28.2 MMM assets.

Consumer Focus:  A total of 7 local private banks have migrated to Flexcube or similar platforms for consumer banking) Dhaka, Dutch Bangla, the City, Eastern, Bank Asia, NCC, and One Bank Ltd.) 

Two shared ATM networks (Ecash and QCash) have gained strong foothold.



A new Joint venture, BEPL is being set up to offer POS (point of sales) payment solution to the mass. Sole player till date Readycash already has a fairly large network.

Key Bank Financials 2005

Unit

Figures Revenue Expenditure EBIT ROE Ratio Head Count (HC) Revenue/ HC

BDT MMM BDT MMM BDT MMM Ratio MMM BDT MM/ HC

All

Nationalised

Local

Foreign

Banks

Banks

Private

Banks

36.7 34.2 2.5 1.1 60.2 0.6

Banks 50.2 39.3 10.9 1.3 28.3 1.8

10.6 5.7 4.9 1.9 1.3 8.1

97.5 79.2 18.3 1.2 89.8 1.1

Table 2.11: Key Bank Financials

2.2.2 Bangladesh Consumer Designation Study – Key Findings: Data mentioned in chapter-2 actually clearly reflects that enormous potential of consumer banking exists in Bangladesh. Opportunities to grab untapped target market

are still there for further growth in consumer banking. Some important findings are presented below: 

Urban wealth concentration in two cities- Dhaka and Chittagong (85%)



Financial markets are underdeveloped (absence of secondary debt market and actively traded securities)



Average currency depreciation 6%, low inflation. software bias on interest rates



Large number of local private banks, amongst foreign banks - SCB is large - Small Auto market - primarily re-conditioned imports



Underdeveloped Credit cards market - SCB is the leader with 70M CIF. Largely untested market for Consumer Loans- most banks offer secured credit



Absence of high end retail liability or organized consumer lending offering

Opportunity  Top end CitiGold / Wealth Management offering 

Mid market savings bank, and bank-at-work products



High end business banking suite of products



Consumer loans to salaried target market



Explore mass market sales finance and cards down the line

Part 2: Chapter 3 3. Consumer Banking of SCB, HSBC & Citibank, N.A. 3.1 Standard Chartered Bank 3.1.1 A Brief History of Standard Chartered Bank Standard Chartered is the world's leading emerging markets bank headquartered in London. Its businesses however, have always been overwhelmingly international. This is summary of the main events in the history of Standard Chartered and some of the organizations with which it merged.

The early years Standard Chartered is named after two banks merged in 1969. They were originally known as the Standard Bank of British South Africa and the Chartered Bank of India, Australia and China. Of the two banks, the Chartered Bank is the older having been

founded in 1853 following the grant of a Royal Charter from Queen Victoria. The moving force behind the Chartered Bank was a Scot, James Wilson, who made his fortune in London making hats. James Wilson went on to start The Economist, still one of the world's pre-eminent publications. Nine years later, in 1862, the Standard Bank was founded by a group of businessmen led by another Scot, John Paterson, who had immigrated to the Cape Province in South Africa and had become a successful merchant.

Both banks were keen to capitalize on the huge expansion of trade between Europe, Asia and Africa and to reap the handsome profits to be made from financing that trade.

The Chartered Bank opened its first branches in 1858 in Chennai and Mumbai. A branch opened in Shanghai that summer beginning Standard Chartered's unbroken presence in China. The following year the Chartered Bank opened a branch in Hong Kong and an agency was opened in Singapore. In 1861 the Singapore agency was upgraded to a branch which helped provide finance for the rapidly developing rubber and tin industries in Malaysia. In 1862 the Chartered Bank was authorized to issue bank notes in Hong Kong. Subsequently it was also authorized to issue bank notes in Singapore, a privilege it continued to exercise up until the end of the 19th Century. Over the following decades both the Standard Bank and the Chartered Bank printed bank notes in a variety of countries including China, South Africa, Zimbabwe, Malaysia and South Africa. Today Standard Chartered is still one of the three banks which prints Hong Kong's bank notes.

Expansion in Africa and Asia The Standard Bank opened for business in Port Elizabeth, South Africa, in 1863. It pursued a policy of expansion and soon amalgamated with several other banks including the Commercial Bank of Port Elizabeth, the Colesberg Bank, the British Kaffarian Bank and the Fauresmith Bank. The Standard Bank was prominent in the financing and development of the diamond fields of Kimberly in 1867 and later extended its network further north to the new town of Johannesburg when gold was discovered there in 1885. Over time, half the output of the second largest goldmine in the world passed through the Standard Bank on its way to London. In 1892 the Standard Bank opened for business in Zimbabwe, and expanded into Mozambique in 1894, Botswana in 1897, Malawi in 1901, Zambia in 1906, Kenya, Zanzibar and the Democratic Republic of Congo (D.R.C.), in 1911 and Uganda in 1912. Of these new businesses, Botswana, Zanzibar and the D.R.C. proved the most difficult and the branches soon closed. A branch in Botswana

opened again in 1934 but lasted for only a year and it was not until 1950 that the Bank re-opened for business in Botswana. In Asia the Chartered Bank expanded opening offices in, what is now, Myanmar in 1862, Pakistan and Indonesia in 1863, the Philippines in 1872, Malaysia in 1875, Japan in 1880 and Thailand in 1894. Some 34 years after the Chartered Bank appointed an agent in Sri Lanka it opened a branch in 1892 to take advantage of business from the tea and rubber industries. During 1904 a branch opened in Vietnam. Both the Chartered and the Standard Bank opened offices in New York and Hamburg in the early 1900s. The Chartered Bank gaining the first branch license to be issued to a foreign bank in New York.

The impact of war Even the First World War offered opportunities for expansion when the Standard Bank set up a branch in Tanzania shortly after British troops occupied the formerly German administered Dar es Salaam in September 1916. Both banks survived the inter-war years but the worldâ&#x20AC;&#x2122;s trade slump led to the closure of operations in the Canary Islands, Liberia, the Netherlands, and Equatorial Guinea. Disaster struck the Chartered Bank's office in Yokohama, Japan, when it was destroyed by an earthquake in 1923 killing a number of staffs. The Chartered Bank was particularly affected by the Second World War when numerous Asian countries were occupied by Japan.

The post war years After the Second World War many countries in Asia and Africa gained their independence. This led to local incorporation in some countries, particularly in Africa.

Other operations such as those in Iraq, Angola, Myanmar and Libya were nationalized, while in Indonesia the Jakarta office was destroyed in an attempted coup d'etat. In 1948 the Chartered Bank opened in Bangladesh and during 1957 it acquired the Eastern Bank.

The Eastern Bank gave the Chartered Bank a network of branches including Aden, Bahrain, Beirut, Cyprus, Lebanon, Qatar and the United Arab Emirates. The Chartered Bank also entered into a joint venture to form the Irano-British Bank which opened for business in 1959. The bank grew rapidly and had 24 branches when it was nationalized in 1981. By the mid 1950s the Standard Bank had around 600 offices in Southern, Central and Eastern Africa. Its network grew substantially in 1965 when it merged with

the former Bank of British West Africa which had some 60 branches in Nigeria, 40 branches in Ghana and eleven branches in Sierra Leone in addition to operations in Cameroon and Gambia. Despite these acquisitions and expansion into new countries such as Mexico, South Korea and Oman (1968), both the Standard and Chartered Bank networks were comparatively small. Both viewed the future with some trepidation as the need to protect themselves from acquisition became ever more apparent. Standard Chartered PLC In 1969 the decision was made by the Standard Bank and the Chartered Bank to undergo a friendly merger thus forming Standard Chartered PLC. It was one year later that the descendants of the "Chartered Bank of India, Australia and China" were finally permitted to open a representative office in Sydney, Australia. Standard Chartered subsequently acquired the UK based Hodge Group, in which it already had a minority shareholding, and the Wallace Brothers Group. The Hodge Group brought to Standard Chartered an extensive network of UK offices specializing in installment credit and industrial leasing, and after a period of rationalization its name was changed to Chartered Trust Limited. Standard Chartererâ&#x20AC;&#x2122;s operations in Jersey emerged from the integration of other Hodge Group businesses with those of Wallace Brothers Bank (Jersey), Limited.

Standard Chartered decided, after the merger, to expand the Group outside its traditional markets. In Europe a number of offices were opened including Austria, Belgium, Denmark, and Ireland, Spain and Sweden as well as several major cities in the UK. Standard Chartered also opened offices in Argentina, Canada, Colombia, the Falkland Islands, Panama and Nepal. In the USA a number of offices were opened and three banks were acquired. These included the Union Bank of California which gave Standard Chartered a presence in Brazil and Venezuela. The opening of a branch in Istanbul in 1986 was overshadowed by a far more dramatic event when Lloyds Bank of the UK made a hostile take-over bid for Standard Chartered. Standard Chartered won its right to remain independent but entered into a period of considerable change.

By the late 1980s Standard Chartered already had considerable exposure to third world debt. Standard Chartered reviewed its operations and decided to focus on its core strengths of Consumer Banking, Corporate & Institutional Banking and Treasury in its

well-established operations in Asia, Africa and the Middle East. This led to a series of divestments notably in Europe, the United States and Africa. During this time staff numbers were reduced; businesses not considered core were sold or closed; associate holdings disposed of; unprofitable branches closed and back office functions consolidated. In addition expensive buildings were sold with the proceeds reinvested in the business, and the senior management team was radically changed and strengthened.

Standard Chartered in the 1990s Even within this period of apparent retrenchment Standard Chartered expanded its network, re-opening in Vietnam in 1990, Cambodia and Iran in 1992, Tanzania in 1993 and Myanmar in 1995. With the opening of branches in Macau and Taiwan in 1983 and 1985 plus a representative office in Laos (1996), Standard Chartered now has an office in every country in the Asia Pacific Region with the exception of North Korea. In 1998 Standard Chartered concluded the purchase of a controlling interest in Banco Exterior de Los Andes (Extebandes), an Andean Region bank involved primarily in trade finance.

With this purchase Standard Chartered now offers full banking services in Colombia, Peru and Venezuela. In 1999, Standard Chartered acquired the global trade finance business of Union Bank of Switzerland. This acquisition makes Standard Chartered one of the leading clearers of dollar payments in the USA. Standard Chartered also opened a new subsidiary, Standard Chartered Nigeria Limited in Lagos, acquired 75 per cent of the equity of Nakornthon Bank, Thailand; and agreed terms to acquire 89 per cent of the share capital of Metropolitan Bank of the Lebanon.

Standard Chartered today Today Standard Chartered is the world's leading emerging markets bank employing 30,000 people in over 500 offices in more than 50 countries primarily in countries in the Asia Pacific Region, South Asia, the Middle East, Africa and the Americas.

The new millennium has brought with it two of the largest acquisitions in the history of the bank with the purchase of Grindlays Bank from the ANZ Group and the acquisition of the Chase Consumer Banking operations in Hong Kong in 2000.

These acquisitions demonstrate Standard Chartered firm committed to the emerging markets, where we have a strong and established presence and where we see our future growth.

3.1.2 Global Presence of Standard Chartered Bank In five regions, Standard Chartered Bank has its presence in 48 countries: Africa

Asia Pacific

Latin

Middle East & UK & USA

Botswana

Australia

America Argentina

South Asia Bahrain

Falkland Islands

Cameroon

Brunei Darussalam

Brazil

Bangladesh

Jersey

Gambia

Cambodia

Colombia

India

UK

Ghana

China

Mexico

Iran

USA

Kenya

Hong Kong

Peru

Nepal

Sierra Leon

Indonesia

Venezuela

Oman

South Africa

Japan

Pakistan

Tanzania

Laos

Qatar

Uganda

Macao

Sri Lanka

Zambia

Malaysia

UAE

Zimbabwe

Myanmar Philippines Singapore South Korea Taiwan Thailand Vietnam

Table 3.1: Global Presence: At a Glance Worldwide Network:

3.1.3 Global Business of Standard Chartered Bank Consumer Banking Consumer banking is a big business for Standard Chartered. Consumer Banking produced more than five million customers world-wide from over its 400 branches. And in 2000, it produced 58% of its operating profits. So it's easy to see why they regard the personal and small business customers as the lifeblood of their success.

Standard Chartered Bank is a major presence and a well-known name across Asia, the Middle East and Africa, while in London and Jersey their Private and Priority Banking business offers first-class services to high net worth individuals.

Standard Chartered Bank’s product range is diverse and growing. Current account services and mortgages have always been cornerstones of our product range. In recent years, they've achieved great success in three growth areas: 

They are a leading credit card issuer; in Hong Kong, India and Bangladesh, no one issues more credit cards than Standard Chartered.



Their wealth management services are second to none, making them the largest independent funds distributor in Asia.



E-enabling products and services have helped them to get close to their customers and ensure they understand their needs.

Their reputation for innovation and quality enables them to stay one step ahead of the competition. The word often associated with Standard Chartered Consumer Banking is 'first': first to open a fully-automated branch in Hong Kong; first to introduce cash machines in Kenya; first to offer a multi-purpose stored value card in Asia.

Wholesale Banking Standard Chartered Bank's market standing today reflects a commitment to continually upgrade their capabilities and quality of services to meet client needs and rapidly changing market conditions.

They operate in more than 35 countries globally, but for almost 150 years the focus has remained the developing world in Asia, Africa, the sub-continent, the Middle East and Latin America. Operating as an integrated business, there are a number of key strands to Wholesale Banking: 

The Global Clients segment provides global relationship banking services to major multinational companies and institutions.



Their Global Products businesses provide tailored transactional solutions to their clients.



Global Market Solution is their leading package in the world's emerging markets, providing foreign exchange and other dealing services, as well as debt financing and risk management solutions, to meet the needs of corporate customers.

Leveraging on a strong franchise and an in-depth understanding of each of their markets, they are able to offer a suite of innovative products and services:  fixed income and syndicated loan businesses bridge the Asian and global capital markets to meet local and foreign currency fund raising needs;  foreign exchange, interest rate and credit derivatives tools and market research provide effective risk management solutions;  money market funds present a cost-effective cash and liquidity management alternative to the traditional offshore money management products;

ď&#x192;ź Corporate advisory services tap the Bank's product suite to structure optimal value-added financial solutions for corporate and institutional customers. ď&#x201A;§

Their Local Franchise activity provides relationship banking services to domestic companies and is also responsible for integrating all facets of their activities in each country in which they operate.

Various support functions and other business units complete the range of capabilities which help to differentiate Standard Chartered Bank, ranging from the development of new products to the development of their internal human resources.

Their culture values tie long-term relationships above short-term transactions. This is reflected in the diverse range of capabilities we provide to our clients. Whether our clients need to finance short term working capital or long term investment; to manage currency, interest rate or commodity fluctuations; to efficiently manage their cash positions or securities portfolios, they can rely on Standard Chartered Bank, the leading Emerging Markets bank.

Technology and Operations Technology and Operations are major strategic differentiators in Standard Chartered.

Flexible technology systems enable them to extract more value more quickly from their growing businesses and help to achieve economies of scale and integrating operations.

In their industry, perhaps more than any other, technology is an integral part of the customer experience. They are dependent on technology to deliver service quality, which itself drives profitability.

The importance of delivery capability was recognized in the creation of a Technology and Operations Committee, reporting within the Executive Committee. This is a senior executive forum to ensure thorough examination of the key strategic and tactical issues, agreement on courses of action and a strict monitoring of delivery. ď&#x201A;§

Excellent strategic planning has gone into re-engineering our service delivery



They have successfully integrated virtually all of the Grindlays operations on to SCB systems ahead of schedule and with substantial annual savings



They have instigated a policy of placing most new software development offshore



Their IT Service Delivery has become cheaper and new telecom network will reduce telecom cost by over 25% over the next 5 years

They have a strong and committed team in Technology and Operations. Their dedication and enthusiasm helps to make the bank world-class. They are dedicated to: 

Migrate established products and services on-line across all of our major

businesses and locations 

Ensure communications and processing technologies meet the needs of an

international customer base in the 21st century 

Restructure operations capabilities so that centers of excellence in one

country can deliver services Group-wide.

Getting the technology and the processes right is important to the business. But they never forget that it's people who make change happen and ensure it's successful.

Fundamentally, its people who make sure those customers are happy. That's why finding, developing and rewarding the right people have become a core culture of Standard Chartered Bank.

Support Functions Support functions are vital to the efficient running of the bank; vital to competitive success; and vital to delivering customer satisfaction.

Standard Chartered Bank hires professionals from a wide range of backgrounds. Some have worked in banks before, some have not. The disciplines that support the business world-wide include: 

Finance - monitoring performance to ensure we are on track.



Risk Management – protecting the bank's business by identifying, assessing, and mitigating risks.



Human Resources - helping managers improve performance through people.



Corporate Affairs – working with employees, governments and media to maintain and enhance our reputation.



Legal and Compliance – ensuring that the way they do business is fair and ethical.

Professional roles may be aligned to a particular country or to a global business. Some of them cover the entire Group. What all the roles have in common is the willingness to be a true business partner; to make everything they do a direct contribution to our mission to be the world's leading emerging markets bank.

3.1.4 Values of Standard Chartered Standard Chartered Bank has five values and these values are key to their success. These values determine how the employees achieve their goals, the way they work together and how it feels to be a part of Standard Chartered Bank. In brief these values are: 1. Courageous: Being courageous is about confidently doing what is right. Often the task may seem insurmountable but with courage and tenacity, the odds can be overcome. A truly courageous act both inspires and builds character.

2. Responsive: How we response to our customer will influence their belief in our commitment to them. A proactive response is often unexpected and more effective for that. It clearly demonstrates our willingness to go beyond the unexpected.

3. International: As a member of global village we view the world from the widest perspective. We are all global citizens and the world is full of new opportunities and exciting possibilities. We also deliver world class products and services.

4. Creative: Creativity belongs to those of us who are excited by challenges and engage them in fresh thinking and an open mind. Creative thinkers are not limited by convention but allow their minds to soar beyond predictable solutions.

5. Trustworthy: Trust is the foundation of every successful relationship. We trust because we believe in the sincerity of our promise. Building trust can take forever.

Losing takes only moments.

3.1.5 Standard Chartered in Bangladesh Standard Chartered Bank started its business in Bangladesh in 1948, opening its first branch in the port city of Chittagong. The bank increasingly invested in people, technology and premises as its business grew in relation to the country's thriving economy. At present the bank has 6 offices in Dhaka Chittagong and Sylhet, including the country's only offshore banking unit inside the Dhaka Export Processing Zone at Savar. Besides with the acquisition of ANZ Grindlays, the bank will have more branches to serve its huge customer base from August 19, 2001.

Extensive knowledge of the market and essential expertise in a wide range of financial services underline our strength to build business opportunities for corporate and institutional clients at home and abroad. Continuous upgrading of technology and control systems has enabled the bank of offer new services, which include unique ATMs and Phone banking.

Standard Charterer’s services in Bangladesh, ranges from Personal & Corporate Banking to Institutional Banking, Treasury and Custodial services.

Branches of Standard Chartered Bank Dhaka Region: 1. Hadi Mansion, 2 Dilkusha C/A, Dhaka – 1000.

2. ALICO Building, 18-20 Motijheel C/A, Dhaka – 1000.

3. House – 5, Road – 5, Dhanmondi R/A, Dhaka – 1205.

4. House – 37, Road – 2, Dhanmondi R/A, Dhaka – 1205.

5. 14 Kemal Ataturk Avenue, Banani, Dhaka – 1213.

6. 53 Kawran Bazar, Dhaka – 1215.

7. 109, Kakrail Road, Dhaka - 1000.

8. 102 Gulshan Avenue, Dhaka – 1212.

9. Sheraton Office Complex, 1 Minto Road.

10. House 81A, Road – 7, Sector – 4, Uttara, Dhaka – 1230.

11. Zone Service Building, Dhaka EPZ. 12. 26 Shaista Khan Road, Narayangang Chittagong Region: 13. Sheikh Mujib Road, Agrabad.

14. Jiban Bima Corporation Shopping Center 22-23 Station Road.

15. 565/A CDA Avenue, East Nasirabad.

Sylhet Region: 16. Fayzu Mansion, East Darga gate.

Khulna Region: 17. Jiban Bima Bhaban, KDA Avenue.

Bogra Region: 18. Shatani House, Sherpur Road, Bogra – 5800.

ATM machines of Standard Chartered Bank Along with 18 on site ATM machines, Standard Chartered Bank has 3 more off-site ATM’s in Dhaka. Total number of ATM is 21.

3.1.6 Chain of Command Bank is conservative by nature and activities. Since it is financial institution, conservativeness is important here. Standard Chartered Bank follows top down approach in communication. The hierarchical ladder of the chain of command of Standard Chartered Bank is shown below: Chain of command of selected departments is given below: O rg a n o g ra m C h ie f E x e c u tiv e O ffic e r H e a d o f C o n s u m e r B a n k in g

H e a d o f F in a n c e & A d m in is t r a t io n

H e a d o f C o rp o rate & E x t e r n a l A f f a ir s

H ead of L egal & C o m p lia n c e

H e a d o f C o rp o rate & I n s t it u t io n a l B a n k in g

H ead of H u m an R e so u rc e s

H e a d o f G lo b a l M are k e t

H e a d o f I n f o r m a t io n T e c h n o lo g y

H e a d o f C r e d it D e p a rtm e n t

H e a d o f F in a n c ia l I n s t it u t io n

H e a d o f C r e d it C a r d s

C h ie f O p e r a t in g O f f ic e r

H ead o f H u m an R eso u rces S n . O f f ic e r , H R O p e r a tio n s

S n . O f f ic e r , H R A d m in

O f f ic e r

O f f ic e r

H ead of C onsu m er B a n k in g M a n a g e r , B u s in e s s F in a n c e

M a n a g e r , S e r v ic e Q u a lit y

H ead o f P ro d u ct D e v e lo p m e n t

H e a d o f D is t r ib u t io n

H e a d o f C r e d it & C o lle c t io n

H e a d o f P r ir it y B a n k in g

O f f ic e r

O f fic e r

O f f ic e r

O f f ic e r

H e a d o f F in a n c e & A d m in is tr a tio n H e a d o f F in a n c e

H e a d o f A d m in is tr a tio n T y p e tit le h e r e

F in a n c e O f f ic e r

S e n io r A d m in O f f ic e r

J u n io r F in a n c e O f f ic e r

A d m in O f f ic e r

H e a d o f G lo b a l M ark et H e a d o f F o r e ig n T r a d in g

H ead of M oney M a rk et

H e a d o f S a le s

O f f ic e r

O f f ic e r

O f f ic e r

H ead of L eagal & C o m p lia n c e M an ag er, L eg al S u p p o rt

O f f ic e r , A u d it & C o m p lin c e

C o m p lia n c e A d v is o r

O f f ic e r

O f f ic e r

O f f ic e r

Banking

3.1.7

Consumer

Standard Chartered offers premium retail banking services to individual customers with a large variety of deposit and loan products. Our Consumer Banking business continuously meets the challenges of developing new products and services to match the specific requirements of customers. In Bangladesh Standard Chartered offers 24 hour service through its Money link, ATM network and Phone link Phone banking. To enhance customer convenience, Standard Chartered has pioneered off-site Money link ATMs in large cities of Bangladesh and is in the process of building a network of off-site Money link ATMs in Bangladesh. The aim is to offer world class service on a 24-hour basis. Standard Chartered offers three types of activities in consumer banking sector: 1. Personal banking 2. Priority banking 3. Safety deposit services 4. Credit card services Personal Banking SCB’s personal banking is tailored to meet the need of the individuals. So it offers different types of deposits and loan packages.

Deposit services In a country like Bangladesh where stock market is not stabilized and investment opportunity is threatened by corruption, political turmoil and economic downturn (both domestic & global), the safest and least risky way to generate money for an individual is to deposit money in a bank. To respond this need, SCB offers different types of deposit services:

1. Current Account Requirement 

2 copies of passport size photographs



Photocopy of 1-7 pages of valid passport (if no passport then driving

license/ voter ID card/ commissioner’s certificate). 

Introducer’s signature and account number at the back of account

holder’s (person going to open the account) photographs.



Photograph of nominee with the signature of account holder at the back

side of nominee’s photograph. 

Minimum initial deposit Tk.50, 000.

Feature 

Free cheque book, ATM service, Phone banking



Account access from any branch, and instant fund-transfer amongst our

branches in the country.

2. Access Account Requirement 

2 copies of passport size photographs



Photocopy of 1-7 pages of valid passport (if no passport then driving

license/ voter ID card/ commissioner’s certificate). 

Introducer’s signature and account number at the back of account

holder’s (person going to open the account) photographs. 

Photograph of nominee with the signature of account holder at the back

side of nominee’s photograph. 

Minimum initial deposit Tk.20,000 (in cash).

Feature 

No cheque book will issue for this account. Money will be withdrawn

through ATM card. 

No joint holder for this account

3. Savings Account It is an assortment of best benefits available in the market, offering a wide range of special treats free of cost to our retail customers. The most attractive treat is the competitive tiered interest rates, which ensures higher returns for larger deposits.

Anyone looking for an opportunity to build a sound saving base can avail our Savings account Requirement 

2 copies of passport size photographs



Photocopy of 1-7 pages of valid passport (if no passport then driving

license/ voter ID card/ commissioner’s certificate).



Introducer’s signature and account number at the back of account

holder’s (person going to open the account) photographs. 

Photograph of nominee with the signature of account holder at the back

side of nominee’s photograph. 

Minimum initial deposit Tk.100, 000.

Features 

Free cheque-book, ATM card and phone-banking service



Account access from all our branches in Bangladesh.



Opportunity to apply for - safe deposit locker facility, utility payment

service through ATM and any of our personal finance products.

4. Fixed deposit Ideal product for nesting surplus deposit for future long-term investment. Our Fixed deposit, known for its high-yield, helps you earn the maximum possible return.

Requirements 

2 copies of passport size photographs



Photocopy of 1-7 pages of valid passport (if no passport then driving

license/ voter ID card/ commissioner’s certificate). 

Introducer’s signature and account number at the back of account

holder’s (person going to open the account) photographs. 

Photograph of nominee with the signature of account holder at the back

side of nominee’s photograph. 

Minimum initial deposit Tk.100, 000.

Features 

Can be opened for a term of 3 months, 6 months or 12 months.



Tiered interest rates, offering higher rates for larger amounts.



Interest payable on maturity.



Automatically renewable (with or without interest).



Can be used as security against personal/ commercial loans.

5. Call Deposit

An easy way to turn short-term savings into high-yield assets, blending of the flexibility of a current account with the yield of a fixed deposit. Other features include: 

Competitive interest rate



No withdrawal restriction irrespective of frequency or size subject to

seven day's notification.

6. Extra Value Savings Account As an EVSA customer you have the comfort of knowing that your money is in safe hands. To put it in a nutshell, EVSA makes your banking more affordable and efficient than ever before, and also provides you with an umbrella for the rainy days.

With EVSA the dreams will no longer seem beyond the reach.

Requirements 

2 copies of passport size photographs



Photocopy of 1-7 pages of valid passport (if no passport then driving

license/ voter ID card/ commissioner’s certificate). 

Introducer’s signature and account number at the back of account

holder’s (person going to open the account) photographs. 

Photograph of nominee with the signature of account holder at the back

side of nominee’s photograph. 

Minimum initial deposit Tk.300, 000.



A sign up fee of Tk.500 is required at the time of opening the account.

Features 

Free personal accident insurance coverage for one year.



A withdrawal limit of Tk.40,000 on ATM card.



50% discounted service charges on issuance of foreign currency,

traveler’s cheque, pay orders and demand drafts. 

33% discount on service charges of lockers.



0.50% discount on offered rates of overdraft facilities.



Free personalized 25-leaf cheque book.



Free Phone banking services



Utility bill payment service through ATMs.

7. Resident Foreign Currency Account (RFCD) Specially designed foreign currency account for resident Bangladeshis. Offers wonderful opportunity to build a deposit base in foreign currency. Helps make payment for overseas commitments and dues like credit card bills, travelling expense etc.

Requirement 

2 copies of passport size photographs



Photocopy of 1-7 pages of valid passport.



Introducer’s signature and account number at the back of account

holder’s (person going to open the account) photographs. 

Photograph of nominee with the signature of account holder at the back

side of nominee’s photograph. 

Copy of employer’s certificate/ contract with detailed salary structure.



Deposit of USD/ GBP/ Yen within one month of opening the account.



In case of marine engineers CDC photocopy is required.



Minimum balance for earning interest is US$1,000 or GBP500.

Features 

Competitive Interest on deposit



Can only be opened within 1 month of arrival from abroad



Deposit can be made in foreign currency only (cash, TC or Drafts)



Cash withdrawal in local currency only



Fund Remittance (in both LCY and FCY) to any place in and out of the

country (without restriction). 

Customers can deposit up to US$5,000 without declaration of any

customs declaration form.

8. Foreign Currency Current Account (FCY Account) Applicable to Bangladeshis working abroad, it can be opened in USD, GBP and Yen without restriction on transaction frequency. Can be operated through

nominees in absence of the accountholder. Fund remains in foreign currency and is freely remittable.

Requirement 

2 copies of passport size photographs



Photocopy of 1-7 pages of valid passport.



Introducer’s signature and account number at the back of account

holder’s (person going to open the account) photographs. 

Photograph of nominee with the signature of account holder at the back

side of nominee’s photograph. 

Copy of employer’s certificate/ contract with detailed salary structure.



Deposit of USD/ GBP/ Yen within one month of opening the account.



In case of marine engineers CDC photocopy is required.

Features 

Deposit can be made in foreign currency only (cash, TC or Drafts or

transfer from other Fcy account) 

Cash withdrawal from the account is in local currency only



Fund Remittance (in both Lcy and Fcy) to any place in and out of the

country (without restriction) 

Fund can be used to make investment in Wage Earners' Development

Bond 9. Non-resident Foreign Currency Deposit Account (NFCD) A short-term foreign currency deposit account suitable for Bangladeshis living abroad, offering most competitive interest rates available in both local and international markets Feature 

Interest paid in Foreign currency



Can be opened for a term of 1 month, 3 months, 6 months or 12 months



Interest rates are tiered (based on amount and term)



Interest payable on maturity



Automatically renewable (with or without interest)



Can be used as security against personal/ commercial loan

Remittance in both LCY and FCY to any place in and out of the country



A. Loan services 1. Cash Line The motto of cash line is “Have your cake and eat it too”. Cash line gives the flexibility to meet the urgent need of cash. It lets one to manage his finances the way he likes it, offering the best of both 

Ready access to cash



High return on long term investment

Features 

Convenient: Cash line is a secured credit facility against fixed deposits, ICB

unit certificates or Sanchay Patras. One can borrow up to 90% of the security value and enjoy the benefits of readily available funds even as investment continues to earn interest. 

Flexible

i.

Payment can be made in monthly installments of 12, 24, 36, 48 or 60 months.

ii.

Interest are due on quarterly basis, principal amount can be paid back at the end of the loan period.

An overdraft limit of 90% of the security value will be set in current account.

iii.

One will have the option of withdrawing as much money as one requires within the limit, anytime he is in need of cash. Interest will be charged on the amount he actually draws and only for the period he utilises it.

One can withdraw fund from the overdraft account or make deposits to

iv.

cover the loan repayments through the ATM machine – at any time of the day or night, 365 a year!

2. Flexi Loan Flexi loan from Standard Chartered is a loan facility that has been custom designed to fit individual’s needs. It lets one enjoy a higher standard of living while providing the convenience of repaying the loan over a maximum period of 6 months. The loan amount varies between a minimum of Tk.50, 000 and a maximum of Tk.5, 000,000.

Requirement 

A Bangladeshi citizen.



20 years of age or more.



A salaried or self employed individual earning Tk.12,000 or more per

month.

Maintaining a savings or current account in SCB for at least six months or



a minimum of one year with any other bank.

A resident of Dhaka, Narayanganj, Chittagong, Sylhet, Bogra or Khulna.

 Features

Flexi security: Flexi loan offers the option of choosing the amount of



security as collateral for the loan. The security account may range from 30% to 100% of the amount. Common types of securities required are saving certificate (Sanchay Patra), fixed deposit, and ICB unit certificate.

Flexi repayment: Flexi loan allows paying back the loan in monthly



installments. The number of installments varies according to the amount of the loan. 

Loans from Tk.50, 000 to Tk.500, 000 can be repaid in 12, 24, 36 monthly

installments. 

Loans from Tk.500, 000 to Tk.1000, 000 can be repaid in a maximum of 48

monthly installments. 

Loans greater than Tk.1000,000 can be repaid in a maximum of 60

monthly installments.  Flexi cost: If one has a borrowing relationship with SCB for at least 1 year, he will only need to offer 30% of the loan amount as cash security. If he provides more as cash security the interest rate will be correspondingly lower. In a nutshell, the applicable interest rates are: 

13% per annum when 100% or more secured by readily encashable securities acceptable to the bank.



15% per annum when 50% to 99% or more secured by readily encashable securities acceptable to the bank.



17% when 30% to 49% or more secured by readily encashable securities acceptable to the bank.

3. Personal Loans An easy and fast loan product that requires minimum documentation no cash security, no down payment and minimum processing time Features Flexible: with minimum documentation and security requirements, the



product offers the choice of loan for any of the following purposes: 

Purchase of miscellaneous household appliances



Purchase of personal computers



Purchase of refrigerators



Purchase of audio-video equipment



Purchase of furniture



Purchase of office equipment



Hospitalization or any other emergency medical needs.



House renovation



Office renovation



Marriage in the family



Advance rent payment



Education training



Holiday expense

 Helpful: The loan amount may range from Tk.75,000 to Tk.1000,000 and there is no cash collateral. Only document from employer or guarantee of a reputed person is sufficient.  Convenient: Monthly installments can be tailored to meet the convenience and budget. One can repay in 12 to 60 equal monthly installments depending on the loan amount.

Priority Banking Standard Chartered Bank Bangladesh offers Priority Banking, a special service package for our valued customers. Under this segment an exclusive combination of services are offered to customers who signed up for it. Some of the benefits offered under the programme are:

 A Priority Card that recognizes your Priority Status at all our local branches and also at our global Priority Centers.  Higher withdrawal limit per day from all our ATMs in Dhaka, Chittagong & Sylhet.  Privileges associated with the Priority card in reputed hotels, restaurants and stores locally and globally.  Exclusive Priority Centre in Dhanmondi & Sylhet with reserved parking space.  Dedicated Customer Relationship Personnel at the Priority Centers.  And also commission free SCB Visa travelers' cheques against travel quota, swifter transactions, pre-arranged banking services and invitation to special social and cultural events.

Services 1. Moneylink Card: Standard Chartered Bank launched Moneylink ATM in 1994, the first bank to offer this service in Bangladesh. Moneylink ATM service is free of charge, offering the following features: 

Cash Withdrawal & deposit



Cheque deposit



Cheque book request



Change of PIN



Printing of mini-statement



Payment of utility bills.

2. Phone Banking Service: Standard Chartered Bank is the first bank in the country to offer automated 24-hour Phone banking service. Our phone banking services include balance inquiry, fund transfer, change of TIN, chequebook request, statement request, foreign currency exchange rate etc., which are available through telephones from the comfort of home, office or car.

Other services available during the working hours include account opening information, remittance query, stop payment instruction, request for draft, renewal of fixed deposit, change of address etc.

Phone link service is offered to all customers free of charge.

3. Safe Deposit Locker: Our safe deposit locker service offered from Dhanmondi and Sylhet branch gives you a modern facility for safekeeping of precious items, confidential documents and other valuables. Other features: 

Personalized service from a dedicated locker officer.



Available to any customers (for an annual fee which depends on

locker size). 

Accessibility anytime during the banking hours.



No additional charges for locker visit.

4. Credit Card Services: Standard Chartered credit card comes with a winning combination of value-packed features and benefits. Some are as follows: 

Wide acceptance: Standard Chartered credit card is accepted at more than 3000 outlets around the country. One can use card for everyday purchases as well as high value purchases. SCB’s wide range of merchants include hotels, restaurants, airlines and travel agencies, departmental stores, hospitals and diagnostic centers, jewelry shops, electronics and computer shops, leather goods, mobiles and internet service providers and many more. The number is increasing everyday to cater growing needs.



Easy credit: With Standard Chartered credit card, clients has the convenience to pay as little as 5% of their outstanding on credit account every month, thus having the power and flexibility to plan for the payments.



Instant cash advances: Standard Chartered credit card gives access to cash up to 50% of the credit limit. Cardholder can withdraw cash advances from all Standard Chartered ATM’s around the country, thus having access to cash 24 hours a day. Besides cash advances can also be taken from any of the branches.



Safe & secure: If a client carries a credit card he doesn’t need to carry cash. Moreover if he loses the card he will be protected from any financial charges he reports to the bank.

Air accident insurance: The Standard Chartered credit card gives free air



accident insurance coverage unto Tk.100, 000 (for Silver Card) and Tk.500.000 (or Gold Card). This coverage is also applicable to supplementary cardholders.

Supplementary card: Cardholder may apply for Supplementary cards for



spouse, parents, and children over 18, sisters, brothers or friends. All charges incurred on the Supplementary cards will be reported on the monthly statement. For the peace of mind original cardholder can assign monthly spending limit on each Supplementary card.

Requirements: This bank issues credit on two ways:

 I. II.

With collateral Without collateral When bank issues card against collateral it usually prefers fixed deposit or

securities (Sanchaypatras). In this case the ration is 1.3:1, means if client wants Tk.10, 000 as a limit, he should have at least Tk.13, 000 in his account. In addition to that he has to submit his salary certificate and the salary must be at least Tk.10, 000 per month for a Silver card and Tk.55, 000 for a Gold card. If self employed, copy of trade license and personal/ company statement for last six months in necessary. One can also have a card without collateral. In that case he has to submit his bank statement and transaction in addition to the salary certificate. If the customer has an account at Standard Chartered 3 months is well enough but for an account of other bank 6 months transaction is necessary.

Standard Chartered Bank issues for types of credit cards: A.

Master Card:

i. Master Silver Card – Limit from Tk.10, 000 to Tk.90, 000. Yearly charge Tk.1500. ii. Master Gold Card – Limit from Tk.100, 000 to above. Yearly charge Tk.3000.

B.

Visa Card:

i.

Visa Classic Card: Limit from Tk.10, 000 to Tk.90, 000. Yearly charge Tk.1500.

ii.

Visa Gold Card – Limit from Tk.100, 000 to above. Yearly charge Tk3000.

5. Introduction to Debit Card: Debit card is the smart way to pay. It can be used at around 800 established merchant outlets around Bangladesh. 

Difference between Debit Card and Credit Card: A debit card is a “Buy Now Pay Now” option, while a Credit Card is a “Buy Now Pay Later” option. Therefore, in a debit card there is no monthly repayment and hence no interest is charged.



Method of Using:

 To make a payment, one has to present his/her debit card and inform the cashier of mode of payment.  The merchant establishment will “swipe” ones debit card on the EDC terminal (electronic swipe machines that help sanction transaction approval). After approval, the EDC terminal will generate a charge slip.  The merchant establishment will request you to sign the charge slip. Please check that the amount mentioned on the charge slip matches ones purchase amount.  Ones purchase transaction will then be completed and the transaction amount will be debited to ones Standard Chartered Bank Account. 

Making a Withdrawal via Debit Card:

 One can access any of the 24-hour Standard Chartered ATM booths.  One needs to follow the steps (as guided on the screen) and complete ones withdrawal.  Ones cash withdrawal limit per day is BDT 20, 000 or as defined by bank.  One needs to ensure that one carefully select the correct account from which to make a transaction/ withdrawal, as wrong selection may lead to your transaction being declined.

6. Mortgage Features  Competitive interest rate with no hidden cost  No personal guarantee from third party and no additional cash security  Company-borrower’s income can be considered to derive the final loan eligibility  Account relationship with Standard Chartered is not mandatory  Refinancing/ Loan take over facility  Financing includes registration cost

 Partial or full prepayment options  Simple and easy documentation  Loan approval within the shortest possible time Eligibility Criteria  Profession: Applicant should have at least three years of service/ professional/ business track records  Minimum Income:

For salaried persons: BDT 25,000 per month For business persons: BDT 35,000 per month

 Minimum Age: 30 years  Maximum Age: 65 years at the end of the loan term  Proposed Property: Any leasehold/ private/ freehold land or house or apartment under the city corporation of Dhaka and Chittagong.

7. Home Loan  Purchasing apartment for residence purpose o Maximum Loan: BDT 6,000,000 o Minimum Loan: BDT 5,00,000 o Maximum loan amount up to 70% of the property value, whichever is lower.

8. Home Credit  For purchase subsequent properties for investment like, o Buying another apartment/ house o Construction or extension of own house o House renovation o Maximum loan amount up to 60% of the mortgaged property value.

9. Lifestyle Loan  To meet urgent daily life needs like, o Purchase of furniture, electrical and electronic home appliances o Education expenses for the children o Emergency medical expenses o Maximum loan amount up to BDT 1,000,000 or 40% of the mortgaged property value, whichever is lower.

10. Terms and Repayment Option  Maximum loan term:

Up to 15 years for salaried persons Up to 12 years for business persons

 Repayment: Loan will be repaid by equal monthly installment (EMI) 11. Excel Banking: It is an excellent Wealth Management Service from SCB, designed to meet evolving banking needs, and give client’s achievements the recognition they deserve. It helps to manage money more effectively, while growing and protecting ones wealth. Personal attention, preferential pricing, and fast-track services are just a few of the distinctive features that will ensure one to get the best out of ones time and money. One will have a dedicated Personal Financial Consultant (PFC) and teller counter to take care of ones banking needs and a host of other privileges to provide with unique banking experience.

12. Modern Banking Facilities 

Evening Banking Services: Available from 6 p.m. to 8 p.m. at Gulshan, Dhanmondi- Rd. 2 & 5, Uttara in Dhaka and Nasirabad in Chittagong.



Other Modern Banking Facilities o 24-hour Call Centre o Internet Banking o SMS Banking o Auto BillsPay Facilities o 24 hour BillsPay Centres at Motijheel, Gulshan and Dhanmondi Rd 2

3.2 Hong Kong and Shanghai Banking Corporation Limited (HSBC)

3.2.1 Group at a Glance Headquartered in London, HSBC Holdings plc is one of the largest banking and financial services organizations in the world. It began operations in Hong Kong more than 130 years ago. The HSBC Group evolved from The Hong Kong and Shanghai Banking Corporation Limited, which was founded in 1865 in Hong Kong with offices in Shanghai and London and an agency in San Francisco. The HSBC Group's international network

comprises some 7,000 offices in 80 countries and territories across Europe, the AsiaPacific region, the Americas, the Middle East and Africa.

With listings on the London, Hong Kong, New York and Paris stock exchanges, around 190,000 shareholders in some 100 countries and territories hold shares in HSBC Holdings plc. HSBC globally provides a comprehensive range of financial services like personal, commercial, corporate, investment and private banking; trade services; cash management; treasury and capital markets services; insurance; consumer and business finance; pension and investment fund management; trustee services; and securities and custody services.

3.2.2 Overview of HSBC in Bangladesh The HSBC Asia Pacific group represents HSBC in Bangladesh. HSBC opened its first branch, its Head Office in Sonargaon Road, Dhaka on 17th December 1996 to provide personal banking services, trade and corporate services, and custody services. The Bank was awarded ISO 9002 accreditation for its personal and business banking services, which cover trade services, securities and safe custody, corporate banking, Hexagon and all personal banking. This ISO 9002 designation is the first of its kind for a bank in Bangladesh. The Hong Kong and Shanghai Banking Corporation Bangladesh Ltd. primarily limited its operations to help garments industry and to commercial banking. Later, it extended to pharmaceuticals, jute and consumer products. Other services include cash management, treasury, securities, and custodial service.

HSBC Bangladesh is under the strict of supervision of HSBC Asia Pacific Group, Hong Kong. The Chief Executive Officer (CEO) of HSBC Bangladesh manages the whole banking operation of HSBC in Bangladesh. The CEO administers all the functional departmentsHuman Resources, Financial Control, Personal Banking, Corporate Banking and Marketing, and communicates with the department heads for smooth functioning of the organization. The following section describes the Personal Banking Division of HSBC Bangladesh.

3.2.3 Personal Banking Department HSBC Bangladesh performs its activities through functional departmentalization. Thus, the departments are separated according to the functions they perform. IN HSBC consumer banking division is known as Personal Banking Division (PLB). Within PLB, subsidiary departments such as Credit, ATM and ATB exist to assure smooth operation of major functions. A structure of the PLB is provided below:

PLB is the most flourishing department of HSBC Bangladesh. Within a span of only five years HSBC-PLB has grown tremendously and is still growing with its innovative products and service offerings. This department basically deals with the management of products and services offered to the individual consumers.

PLB Division has two major Departments- Personal Financial Services Department (PFS) and Personal Financial Credit Department (PFS- Credit). Under the Personal Financial Services Figure 3.1: Organization Structure of Personal Banking Department Source: Shahed, Abdullah. Assistant Officer, PFS Department, HSBC Motijheel Office.

Department there are five branches headed by the Manager of Branches. The Credit Department is a separate department under PLB division headed by Manager-PLB Credit. There are another two supporting departments called ATM Center & ATB Center and Credit Card Department. The Head of PLB supervises all the departments. PLB functions in the context of the following: Branch network There are five offices of HSBC, four situated in different areas of Dhaka and one in Chittagong. Only the Dhaka Office (Head Office) and Chittagong Office deals with both Corporate and Personal Banking. The other three offices only deal with the Personal

Banking activities which are primarily to provide various financial services to the consumers. These include customer services, sale of various PLB products, opening new accounts, providing cash, remittance and other teller services.

The branches are moderately decentralized for better delivery of services to customers and have its own premises and facilities. These branches are headed by a Branch Manager having a total of nine employees in each branch apart from the Branch Manager. A great deal of teamwork is observed within these branches. The Front Office team consists of three Customer Service Representatives (CSRs) who provide all kinds of customer services and sell the financial products. The Back Office team consists of four tellers who provide all the cashier services. Each team reports to its own supervisors respectively: Customer Services Officer- Front and Customer Services Officer- Back.

These two Officers report to the Branch Manager. All the Branch Managers report to the Manager of Branches. The bank has created a mobile sales team consisting of ten to fifteen Mobile Sales Officers (MSOs) in each branch. The MSOs report to their team leaders and the team leaders report to the Branch Manager. The bank also has a Tele Sales Team in its Dhanmondi Branch. The reporting relation of this team is same as the mobile sales team.

Credit Department The Personal Banking Credit Department appraises the loan applications sent by the branches. The Manager of PFS Credit Department approves and administers all the activities and heads this department. The Manager is staffed with Processing and Administration Personnel and Credit Approval Personnel. The Approval Officer mainly approves or rejects the credit requests. After being checked by the Approval Officer, the credit requests are forwarded to the Processing Officer for further processing of the application. This department is also responsible for monitoring all necessary documents and securities related to loans.

ATM and ATB Center The ATM (Automated Teller Machine) Center ensures smooth operation of the ATM machines located in Dhaka and Chittagong. The ATM center is responsible for regular

replenishment of the off-site ATMs and servicing of all the ATMs. Currently 11 ATMs are in operation. The ATM Center deals with issuance, termination and servicing of the ATM cards. This department also oversees ATB (Automated Tele Banking) and supervises HSBC Phone banking services provided to customers.

Credit Card Department The Credit Card Department collects the card application forms from the branch level and processes these forms. HSBC launched Credit Card in collaboration with Prime bank Limited. The Card Department has one Officer and an Assistant Officer. After receiving the application forms the personnel of this department checks the documentation against the parameters. These personnel then send the application forms to the Credit Card Department of Prime Bank. As HSBC has launched the credit card in co-branding with Prime Bank Limited, the credit appraisal process and the authority to give the purchase limit of the card has been preserved by the Prime Bank Limited. After approval of Prime Bank Limited, HSBCâ&#x20AC;&#x2122;s Credit Card Department collects the card from Prime Bank Limited and sends these cards to the branches for distributing to the card applicants.

Personal Banking Services Realizing the huge potential and growth in Personal Banking industry in Bangladesh, HSBC extended its operation to the Personal Banking sector in Bangladesh and within a very short span of time it was able to build up a huge client base. HSBC in Bangladesh specializes in self-service banking through providing Day and Night Banking Services.

These services include 24-hour ATM services, Phone banking services and Easy Pay Machine services, 12-hour long Call Center services and Customer Service Center.

Through ATM machine a customer can withdraw cash up to Tk. 20,000/- per day; depending on the nature of his/her account, and deposit cash and cheques, transfers fund from one account to another account and know the account balance. Phone banking service aids the customers to know their account balances without coming to the Branch or ATM Booth. The Easy Pay machine aids customers to deposit cash and cheques and pay their utility bills. In the Customer Service Center a customer can get access to the ATM machine and Easy Pay machine. One of the Sales Officers remains in

the Customer Service Center from 9 a.m. up to 10 p.m. The sales officer assists the customers by answering all their queries and also sells Personal Financial Products (deposits and loan products) to the interested customers. A customer can also call the “Call Center” from 10 a.m. to 10 p.m. to know about different products of the bank. The Tele Sales Officers at the Call Center answers customer queries through telephone and also sells the bank’s personal products to the customers.

In 2000 the bank launched a wide array of personal banking products designed for individual customers. The bank currently operates in the niche market and targets the higher income and the higher middle-income groups. More precisely, the target customers of the bank are Professionals, Executives, Managers and high net-worth businessmen. HSBC has attached a Sales Team to sell the financial products. The Sales Team comprises of Mobile Sales Officers, Tele Sales Officers and the Front-desk officers in the branch.

The wide range of personal products can be divided into two broad categories- the Deposit Schemes and the Loan Products. The Deposit Schemes include Savings Account, Current Account, and Time (Fixed) Deposit Accounts in local currency (Taka). For the Non-Resident Bangladeshi (NBR) customers HSBC also offers Current Account and Time Deposit Accounts in Foreign Currency (USD, GBP and EURO). In this report, the focus remains on the loan products and the features of the loan products as described in the following chapter.

Personal Loan Products The Personal Banking Division of HSBC has designed various loan products to meet the needs of individual customers. The customers may want to have a car, an apartment, furniture and other household appliances to decorate the house etc. HSBC has focused on the needs, wants, demands and expectations of the consumers that arise from a secured income and an improved living standard. The bank has designed its loan (asset) products to satisfy some basic purchase purposes of the individual customers and also

intends to fulfill the status need of the customers by financing the purchase of high value assets like cars and apartments. The loan products of the bank are as follows: Personal Installment Loan (PIL) This loan is known as the any-purpose consumer loan of HSBC. The customers can avail this loan to meet any of their personal needs such as, purchase of household goods, computer purchase, marriage purpose, treatment purpose of the family members, house renovation, land purchase etc. The features of this loan have been specified in Table I below.

Product feature Product name Minimum amount Maximum amount

Personal Installment Loan.

Customer needs to apply for minimum Tk. 50,000/-.

Tk. 2,000,000/- or 4 times of salary or monthly income of the applicant, whichever is lower, 6 times for Auto pay customers,

Tenure Interest rate

and 10 times for CEPS customers.

Maximum 36 months.

For normal or regular (including Auto pay) customers 15%

Loan processing fee

For selected CEPS Customers â&#x20AC;&#x201C; 13 %.

1% of the loan amount or BDT 1,000 whichever is higher for all customers. The processing fee includes stamp fee of BDT 170

Early settlement fee Partial

and 15% VAT. Tk. 1,000/- plus 15% VAT. If paid within 3 months, 1% of the

outstanding amounts or BDT 1,000, whichever is higher? prepayment Allowed after 3 months of loan disbursement. At least 30% of

fee

the outstanding loan amount must be paid at a time. A customer also needs to pay BDT 1,000 as partial prepayment

Processing Time

fee.

For regular customers 3 days.

For Auto pay / CEPS customers 1 or 2 days.

Guarantee

Provided all the documents have submitted by the applicant.

No personal guarantee required.

Table 3.2: Features of Personal Installment Loan Source: Personal Installment Loan Brochure Benefits for the Customers

The loan is meant for any purpose and completely unsecured in nature. The customers do not need to submit invoices or quotations for what they intend to purchase. The customer does not need to pay any down payment to disburse this loan.

Eligibility for availing the loan: The customer whose age is between 25 years and 56 years can apply for this loan.

The applicant is required to have at least two years job experience in a well- established company.

Minimum monthly income of the applicant should be Tk. 15,000/-.

Self-employed individuals can also apply by submitting valid income proof (like tax papers) to the bank.

Travel Loan The loan is the extension of the Personal Installment Loan and solely given for the travel purpose. These loans are meant for overseas vacation purpose. The customers need to submit travel quotation from Travel Agency in order to avail the loan. Table II highlights the characteristics of this type of loan.

Product feature Product name Minimum

Travel Loan Customer needs to apply for minimum Tk. 50,000/-

amount Maximum

Tk. 500,000/- or 4 times of salary or monthly income of the

amount

applicant, whichever is lower, 6 times for Autopay customers,

Tenure

and 10 times for CEPS customers Maximum 36 months for loan amount below Tk. 400,000/-.

Maximum 48 months for loan amount above Tk. 400,000/-.

Interest rate 15% for all the customers.

Loan processing 1% of the loan amount or BDT 1,000 whichever is higher for all fee

customers. The customers who receive Travel Loan get discounts in the endorsement fee.

Table 3.3: Features of Travel Loan Source: Travel Loan Brochure

All the other features of Travel Loan such as processing fees, early settlement fees and

partial prepayment fees and the eligibility parameters for the customers are the same as those of Personal Installment Loan.

My Loan HSBC has launched a new product named My Loan in the first quarter of 2004. My Loan is also an extended version of the PIL. The product features, benefits and the eligibility parameters for the customers are same as the Personal Installment Loan. The only difference from PIL is that in order to avail My Loan the customers need to obtain quotations from the retail shops. The bank sends the approved amounts to the retailers by a Pay Order instead of crediting the applicant’s account. For the My Loan campaign the bank has made agreements with various retailers. Any customer who wishes to purchase products or services from the specified retailers can apply to the bank for a loan. The loan is given to the customers based on their monthly income and the quotation price of the products and services. The list of the retailers is given in the Appendix C.

Car Loan HSBC provides Car Loan for customers to purchase cars for only personal usage.

Customers can not apply for car loan for business or other commercial purpose. Table III describes the features of a Car Loan.

Product feature Product name Minimum amount Maximum

Car Loan.

Customer needs to apply for minimum Tk. 50,000/-.

Tk. 4,000,000/-. Customers can apply for 8 to 10 times of their

amount

salary or monthly income. Maximum 70% of both new and reconditioned car value is given based on the applicant’s

Tenure

monthly income. (Applicable for all customers).

Usually 48 months, sometimes 60 months if the loan amount is

Interest rate

over Tk. 500,000/-.

For normal or regular (including Autopay) customersLoan amount below Tk. 500,000/- – 14.5 %.

Loan amount equal or above Tk. 500,000/- – 14 %.

For selected CEPS Customers or selected car vendors – 13 % or Loan

13.5 % based on agreement with the bank. processing 1% of the loan amount or Tk. 1,000/- whichever is higher for all

fee Early

customers. The processing fee includes stamp fee of Tk. 170/and 15% VAT. settlement Tk. 1,000/- plus 15% VAT. If paid within 3 months, 1% of the

fee Partial

outstanding amounts or Tk. 1,000/- whichever is higher.

Allowed after 3 months of loan disbursement. At least 30% of

prepayment fee

the outstanding loan amount must be paid at a time. A customer also needs to pay Tk. 1,000/- as partial prepayment

Processing Time

fee.

For all customers 3 days.

Provided all the documents have submitted by the applicant.

Table 3.4: Features of Car Loan Source: Car Loan Brochure In order to avail the Car Loan, customers need to submit quotations from car vendors mentioning the price of the car to be purchased.

HSBC provides this loan for only brand new or reconditioned cars. The bank does not finance for secondhand car purchasing. The loan value is paid to the car vendor in the form of Pay Order instead of crediting customer’s bank account. The car needs to be registered solely in the name of HSBC. After repayment of the loan the ownership of the car is handed over to the customer. HSBC also make arrangements with selected insurance companies for special discounts on their insurance policies. The loanprocessing fee does not include registration cost and the insurance cost. The registration and insurance fees need to be paid by the customers.

Benefits for the Customers Like the Personal Installment Loan (PIL), Car Loan does not need any personal guarantee or cash security. HSBC has agreements with the various car vendors and companies. The customers who purchase cars from the specified vendors get lower interest rate from

the bank. For example, the Bank has agreement with DHS Motors and A-1 Motors to provide its customers a Car Loan at 13% while the regular rate is 14%.

Eligibility for availing the loan: The eligibility criteria to avail Car loan are same as that of PIL. In addition, the applicantâ&#x20AC;&#x2122;s monthly income should be Tk. 20,000/-.

Home Loan Housing Finance industry is the most secured field to invest for any Financial Institutions.

HSBC penetrated this industry in the last quarter of 2002. Initially, the bank had rigid product features and targeted only the salaried business executives. Over time HSBC brought flexibility in its Home Loan and is further developing this product to compete with the Housing Finance Products offered by many other banks and Financial Institutions. Table IV describes in details the features of a Home Loan.

Product feature Product name Minimum

Home Loan Customer needs to apply for minimum Tk. 750,000/-

amount Maximum

Tk. 10,000,000/-. A maximum loan amount of 70% of the total

amount

value of the apartment costing up to Tk. 5,000,000/- and 60% of the total value for apartments over Tk. 5,000,000/- is given to the customers based on their monthly income. Usually a customer can avail loan amount 22 to 25 times of their monthly

income.

Tenure Maximum 15 years.

Interest rate 14% for all customers.

Loan processing 1.5% of the loan amount. The processing fee includes stamp fee fee Prepayment fee

of Tk. 170/- and 15% VAT. Tk. 1,000/- plus 15% VAT. At least 30% of the loan outstanding

needs to be prepaid.

Early settlement Early Settlement fee is 1% of the loan outstanding or Tk. fee Processing Time

10,000/- whichever is higher.

Loan processing time is higher than the processing time of other

loan products since legal checking is involved. The time is not specified and varies on individual application time.

Table 3.5: Features of Home Loan Source: Home Loan Brochure Home Loan is given only for completed flats or apartments, which are less than 20 years old. The loan amount includes registration cost. The loan is paid to the developers or the previous owner through Pay Order instead of crediting the customerâ&#x20AC;&#x2122;s account. The apartment is mortgaged in the name of HSBC and the bank preserves the original title deed.

The bank manages the insurance

coverage for fire, earthquake, flood and cyclone. The insurance coverage cost is borne by the customer. Home Loan also does not require any personal guarantee.

Eligibility for availing the loan: The eligibility parameters are same as those of Car Loan and Personal Installment Loan.

However, the applicant needs to have monthly income at least Tk. 40,000/-. The borrower must repay the loan amount before his/her retirement date or reaching age of 57 whichever is earlier.

Personal Secured Loan Personal Secured Loan (PSL) is a stand-by loan which a customer can avail against his/her Time Deposit held with HSBC or Wage Earner Development Bonds (WEDB) and US Dollar Bonds. Features of a Personal Secured Loan are listed in Table V. Product feature Product name Minimum amount Maximum

Personal secured Loan.

Customer needs to apply for minimum Tk. 90,000/-.

90% against both Local currency security (Local currency Time

amount

Deposit and WEDB) and Foreign Currency Security (Foreign

Tenure Interest rate

currency time deposits and US Dollar Bonds).

Maximum 60 months.

For Local currency Time deposits (TMD)- TMD rate +3%. For WEDB and US Dollar Bonds- 12.5% for loan amount below Tk.

Loan

500,000/- and 12% for loan amount above Tk. 500,000/-. processing For HSBC security (TMD held with HSBC or bonds purchased

fee

from HSBC) the processing fee includes Tk. 1000/- plus stamp fee of Tk. 170/- and 15% VAT. For other bankâ&#x20AC;&#x2122;s security (bonds purchased from other multinational banks) the processing fee includes Tk. 1500/-

Early

plus stamp fee of Tk. 170/- and 15% VAT. settlement Tk. 1,000/- plus 15% VAT. If paid within 3 months, 1% of the

fee Partial

outstanding amounts or Tk. 1,000/- whichever is higher.

Allowed after 3 months of loan disbursement. At least 30% of

prepayment fee

the outstanding loan amount must be paid at a time. A customer also needs to pay Tk. 1,000/- as partial prepayment

Processing Time

fee.

For all customers maximum 2 days.

Provided all the documents and discharged securities (authorized the bank to encash the security as needed) have submitted by the applicant.

Table 3.6: Features of Personal Secured Loan Source: Personal Secured Loan Brochure Personal

secured

loan

is

repayable in equal monthly installments. The securities (TMDs or bonds) need to be opened or purchased before applying for the loan. The applicant should properly sign the entire signature field specified in the TMD application form and on the bonds to give the bank the authority to encash the securities as needed in the loan application form.

This loan is provided against the bonds issued only by HSBC and other multinational banks. In the event of three consecutive missed installments the bank encashes the securities and realizes the outstanding loan amounts.

Personal Secured Credit Personal Secured credit (PSC) is a credit or overdraft facility against Time Deposits or bonds such as Wage Earner Development Bonds, US Dollar Bonds, that enables customers to have the flexibility to meet short term commitments without unlocking their long term investments. Personal Secured Credit (PSC) facility is similar in nature of

the Personal Secured Loan (PSL) facility. The basic differences of PSL facility and PSC facility are: The customer repays the interest on PSL facility on monthly installment basis while he/she repays the interest on PSC facility quarterly (that is, in March, June, September and December).

For Personal secured credit (short term) the interest is calculated on the daily outstanding loan amount and for personal secured loan (long term) the rate is calculated annually.

To have PSC facility the customers must maintain a current account with HSBC while for having PSL facility they may have either savings account or current account with the bank.

The loan tenure is for maximum one year (since short term credit facility), however the customer can renew the facility for further period (up to the maturity period of the securities) without paying any additional renewal fees. Facilities are repaid when either time deposit is withdrawn or when Government bonds mature.

However all the other features of the PSC (like nature of security, early settlement fees, processing fees) are exactly the same as those of PSL)? The interest rates for PSC against various types of securities are given below: For Local currency Time deposits (TMD) - TMD rate +3%.

For Foreign Currency Time Deposits- 12.5% for loan amount below Tk. 500,000/- and 12% for loan amount above Tk. 500,000/-.

Against Bonds: 13% for any amount.

Benefits to the customers These loans provide the customers with flexibility to meet any emergency cash needs without encashing their high yield investments already purchased. The customer can also re-invest the loan amount while preserving the main investment (Time/Fixed

Deposits or Bonds) intact. These loans provides the customers the opportunity for not to block their savings for a prolonged period rather these products help them to utilize 90% of their savings in different fields and multiply the return on their investment.

Eligibility to avail these loans 

No particular age limit is required. However, the applicant cannot be minor (that is, should be more than 18 years).



Any body with the repayment capability and having security can avail this loan.

Common Benefits of generally applicable to the loans Loan repayments are made in form of equal monthly installments (EMI). The customers have the flexibility of choosing the repayment periods among 12, 24 or 36 months.

The monthly installment is automatically debited from the customer’s personal account held with HSBC. The customers need not come to the bank to pay the monthly installments.

The bank specifies three dates for their customers to pay the installments. These dates are 7th, 15th and 28th of every month. The customers can choose their own preferred date to pay the installments from the above specified dates.

Having provisions for partial repayments and early settlement of the loan, a customer can repay the loan anytime and avoid paying extra interest to the bank.

Customers can apply jointly, since their combined income enables them to apply for a higher loan amount.

The documentation needed for the Personal Installment Loan (Unsecured Loan) 

Photograph of the applicant



Applicant’s passport copy



Other bank’s Statement



Bill copy (telephone/Gas/ Electricity/mobile) which goes to customer’s residence



Income Proof (Salary Certificate for salaried individuals, Trade License and Income Tax Return certificates for the self employed persons)



TIN (Tax Identification Number) Certificate is required for loan amounts exceeding Tk. 5, 00,000/-.



For Car Loan, Travel loan and My Loan, the quotations from the car or retail vendors and the travel agencies are needed along with the documents required for the PIL.



For Home Loan the customers need to submit Property Ownership Documents, such as Ownership Deed, Deed of Agreement with Developer, along with the documents required for the PIL.



For Secured Loans such as (PSL and PSC) the customer does not need to provide any document other than the security itself (such as discharged bonds and the original Fixed Deposits Receipts).

Credit Cards HSBC launched its Credit Card in September 2003, co-branding with Prime Bank Limited.

The bank could not launch its own credit card to comply with Bangladesh Bank order.

The purpose of launching the credit card is to facilitate the customers to increase their spending power. HSBC also aims to counter the market competition since many other banks like Standard Chartered, Prime Bank, National Bank, Dhaka Bank and other financial institutions like Vanik have issued credit cards. HSBC’s credit card has acceptance in about 5,000 places. The customer can use the cards in any hotel, restaurants, shops, departmental stores, hospitals etc. Table VI provides the features of an HSBC Credit Card.

Product feature Product name Products offered Card limit

HSBC-Prime Co-branded MasterCard Gold card.

MasterCard Gold. HSBC only issue cards for local usage.

MasterCard Gold Normal- Tk. 50,000/- up to Tk. 100,000/-

Validity of cards Annual Fee Renewal Fee Replacement Fee Late Payment Fee

MasterCard Gold VIP- Tk. 100,000/- up to Tk. 200,000/Two years from the date of issuance.

Tk. 2000/Tk. 2000/Tk. 500/Tk. 300/- The fee is taken if the customer pays the

Supplementary Card

outstanding balance in late.

Maximum 9 supplementary cards can be availed by a

customer. The credit limit is shared for the supplementary cards. for First supplementary card is free of cost. However, for the

Fee

Supplementary Cards Interest rate

next card(s) annual fee is Tk. 1,000/The interest rate is 2.5% per month and calculated on a

daily basis on the card amount from the posting date.

Time period given to The customer can enjoy between 20 to 50 days of interest make payments

free credit from the date of each transaction. The customer can pay 8% of the current outstanding balance or Tk. 500/- whichever is higher.

If the current balance is less than Tk. 500/- the customer

Cash Advance

should pay in full.

The customers cannot have the cash advance facility on

Payment Mode

this card. HSBC provides only the purchase facilities.

The customer can pay the outstanding balance through cash, cheque, Account transfer, Auto Debit Instruction etc.

Table 3.7: Features of Credit Card Eligibility to avail the card 

Only HSBC account holders can apply for the cards.



The account holder has to maintain a relationship of minimum 3 months and preferably 6 months with HSBC to apply for the card.



The age limit of the customers should be between 21 and 65 years.



The gross salary or the monthly income of the customer should be minimum Tk. 25,000/-.

Benefits to the Customers 

By having the credit card the customer can associate himself with HSBC’s brand name.



The Gold cards are the status symbol for the customers.



The customers are getting longer interest free period and lower annual fee with HSBC than the other banks. Other banks are providing interest free period for maximum 45 days and taking annual fee up to Tk. 3,500/-.



The customers are also having easy bill payment mode with HSBC.

The documentation needs to provide along the application form are



2 photographs



Salary Certificate (for salaried individuals), Trade License (for self-employed persons)



Last 6 months Bank Account Statement



Proof of residence (if Own)



Passport Copy



Phone Bill ( T&T), Gas/ electricity Bill copy



Ownership of car (if any)



Income Tax Return Certificates



Statement of other bank Credit Card (if any)



Copy of club membership



Evidence of other income (including income of spouse)

Processing of Loans The loan processing is handled by the Customer Service Representatives (CSRs) at the branch level. HSBC has a centralized Credit Department in its Head office to monitor and process individual loans. The overview of the loan availing process for a new customer is described in the following subsections. 

Account Opening: The customer initially approaches the CSR at the branch level specifying his/her individual needs for availing loans. CSR(s) makes the subjective judgment on the authenticity and financial status of the customer to arrive at proper justification for the loan in terms of definite purpose, personality and willingness of repayment. Once satisfied, the CSR advises the customer accordingly and describes the related product features of the loan. The customer then needs to open either a Current Account or a Savings Account at HSBC in order to avail the loan.  Branch Level Verification: After opening the account the customer collects the required documents for the loan application and fills up the application forms.

The CSR verifies copies of all documents against the original documents provided by the customer and also checks the loan application from. The loan processing times starts at this point.

The CSR sends the loan application form to the Branch Manager after writing his/her comments. The Branch Manager verifies the applicant’s document and provides his/her comments. If the Branch Manager approves the loan application, the CSR sends the application form along with the documents to the Credit Department for further assessment. 

Credit Appraisal Process: When the Credit Department receives the applications, a personnel of Credit Department checks all the documents to determine whether it meets each of the requirements. Applications which do not meet the parameters of the lending policy are reviewed by Credit Manager to judge whether the application has some merit. The Credit Manager recommends loans not meeting the parameters to the Head of PLB Division for his/her approval.

HSBC is more flexible with the Personal Secured Loan / Credit because of the security obtained. For the rejected applications a letter is sent to the customer.

In the Credit Department the Credit Officer verifies the loan application. As the most of the loans of the bank are not supported by cash security and guarantors, the bank’s personnel examines the customer details thoroughly during credit assessment. The Credit Officer basically focuses on the two key features during credit assessment. These are Financial Strength of the Customer and Customer Profile.



Financial Strength of the Customer: The Credit Officers determine the creditworthiness of a customer (ability and willingness to repay). Under this criteria they examine: the customer’s capacity to repay the loan, assets, property, bank balance, own residence, monthly salary for the salaried individual, stability of cash flows, other financial Statements, Tax Return Paper for businessmen and self-employed people.

For existing customers the bank checks account details, account conduct and the nature of previous payments or the repayment history if the customer has had any previous loan. For new customers the bank checks other bank’s statements and verifies the financial details.

The Credit Officers also verifies all the income sources and the expenditure sources. The officers verify the salary certificate by calling the applicant’s office, visiting the applicant’s residence if the applicant shows any rental income, and

checks for reference. The Credit Officers also use their subjective judgment to consider the applicant’s living expenses against his/her income and family size.

They check whether the rental expense shown reflect the true picture. The bank then makes the quantitative discretion by finding out the debt-burden ratio (Expenditure/Income) of the customer. The Credit Departments prefers that the ratio be below 70%. 

Customer Profile: To understand the customer’s profile the bank checks the stability of the customer. For example: the tenure of the job of the applicant and the career growth (for the salaried individual). The tenure of the business for a businessman and his/her investment in that field and the tenure of the present address. The bank also verifies the personal commitment of the borrower. To check this, Credit Officers verify the borrower’s marital status, number of children and socio-economic status.

Finally, the Credit Manager reviews the application to ensure issues are properly addressed and gives his comments. Each Credit Officer, Credit Manager and the Head of the department have the specified limit to approve the credit amount.

The application form is judged and approved by the final authority. The Credit Department retains all the applications those are approved and reverts the rejected application forms



Disbursement: The daily lists of approved and rejected applications are circulated to the Credit Manager and the Branch Managers. The CSR informs the customer whether the loan has been approved or not. For the secured loans the loan amount is disbursed to the customer bank account with HSBC if all the documents are in order. However, for the unsecured loans like Personal Installment Loan, Car Loan the customer needs to give the bank five undated cheques covering the installment amounts as security. After receiving the cheques from the customer the Credit Department disburse customer’s account with HSBC or send the Pay orders to the Vendors.



Savings Account: The Key features of a Savings Account are shown below in Table 3.8.

Product feature What is it:

Savings Account This is an account where the customer can deposit

money and earn interest on the balance of the account. However, the bank must pay the customer Opening Balance

his/her money in the account whenever demanded.

A customer can open this account with minimum balance of Tk. 50,000/-. The customer can open this

Interest Rate

account either by cash or by cheque.

4.10% for Tk. 25,000/- to 500,000/- .

4.61% for Tk. 500,001/- to 1,000,000/-.

5.10% for over Tk. 1,000,000/-.

Calculation of interest and Interest is calculated on daily balance from Tk. payment 25,000/- and paid half yearly.

Requirement for earning No restrictions on withdrawal or upper interest limit. interest Check book delivery 2 working days after opening an account.

A/C closing fee Tk. 300/-.

Fee for closing of A/C within Tk. 500/-.

3 months of opening Table 3.8: Features of Personal Account Source: Personal Account Brochure Type of Account HSBC offers following type of accounts to its clients. As its primary focus is on loan, its type of account and account services are relatively very limited. ď&#x201A;§

Current Account: The Current Account features are same as those of Savings Account. However, one exception is that in Current Account the customers do not earn interest on their deposit balance. The customer may have both a Savings Account and a Current Account with the bank at the same time.

The prime features of both the accounts are that the account holder must maintain an average (For three month period) Relationship Balance of Tk. 50,000/- with the bank. If the Relationship Balance falls below Tk. 50,000/- the bank deducts a relationship fee of Tk. 345/- from the customerâ&#x20AC;&#x2122;s account after every three months. By opening a Savings or Current Account the customer may have free ATM cards and free Phone banking Services.



Time Deposits: The customers need to open Time Deposits, which are interestbearing accounts with stated maturities, which may carry penalties in the form of lost interest earnings or reduction of principal if early withdrawal occurs, in order to avail Personal Secured Loan or Personal Secured Credit facilities. The features of the time deposits are:

 The customer can open Time Deposits for the varied tenures. The available tenures are 1month, 3 months, 6 months and 1 year. The interest of this account is paid upon maturity. As the interest rates of these accounts vary frequently within short periods of time, the rates have not been incorporated in the report.  The opening balance of the Time Deposit is Tk. 100,000/-.  The customer may also open Monthly Interest Bearing Time Deposit with opening balance of at least Tk. 500,000/-. Here the customer keeps his money for minimum one year to maximum two years and also draw the interest on monthly basis. The interest amounts are transferred to the Savings or Current Account on the date as customer prescribes. The advantage of this account is the customer can avail dual interest facility. As the interest amount of the TMD is transferred to the Savings Account the customer also avails the interest of the Savings Account on this amount.

To open the savings or current accounts a customer needs to submit one passport-size color photograph, either Passport copy or copy of the Driving license or copy of the Voter ID card and Tk. 50,000/- either in cash or in cheque along with the properly filled deposit form. For the new customers who want to open the account only to avail the loan can open the account with Tk. 10,000/-. The opening balance is refundable if the loan does not get approved.

3.3 Citibank, N.A. In Citibank, N.A. consumer banking services are limited to its accommodation account. It provides very narrow consumer banking services, namely deposit facilities. No credit facilities are currently providing by Citibank, N.A. for its individual Clients. Nevertheless product and service range of Citibank, N.A. for its individual clients is very selective in nature. Local account opening is handled by Domestic Account Services (DAS) unit. All customer accounts including Current, Savings, SND accounts therefore is handled by

DAS. The accounts may be of different kinds depending on the type of the customer i.e. corporate or individuals and the type of the organizations i.e. local or foreign incorporated etc.

3.3.1 Consumer Banking Promises of Citibank, N.A. Citibank, N.A.’s consumer banking clients get the following offers: All the Citibank, N.A. clients can efficiently manage their fund through opening



an account in it. 

It provides friendly and personalized services to all its clients.



It always keeps personal touch in maintaining relationship with the clients.



It offers state-of-the-art technology in all spheres of its premises.



It is committed to value financial stability of its valued clients.



Convenience in accessing the account is another aspect of the consumer banking services.

Clients can also get comprehensive banking solutions at their desktop through



Citibank, N.A. 3.3.2 Consumer Banking Facilities of Citibank, N.A. 

Offers to make day-to-day transactions.



Deposit or withdraw your cash right near your doorstep.



Banking opportunity with the world’s largest financial institution. Convenience to transfer money anywhere in the country and across the world’s largest financial institution (subject to local regulations).

3.3.3 Consumer Banking – Accommodation Account Accommodation accounts are targeted towards individuals only. Its dimensions are as follows: Type of Accounts of Citibank, N.A.: The most common types of accounts may be of local currency denominated current or savings accounts for resident individuals. For other types of accounts, the Bangladesh

Bank Guideline’s For Foreign Exchange Regulations, 1996 Chapter 5, 10, 11, 12 & 13 is referred. Citibank, N.A. offers the following kinds of account for its individual clients. 

Current Account



Savings Account



Short Notice Deposit Account



Fixed Deposits



Foreign Currency Account

Type of Services related to Account: 

Remittance Services



Travel Services

Features of various Accounts of Citibank, N.A.: 

Current Account: o

It is simple and easy to operate.

o

No interest is payable on any current account maintained with Citibank.

It offers unmatched convenience and no hidden

o

charges.

It provides 24 hour banking through ATM

o

facility.



o

It provides easy access to the account.

o

It ensures faster fund flow.

Savings Account: o

It maximizes the power of its client’s savings.

o

It offers attractive interest rate.

o

Interest on savings Account is calculated on a monthly basis on the Lowest balance in the account during the month and is paid every six months (at the end of June and December).

If the balance in any account falls below the

o

minimum balance on a day, in any month, interest shall not be paid

o

for that month.

The rate of interest determined by Citibank

o

from time to time payable on the credit balance maintained in any interest bearing Account shall be binding on the customer. Withholding tax, if any, shall be deducted at the applicable rate.

It provides 24 hour cash access through ATM.

o ď&#x201A;§

Short Notice Deposit Account: o

It is a unique product offered by the bank.

o

It allows its clients to make transactions easier.

o

This account accumulates interest on daily credit balance of an account.

Interest on special notice deposit account will

o

be calculated on daily balances in the account, and paid in the frequency as guided by Bangladesh bank from time to time.

To qualify for interest, any credit into the

o

\account must remain Deposited for at least seven (7) days.

o ď&#x201A;§

Fixed Deposits: o

Fixed deposits account can be opened with Citibank for monthly quarterly, half yearly and on yearly basis.

o

The amount deposited shall be repayable only on the date of maturity with interest up to that date. Partial/ premature withdrawal shall be at the absolute discretion of the bank and subject to the terms and conditions imposed by the bank, including the reduction of interest rate

payable on the deposit. Repayment shall be made in the currency of the deposit and only to the depositor in Manager’s Cheque (Pay Order) or other means favoring the depositor.

A deposit made on a roll over basis shall, on its

o

due date, unless withdrawn on that date, be automatically renewed for a like term at the prevailing rate of the bank on that date and shall continue to be renewed on each succeeding due dates, unless otherwise instructed by the customer in writing to, Citibank at least three business days prior to the due date or unless Citibank has given notice to the customer prior to the due date that it shall not roll over the deposit on such due date. In both such cases, interest shall cease to accrue on the said due date. 

Foreign Currency Account: Foreign currency account can be opened with

o

Citibank (subject to local regulations).

Characteristics of various Services of Citibank, N.A. Accounts: 

Remittance Services: It gives the power of managing the foreign

o

exchange flows effectively.

Funds sending and receiving facilities through

o

Citibank state-of-the-art technology from or to anywhere of the world. 

Travel Services: oIt issues traveler’s cheque and foreign currency to travelers who maintains account with Citibank.

Shanchay Patra: In Citibank, N.A. clients can also avail Sanchay Patras of various terms. Terms for the Sanchay Patra vary from 3 months to 3 years.

Schedule of charges Schedule of charges for Citibank, N.A.’s consumer banking products are as follows: Product

Fee

Minimu m

Inward Remittance (TT/DD): Credit to Nil Nil Citibank Account Payment at 0.1% Tk. 500 counter Payment to 0.1%+ ref. to Tk. 500 other bank by note MC Payment to 0.1%+ 500 (DD) other bank by FCY DD Payment to 0.05% other bank – BBK check Outward Remittance: Issuance of 0.05% flat Telegraphic Transfer Issuance of 0.3% flat Demand Draft Issuance of MC Commission Managers Check = Up to Tk. 100 M = Tk. 200 Over Tk. 100 M = Tk. 400 Issuance of Tk. 200.00 Bangladesh Bank Cheque Account Services: Yearly Account Savings Account Maintenance = Tk. 1000 Current Account = Tk. 2000 Stop Payment Tk. 100 per instruction Issuance of Tk. 150 = 25 Checkbook leaves Tk. 250 = 50

Postage /Cable

MC Commission = Upto Tk. 100 M = Tk. 200 Over Tk. 100 M = Tk. 400

Tk. 500

Tk. 500

Notes

Tk. 20

Tk. 500

Tk. 500

Other

Tk. 500

Minimum balance required Excessive withdrawals

leaves Tk. 500 = 100 leaves Tk. 500/ month Tk. 500/ month

Tk. 500 Current year â&#x20AC;&#x201C; nil Statement prior year - 400 Counter Transaction: Issuance: 1% of issuance Travelers Checks amount Dependents of staff = Nil Issuance: 1% of issuance Currency notes amount Dependents of staff = Nil Encashment: Citicorp = Nil Travelers Checks Others = 0.25% Encashment: 1% Currency notes Clean bills 0.25% purchased Collection: Clean 0.15% Bills (FCY)

This will apply where savings accounts have more than 5 withdrawals in a month.

Account Closing Statement Rendition

Excise Duty + TDS

Tk. 100

Tk. 100 Tk. 100 Tk. 500 Tk. 200

Table 3.9: Schedule of charges Interest Rate The list of interest rate of Citibank, N.A.â&#x20AC;&#x2122;s consumer banking services are presented in the following table: Citibank, N.A. List of Interest Rate (Percentage per year) Effective Date: 01 November 2006 Rate of Deposit (Local Currency)

Saving Deposit Rural Urba Area n Area

Less than 10 million

1

2 4.5

Fixed Deposit Short Notice Deposit

Up to 1 Mont h

3 3.007.00

10 million & above but less than 50 million 50 million & above but less than 100 million 100 million & above

3 months & above but less than 6 months

6 months & above but less than 1 years

1 year & abov e but less than 2 years

2 3 year year & & above abov e but less than 3 years

4 4.50

1 mont h & abov e but less than 3 mont hs 5 4.75

6 5.50

7 5.50

8 5.50

9 6.00

10 6.00

4.757.50

5.08.0

5.758.00

6-8.25

6.259.55

7.009.55

6.25

7.757.77

8.258.27

8.95

9.319.36

9.659.75

9.659.75

6.25

7.77

8.27

8.95

9.53

9.85

9.85

6.25

Table 3.10: List of interests Account Opening Procedures In Citibank, N.A. all individual clientsâ&#x20AC;&#x2122; account is listed in Accommodation Account.

Formal account opening procedures are described below: Account Opening Process

All account documents shall be reviewed by respective relationship managers for completeness of the documents before forwarded to the DAS unit. The Relationship team shall ensure the following: o

Proper due diligences and KYC procedures are performed at the time of establishment of the relationship.

o

All relevant customersâ&#x20AC;&#x2122; documents are obtained, verified and attested or appropriate deferral is raised for any documentation deficiency.

o

Internal and appropriate approvals are obtained including Category A & B approval, minimum balance waiver (if any) etc.

On receipt of the documents the DAS unit shall perform the following activities : 1. Check the documents in accordance with the Standard Account Opening Checklist and Forex Guidelines for completeness of the documentations.

2. For any deficiencies, the respective RM shall be notified for rectification or deferrals 3. If the documents are found in order, the account shall be opened as per the standard and agreed cut-of time arrangement.

4. The check books to be printed on the same day for the first time issue of the checks. The LOP (Local Operating Procedures) for check-book printing and handover process may be referred.

SDN Screening: The SDN/SDT checking is to be performed from Citigroup Global Compliance website for the prospective customer, its signatories and directors. Any positive match or confusion must be notified to the OIC of the unit and compliance for immediate clarification and action.

Maintenances of Anti-Money Laundering Monitoring : All account documents must have a Transaction Profile which gives the idea of transactions the customer wants to do with the bank. The limits of TPs are maintained in IBBS module named AMLMON. This maintenances needs to be done very carefully since

depending on the maintenances, the compliance department shall generate the exception reports and review for AML monitoring purpose.

Deferrals Documents those can not be collected at the time of opening the accounts shall needs to be approved through approved deferrals. The deferral process shall be governed by the approved deferral policy of the country.

MSign Sample signatures are maintained in the MSign prog by the DAS unit only. A short text of the signing authority to be appended in IBBS system.

Account opening of Individual Accounts The account opening process is centralized in Motiheel Branch for opening all Dhaka corporate and individual accounts. GTS Head shall approve the individual accounts.

Following points to be noted for opening individual accounts: Nomination o

It will accept photograph of the nominee attested by the account holder.

o

Nominee's signature is not mandatory. In case of a minor nominee we will require attested photograph of a guardian also. Account holder cannot be the guardian.

The CRM/PSM will try to get additional identification information/documentation The CRM/PSM will check so that signature of the customer is same in the application form and the back of nominee's photograph.

Mode of Operation o

Under single signature means any one of the account holders can sign.

o

Under Joint Signature means all of the account holders have to sign together.

TIN Number

o

Wherever someone's annual income is over tax limit (currently Tk. 75,000/-) TIN number should be filled in. In case of people that have started earning recently RM/PSM will write a comment to that effect.

o

Housewives may not have TIN number. It should be filled in Not Applicable in both the TIN & Income fields.

o

If TIN is not obtained by the time the docs are sent to DAS Ops for account opening the CRM/CRO/PSM can convey the same over phone/e-mail. DAS Ops will write it in pencil and open the account. CRM will complete the form during the weekly visits on Thursday.

US Tax Information This must be filled in. In case of a non- US person tic NO Introduction/ Attestation Citibank officers (not contract staff) can introduce accounts & attest photographs of the customers. ď&#x192;¨ Introducer & Approver cannot be the same person Transaction Profile Customers will fill in only the relevant items for them. Total value column needs to be filled in as AML monitoring takes place on both size of transaction and aggregate value of the transactions during a period.

RM for Individual Accounts o

PSMs cannot be RM to an account. They can be introducers. The Account should have an RM from Corporate/FI/Priority, as applicable.

o

Corporate/FI RMs cannot be RM to Individual Accounts. They can be introducers.

The Account should have an RM from priority banking.

Description of Some Documentation The Account Opening Kit (Accommodation Account) has the following forms: 1. Account Application Form- Accommodation Account 2. Documentation Check List- Accommodation Account

3. W-9 Form-Request for Tax Payer Identification Number (TIN) (Applicable for US citizen only) 4. Statement of Foreign Status and Affidavit (Applicable for Non US citizen only) Required Documentation: The following table details the documents required for opening various types of accounts in Bangladesh that is also followed by Citibank, N.A. Sl. 1

2

3

4

5

6 7

8

Resident Bangladesh Nationals Account Application FormIndividual Account Photograph of Applicant(s) attested by introducer Photograph of Nominee attested by applicant(s) Copy of Passport (first 7 pages) or acceptable identification Letter of introduction from applicant’s existing banker, employer or acceptable third party Mandate Card1

Non-Resident Bangladesh Nationals Account Application Form-Individual Account

Resident Foreign Non-Resident national Foreign national Account Application FormIndividual Account Photograph of Applicant(s) attested by introducer Photograph of Nominee attested by applicant(s)

Account Application FormIndividual Account

Copy of Passport (first 7 pages) or acceptable identification Letter of introduction from applicant’s existing banker, employer or acceptable third party Mandate Card1 Mandate Card1 Valid work permit/ Valid Visa and employment Work Permit agreement

Copy of Passport (first 7 pages) or acceptable identification Letter of introduction from applicant’s existing banker, employer or acceptable third party

Photograph of Applicant(s) attested by introducer Photograph of Nominee attested by applicant(s) Copy of Passport (first 7 pages) or acceptable identification Letter of introduction from applicant’s existing banker, employer or acceptable third party

Valid 18-A permission from Bangladesh Bank (not required for employees of banks, local

Photograph of Applicant(s) attested by introducer Photograph of Nominee attested by applicant(s)

Mandate Card1 Income certificate duly attested by the appropriate authority

9

10 11 Employer’s Request letter 12 Tax Certificate recent 13 Copy of utility bills (i.e. telephone bill), or Employee ID

companies) Form QA-22 signed in duplicate by all signatories *SFS & A/W9 *SFS & A/W9 Employer’s Request Employer’s letter Request letter Tax Certificate recent Tax Certificate recent Copy of utility bills Copy of utility (i.e. telephone bill), bills (i.e. or Employee ID telephone bill), or Employee ID

*SFS & A/W9 Employer’s Request letter Tax Certificate recent Copy of utility bills (i.e. telephone bill), or Employee ID

*Applicable for US citizens only Notes: 1. Mandate Card should be executed only if a person other than the account holder(s) is authorized to operate the account. Items 3,4, and 9 should also be provided for this signatory.

2. For self-employed persons, declaration duly attested by Bangladesh embassy/ high commission/ consulate in that country. For mariners copy of continuous discharge certificate (CDC) 3. Citibank may ask for additional documents for special accounts Accommodation Account (“A”) Opening Checklist: It needs to be made sure that the following underlying KYC documentation is obtained and submitted with the AA Request form for any new AA Opening:  Completed and in-country approved CADD by RM, Business Head, CCO (for Public Figures only), and Country Compliance;  Completed and in-country approved AA Request Form by RM, Business Head, CCO,  and Country Compliance;  For US nationals, copy of 

Completed and signed W-9 ( Form for US Nationals;



Passport;



National Identity Card or Employment Staff Identity Card; or





Government issued Tax Identification; and/or



Other CIP-P acceptable documentation

For Non-US nationals, copy of 

Completed and signed Statement of Foreign Status and Affidavit (plus W8BEN Form if the non-US national having a US mailing address); Passport;



US Green Card (if applicable)



Passport;



National Identity Card or Employment Staff Identity Card; or



Government issued Tax Identification; and/or



Other CIP-P acceptable documentation



Referral Letter from Sponsoring Employer requesting AA opening;



If a referral letter fails to mention that the applicant is an “Executive” according to the definition set out in the addendum-“Accommodation Account (AA) Opening Procedures (February 2006)’, a written confirmation from a client representative for opening an “Operating Account” for “Executives” of corporate clients in Non-GCG presence countries describing the individual’s status and role within the corporate;

 

Call Report; and To the extent the country has a GCG presence, the RM has to document details rationales in the AA Request Form under point 4 as to why the AA is to be opened on the CIB platform with CCO approval.

Call Report Incase of account officer met the customer in person a call report has to be

prepared for the RM. It consists of Meeting Date, Place of Meeting, Discussion Summary and Action Points. Call Report is usually prepared when a customer visit the branch to lodge his/her account opening documents.

KYC (Know Your Customer) Form: It has to be filled in by the RM that includes some queries. These are as follows: o Name of the client o Actual owner of the account? (account holder acting as an agent /trustee) o Confirmation of original Passport/ ID sighted and photocopy obtained o Reason for account opening for non-resident and foreigner

o Occupation of the client o Net worth/sales turnover of the client o Account opening source o Expected value of transactions on a monthly basis o Expected number of transactions on a monthly basis o Expected value of cash transactions on a monthly basis o Expected number of cash transactions on a monthly basis After clarification of all these queries an overall risk assessment of the client is done. A comment is also written regarding the client.

For high net worth customers list of questions to be used when obtaining source of wealth.

Criteria of Judging High Net Worth Customers are given below New customers whose initial deposit is more than BDT 6.5 MM (initial means within one month of Account Opening) Existing customers whose total AUM (Asset Under management) grow to > BDT 6.5 MM for 3 consecutive months.

Discrepancies Identified This form identifies substantive discrepancies during the verification process. If any documentation remains incomplete is highlighted for further action. The client has to be followed up by the RM or the account officer for resolving these sorts of discrepancies.

CIP Attestation This CIP attestation is only for the purpose of ensuring that the appropriate verification of identification has been completed. This CIP Attestation does not replace any other know your customer or due diligence requirements that are set forth in the Citigroup Global AML Policy or the procedures of any business.

To be Completed by Relationship Manager This form has to sign by both the checker and maker of Account Opening after it has been filled in and signed in by the RM. A portion of the fields of this form will also be

required to fill in by FINCON and Account Services Team. This form has the following fields to be filled in: 

All documents are attached as per GAD Checklist



All given forms are properly filled in



Other documents for special accounts are attached



Transaction Profile (Attached with the Account Opening Form) /BIR/KYC

attached 

Applied for 18-A/18-B/ Other Approvals (where applicable)



Internal Approvals obtained

Customer Acquisition due Diligence Accommodation Accounts (CADD) 

This form includes the following information to be filled in:



Account Information and Identification



Transaction Profile



Source of Wealth and Funds (Section A: Employment Information &

Section B: Source of Initial Funds Information) 

Customer Identification Program/ Procedures



Other Information



Review and Approval

Accommodation Account Request Form This form includes the following information: 

Name of customer



Country (except for CBG accounts, accommodation accounts will not be

approved in countries that have a GCG presence) 

Nature of the corporate relationship to which the accommodation

account is linked 

Rationale for opening the account



Products and services to be used by the customer



Annualized expected revenue for the account



GCG-equivalent account opening documentation obtained and due

diligence completed and approved 

Tax document obtained and filed in accordance with Global and/or Local

Tax Documentation Standards and account opening process

Filling up of minor items missed The CRM/PSM will visit DAS Ops at Dhaka branch every Thursday to complete such items. Head of Branches will monitor this.

GTS Head may approve the deferrals for any minor documentary deficiencies relating to individual accounts.

To note, the relationship team shall have their own process, procedures and checklist for their Target Market and Customer Selection, KYC policy and approvals for priority accounts acquisitions which shall be in line with the Citibank Bangladesh AML policy and Individual and Accommodation Account policy.

Final Step Finally the completed hardcopy CADD along with other forms and documents has to be sent to the following people for further verification and approval purpose: 

Referring Relationship Manager



Business Head/ Business Head Designee



Country CIB Compliance Officer for High Risk or Public Figure Accounts



Citigroup Country Officer (“CCO”) for Public Figure Accounts

Confirmation and approval of these people will corroborate and concur that the client is an appropriate client for Citigroup.

All these documents will then be forwarded to the regional head Office of Citibank, N.A. for their approval and record.

Closure of Accounts Accounts may be closed on the basis of the request from customers. The signature of customer should be verified for such closure. The management of Citibank may decide to close account on special business consideration with proper justification. Such closure should be approved by respective business heads only and proper customer communication should be kept for such closure. The balances of the account (if any) should be paid though pay-orders or demand draft in the name of the account holder or as instructed by the customer. In case of account closures by management decision, the pay-order or demand draft must be in the name of the account holder(s) only.

Storage All original account documents including the closed accounts must be stored in the fire proof cabinet in alphabetic order. A copy of the documents should be sent to off-site storage for COB purpose.

Self- Assessment Quarterly self assessment will be done by a member independent of processing.

3.3 Key Findings  Standard Chartered bank has been offering a wide array of innovative consumer 

Banking products and services. It has a greater number of branches for which it could get access of large number of customer base.



HSBC has been more focused on providing credit facilities to their customers.



Therefore, loan products and credit cards have been getting importance among all their personal banking products.



Citibank, N.A. has been falling behind both SCB, and HSBC because of limited



Nature of its consumer banking. Product range has been unsatisfactorily low.

Surprisingly, no credit facilities in terms of loan or credit card are currently being provided to the customers.

Part 2: Chapter 4 4. Current Scenario of Consumer Banking Services by Citibank, N.A. After qualitatively analyzing and comparing the description of consumer banking products and services by SCB, HSBC and Citibank, N.A. all together, the following picture can be revealed. In order to have more accurate image, comparison with other local banks such as Eastern Bank Limited (EBL), Brac, and Islami Bank has also been carried out.

4.1 Competitive Positioning The table presented below illustrates the comparison of Citibank, N.A.’s consumer banking services with other banks based on product variety, pricing, and distributional aspects.

Produ

Citibank, N.A.

SCB

HSBC

EBL

BRAC

Islami

Low

High

High

Low

Mid

Bank High

Asset:

Asset:

Asset:

Asset:

ct Variet y Pricing

Distrib

Asset:

(Consumer Asset:

Loan

High

Mid

Mid

High

High

Not Introduced Yet)

Liabilit

Liability:

Liability:

Liability:

Liability:

Liability: High

y: High

High,

High,

Low,

Low,

Charges:

Charge

Charges: Charges: Charges: Charges:

High Low

s: High High

Mid Mid

Low Low

Mid Low

Mid High

utions Table 4.1: Comparison of Citibank, N.A.’s Consumer Banking Services with Other Banks Product Variety

Pricing

Distribution

Types of Loans Deposit Schemes

Loan Rates

Branches/ ATMs

Deposits Rates

Day/ Night

Foreign Currency Remittances

Charges: Minimum Balance

Sales Representatives

Cards, Lockers

E-banking

The above table regarding the competitive positioning of Citibank, N.A. discloses the actual present condition of Citibank, N.A.’s consumer banking products and services.

Therefore, its product range is not at all substantial. It reveals that in terms of product variety Citibank, N.A. is still far behind other banks. Most importantly it does not provide its clients with the most popular consumer banking products, credit card and debit card.

Surprisingly, it has not introduced, one of the most profitable assets loan, for its individual clients. Hence, in order to offset its high liability pricing, it has to increase its charges compare to other banks. High charge definitely reduces attractiveness of its consumer banking products.

The following figure shows the pictorial representation of Citibank, N.A. compare to competitors with respect to its product variety and pricing.

Citibank, N.A. EBL Brac HSBC SCB Islami Product Variety Pricing

Figure 4.1: Competitive Positioning based on Pricing and Product Variety

The figure presented below gives a clear indication that Citibank, N.A. has a weaker distributional capability compares to other banks.

Distribution Brac

HSBC

SCB

EBL Citibank, N.A.’s Distributions thrust:

Citi - Now Citi - 2005

Branch, Booth, ATM, E-cash, Sales Representatives

Figure 4.2: Competitive Positioning based on Distribution

In terms of distributional aspects performance of Citibank, N.A., hence, is not at all satisfactory. Few branches, absence of evening banking/ 24 hour banking and E-banking (currently only used for its corporate clients only), Sufficient sales force are attributable for this lagging.

4.2 Market Positioning Current market positioning of Citibank, N.A. is as follows: 

World’s greatest financial services company with a global brand



Superior payment products



Dedicated relationship managers providing personalized service



Excellent remittance capabilities



Strong neighborhood focus for both business and wealth management

4.3 Target market Target market of Citibank, N.A. is very specific. This is as follows: 

Corporate Linked Individual Clients



Embassy Linked Individual Clients



High Net Worth/ High Profile Significant Local Individuals

4.4 Product Strategy At present it offers a narrow product range with limited features 4.5 Pricing Strategy Though the target market size is very much tapered, Market Skimming Pricing Strategy is followed as the targeted Clients are mainly high profile/ high net worthy.

4.6 Distribution Strategy Limited distribution as only four branches (Chittagong, Moijheel, Gulsahn, and Dhanmondi) and one booth in US Embassy of Citibank, N.A. is currently in operation.

Even ATM booth is only 3 throughout the country.

4.7 Promotional Strategy For promotional purpose, mainly print media is used. However, recently it has started sponsoring programs.

4.8 Challenges 

Inadequate Distribution



Limited distribution channels – ATM, booth, branch



Absence of Phone banking, and Evening banking for Individuals



Products – loans, Credit Cards, International ATM card



To have exceptional service handling processes.

4.9 SWOT Analysis

4.9.1 Strengths 

Viewed as Aspiration Foreign Brand



Experience in Sub- Continent



Ability to success transfer from India



Ability to leverage existing GCIB infrastructure

4.9.2 Weaknesses 

Limited market size



Entrenched Foreign banks with captive market share



Poor Telecom infrastructure



No credit imprint



Absence of loan, and mortgage facilities



Untested regulations / legal infrastructure



Limited pool of consumer bank talent



Narrow consumer banking product range with limited features



High pricing strategy



Comparatively fewer promotions



Insufficient distributional aspects



Absence of modern banking facilities (such as Evening Banking, Excel Banking, SMS Banking, and Phone Banking etc.)

4.9.3 Opportunity 

Growing market size - middle class segment and expansion of disposable income



Limited retail product offering in the market



Top end CitiGold end and Bank-atwork liability opportunity



Untapped NRB (Non-resident Bangladeshi)/ Consumer Finance market

4.9.4 Threats 

Lockout strategy if employed by entrenched players



Economic downturn/ natural disasters



Politically unstable environment

Part 2: Chapter 5 5. Survey Methodology and Findings

5.1 Method Used in Developing the Survey For the survey I have prepared a questionnaire consisting of 21 questions. Primary data was collected through asking questions to respondents. All data were collected, analyzed, and critically evaluated in preparing this report.

The questionnaire includes closed ended, open-ended question, filtering question, checklist question and others. After the collection of the data, I coded the entire question and these coding was used in SPSS software. In my questionnaire we tried to avoid all burdensome, double-barreled, laddering, ambiguity and make the questions easy and simple.

The questionnaire includes legitimate purpose in the beginning and is divided into three parts: basic information, classification and identification.

After making the questionnaire I have surveyed the questionnaire and coded the entire questionnaire. After that I have entered all the coded information in the SPSS software and analyzed the entire questionnaire with different methods.

5.2 Discussion of Each Type of Question in terms of Our Report Purpose Q-1 Filtering question The first question in my questionnaire is a filter question. Filtering question screens out respondents who are not qualified to answer a second question. It measures the familiarity and past experience before asking about the topics.

This is a simple â&#x20AC;&#x201C;dichotomy question form where the respondents are required to choose one of two alternatives (yes and no).This question helped me to identify the Citibank, N.A.â&#x20AC;&#x2122;s consumer banking products and service users. As I did not want to decrease my sample size from 80, I had to survey quite a few more people to keep my sample size to 80.

Q-2 Type of Account Maintained Via asking this question I have tried to segregate my sample into two groups.

One with operating account and another with payroll account. It helped me to identify percentage of corporate linked individual client. So, that I could

determine whether Citibank, N.A.is interested in new unknown clients not related to its corporate client.

Q- 3 Reason for selecting Citibank, N.A. This question was asked to know why the Citibank, N.A.’s clients has chosen it as their bank. From the answers of this question we will have a clear image about subscriber’s reason behind taking services from Citibank, N.A. This is a checklist question where we allowed the respondents to tick multiple alternatives, which they think is appropriate.

Q-4 Types of Consumer Banking Products and Services Frequently Used This question was asked to know which consumer banking products of the bank they use frequently. It helped to decide on consumer preference and demand of consumer banking products. This is a checklist question too.

Q-5, 6, 7, 8, and 9 Level of acceptance- Service Quality, Service Loyalty, Switching Cost, Customer Perceived Value and Customer Satisfaction Through these questions the respondents were asked to indicate their level of preference on service quality, service loyalty, and switching cost of Citibank, N.A.’s consumer banking services. Customer perceived value, and customer satisfaction of Citibank, N.A.’s consumer banking services were also judged via the responses of the sample respondents.

Questionnaire 5,6,7,8, and 9 includes statements in a likert scale. In a likert scale the respondents are required to indicate a degree of agreement or disagreement with the statements, ranging from very positive to very negative attitudes. From these questions their level of agreement or disagreement will tell us whether the Citibank, N.A.’s users have positive or negative attitudes towards its service quality, service loyalty dimension of consumer banking services. It also helped me to determine whether clients were very prone to switch to other banks. Their perceived value aided me in judging importance of its consumer banking services. Responses on the above dimension ultimately guided me in evaluating satisfaction level of Citibank, N.A.’s consumer banking services.

Q-10 Satisfaction level with Only four Branches

From this question I wanted to know whether the clients’ are satisfied with Citibank, N.A.’s limited number of branches. Their positive or negative answers helped me to know about their level of satisfaction. The question is again in a likert scale form.

Q-11 Increase Level of satisfaction Here I wanted to know what else Citibank, N.A. should do to increase the satisfaction level of the consumer banking customers who are satisfied with the current service, and also of those who are not satisfied with the current service.

This question is in rank order scale, which measured that option increasing the satisfaction level more. Ultimately the most significant satisfaction level increasing option was highlighted through their responses.

Q- 12 Preference for Full-fledge Consumer Banking Responses of this question actually showed me the way to determine customers acceptance level for full-fledge consumer banking operation by Citibank, N.A. Answers to this question actually either encouraged or discouraged Citibank, N.A. to go for further expansion of its consumer banking operation. It is in a likert scale form question.

Q-13 and 14 Existence of Other Foreign Banker Through this question I wanted to know if respondents have any other foreign banker. Positive responses to Q- 13 ask the client to either choose or mention their other bankers’ name in Q-14.

It gave me the identity of strongest

competitors. It would also reveal whether Citibank’N.A. could adequately meet client’s demands or not.

Q-15 Highest Market Share Holding Bank Here my purpose was to find whether customers are aware o the banks having the highest market share. The answers from here enabled me to know about competitive positioning of Citibank, N.A.

Q- 16 Ranking Banks based on their Specific Attributes Through this question my attempt was to observe customers’ preference towards different banks. They were provided with different attributes and were

asked to rank them in order of their preference. This will give me a better picture of all the strongest players in the market. It again helped me to determine competitive positioning of Citibank, N.A. Q-17 Open-ended Question This question actually enabled me to find out in general opinion from the client’s regarding Citibank, N.A.’s consumer banking products and services.

Demographic questions In this last part of the questionnaire I asked four questions, from which I wanted to know the demographic information, such as age, sex, occupation, and monthly family income. These questions enabled me to observe the effect of customers’ demographic background on choosing the particular service(s) and satisfaction level.

Gender From the question about gender I tried to understand how a customers’ gender or sex is related with the preference, and satisfaction level etc.

Age group Here I wanted to observe how customers’ age influences their with the preference, and satisfaction level etc.

Gross family monthly income Here my purpose was to know customers’ attitude towards the different fact and how their gross family income is related with it. This is a pivot question. Pivot questions are used to obtain income information and other data that respondents may be reluctant to provide.

5.3 Data Collection Efforts & Experience

5.3.1 Sampling plan Before start doing the survey I planned how I am going to conduct my survey.

My sample plan was made to make the task professional and easier. The sampling plan was divided into the following five steps: Step 1 For the survey purpose I first planned that who is going to be my respondents for the survey. Identifying the correct respondents who can provide me with accurate answer is very important for survey. As my time was limited I used only Citibank, N.A.â&#x20AC;&#x2122;s current customers as I have easy access to them.

Step 2 I incorporated a sampling frame that includes only one sample category specifically Citibank, N.A.â&#x20AC;&#x2122;s consumer banking clients. However, due to time limitation I surveyed consumer banking clients of Gulshan, and Motijheel branch of Citibank, N.A. As Dhanmondi branch opened in December 16, 2006, I could not include clients from that branch in my sample.

Step 3 In the third step I decided about the number of respondents I am going to have.

For the survey I decided that I would take 80 respondents.

Step 4 For the survey I planned what is going to be my question and what will be the question pattern. In the questionnaire I planned to use simple, conversational language and avoided double barreled, burdensome questionnaires to get accurate answers.

Identify the respondents

Step 1 Incorporate sampling frames

Step 2

Determine sample size

Step 3

Make questionnaire according to our respondents

Step 4 Conduct survey through questionnaire

Step 5 Figure 4.3: Justification for sampling plan Step 5 I planned to conduct my survey with 80 respondents. To avoid non-response error, I determined to do an initial screening through the use of the filtering question, and then I can come up with my target sample group. While preparing questionnaire I kept in mind mainly the respondents, as they are the one who is going to fill it up. I used simple, easy, conversational word, which reduces ambiguity. All the questions were in order so that the respondents can feel the track. Most of the questions were closed ended, checklist and rank order questions. I putted only one open-ended question so that the respondents do not take it as troublesome. So my over all attempt was to make the question easily understandable by the respondents.

5.3.2 Summary of Sampling Plan My population was Citibank, N.A.’s consumer banking clients. My sampling plan was as follows:  Sample Size I chose a Sample Size of 80 people.  Sampling Frame My sampling frame includes consumer banking clients of consumer banking clients of Gulshan, and Motijheel branch of Citibank, N.A.  Sampling Method My sampling method is Cluster Sampling.

5.3.4 Method of administering the Questionnaire Survey Method The survey method is a simple one, where I had to go to client’s personally and cordially asked them to fill in the questionnaire.

Nature of the Questionnaire To meet the objective of the research I prepared a questionnaire, which would include various Citibank, N.A’s consumer banking related questions. Questionnaire was developed in order to explore findings supporting the research topic.

Field Work/Data collection I used both primary and secondary data for the research purpose. Primary data has been collected through survey conducted in Gulshan and Motijheel branch of Citibank’ N.A. 

Tabulation & Data analysis The SPSS (Statistical package for social science) would be used for analyzing the data. After getting all the questionnaires filled up, I coded each of the questions along with the variables with SPSS. Here I have entered all my responses to make a database. These SPSS databases then became the source of further analysis.

With the help of the data sheets I have analyzed them using various methods like descriptive statistics, frequency, reliability, correlation, regression analysis (both Stepwise and Entered), and cross tabulation. Pearson’s Correlation analysis was used to identify existing relationship between the independent and dependent variables. After collecting the data, bivariate Correlation method was used to analyze the correlation matrix to investigate whether any significant relationship exists. Correlation is the statistical tool that can be used to describe the degree to which one variable is linearly related to another. In order to investigate which variable explains the highest variation in service effort, I implemented the simultaneous and stepwise regression analysis that would also suggest the strength of associations between the study variables. The reliability of the scales will be determined by Cronbach alpha. This helped to make the analysis of data collected during the research easier, and more effective. This assisted me to find out the clients’ level of satisfaction regarding Citibank, N.A.’s consumer banking products and services.

5.4 Survey Findings Analysis of question no.1 Valid

80

Missing

0 1.0000 1.0000 1.00 .00000

N Mean Median Mode Std. Deviation Table 5.1: Descriptive Statistics Frequency Percent Valid

Yes

80

100.0

Valid

Cumulative

Percent 100.0

Percent 100.0

Table 5.2: Frequency As the first question was a filtering question, in order to maintain my sample size of 80, I required discarding of quite a few non-consumer banking clients of Citibank, N.A. as my respondents. As my sample size was more than 30, and had standard deviation, from K-S test I found my sample is normally distributed for Citibank, N.A. consumer banking clients, which was a necessary criterion to test my hypothesis.

Analysis of question no.2 N Mean Median Mode Std.

Valid Missing

80 0 1.4125 1.0000 1.00 .49539

Deviation Table 5.3: Descriptive Statistics

Frequency Percent Valid

Valid

Cumulativ e Percent 58.8 100.0

Operating

47

58.8

Percent 58.8

Account Payroll Account

33

41.3

41.3

Total

80

100.0

100.0

Table 5.4: Frequency Type of Account in Citibank, N.A.

41%

Operating Account 59%

Payroll Account

Figure: 5.1 Types of Accounts in Citibank, N.A. When the respondents were asked a question regarding type of account they hold with Citibank, N.A., 58.8% responded to operating account option, and the rest 41.3% responded to payroll account option. The finding actually has depicted that Citibank, N.A. not only keeps payroll account of individuals related to their corporate account, but it also encourages non-corporate linked individuals to open account here. 41.3% of payroll account also has indicated that Citibank, N.A. gives importance to corporate linked individuals as their valued consumer banking clients. Therefore, corporate-linked (GRB or TTLC) individuals play a vital role in its consumer banking target segment.

Analysis of question no. 3 Brand

Market

Service Variety of Employer

Image

Share

Quality Consume Company r Banking

is the

Products Corporat N

Valid

80

80

80

80

e Client 80

Missing Mean Median Mode Std.

0 1.0750 1.0000 1.00 .26505

0 1.8375 2.0000 2.00 .37124

0 1.7125 2.0000 2.00 .45545

0 1.800 2.000 2.0 .4025

0 1.5875 2.0000 2.00 .49539

Deviation Table 5.5: Descriptive Statistics

Valid

Tick

No tick

80

Missing 0 Brand Image

Frequency

74

6

Market Share

Percent Frequency

92.5 13

7.5 67

Percent Frequency Percent Frequency Percent

16.3 23 28.8 16 20

83.8 57 71.3 64 80

Frequency Percent

33 41.3

47 58.8

Service Quality Variety

of

Consumer Banking Products Employer Company is the Corporate Client

Table 5.6: Frequency Reasons for Selecting Citibank, N.A. Brand Image

41.3% 92.5%

Service Quality

20% 28.8%

Market Share

16.3%

Variety of Consum er Banking Products Employer Company is the Corporate Client

Figure 5.2: Reasons for selecting Citibank, N.A.

From the individual analysis of the checklist question no. 3 where I asked their reason behind choosing Citibank, N.A., I found that highest number of respondents 92.5% have ticked the check list question option brand image, 58.8% have ticked employer company is the corporate client, 28.8% have ticked service quality, 20% have chosen variety of consumer banking clients, and 16.3% have selected market share. The highest response getting option has provided clear indication of Citibank, N.A.’s likelihood of being preferred by Client’s for its undeniably strong brand image. “Employer Company is the corporate client” is certainly justified from the analysis of question no. 2, as 41.3% of the consumer banking clients is holding payroll account. That was more visible from the following cross tabulation analysis. However, as my focus was to evaluate its consumer banking services, such a lowest percentages of response for “service quality” and “variety of consumer banking products” actually reflects the bank’s weaknesses on those most important service attributes.

Cross tabulation Cases Valid N Account 80

Missing Percent N 100.0% 0

Total Percent N .0% 80

Percent 100.0%

Type * Employer Company is the Corporat e Client Table 5.7: Account Type * Employer Company is the Corporate Client Cross tabulation Employer Company isTotal the Corporate Client Tick Account Operatin

No Tick 47 47

Type

g Account Payroll 33

33

Account Total

33

47

80

Table 5.8: Count Here, 41.3% of the respondents that means 33 out of 80 respondents, holding payroll account with Citibank, N.A. has chosen employer company is the corporate client option.

The result of the cross tabulation again support that employer company being the corporate client is one of the significant cause of holding payroll account with Citibank, N.A. and selecting consumer banking services of Citibank, N.A. Analysis of question no.4 Cash

Cash

Check Check Inward Outward FCY

Deposi Withdr Deposi payme Remitt Remitta Check ts

awal

t

nt

ance

nce

ATM

Draft Manager

Card

â&#x20AC;&#x2122;s

Deposit/

Cheque

Collectio N

80

(Valid) Missin0

80

80

80

80

80

n 80

0

0

0

0

0

0

80

80

80

0

0

0

g Mean 1.6375 1.0375 1.0000 1.0000 1.7125 1.9250 1.7875 1.1125 1.8000 1.7750 Media 2.0000 1.0000 1.0000 1.0000 2.0000 2.0000 2.0000 1.0000 2.0000 2.0000 n Mode 2.00 1.00 1.00 1.00 2.00 2.00 2.00 1.00 2.00 2.00 Std. .48376 .19118 .00000 .00000 .45545 .26505 .41166 .31797 .40252 .42022 Deviati on Table 5.9: Descriptive Statistics Tick Valid

80

No tick

Missing

0

Cash

Frequency

29

51

Deposits Cash

Percent Frequency

36.3 77

63.8 3

Withdrawal Check

Percent Frequency Percent

96.3 80 100

3.8 0 0

Frequency Percent

80 100

0 0

Frequency Percent

23 28.8

57 71.3

Frequency Percent

6 7.5

74 92.5

17 21.3

63 78.8

71 88.8 16 20 18 22.5

9 11.3 64 80 62 77.5

Deposits Check payments Inward Remittance Outward Remittance FCY

Check Frequency Percent Deposit/ Collection ATM Card Drafts Manager’s Check

Frequency Percent Frequency Percent Frequency Percent

Table 5.10: Frequency

Frequently used Consumer Banking Products & Services Cash Deposits

100

%

Cash Withdraw al

80

Check Deposits

60

Check payments

40

Inw ard Remittance

20

Outw ard Remittance

0

1 Product & Service Type

FCY Check Deposit/ Collection ATM Card Drafts Manager’s Check

Figure 5.3: Consumer banking Products & Services In the checklist question no. 4 respondents were asked to select frequently used consumer banking products and services of Citibank, N.A. from the given options. As a result I found that highest number of respondents that was 100% have separately ticked the check list question option both check payments and check deposits, 96.3% have ticked cash withdrawal, 88.8% have ATM card, 36.3% have chosen cash deposits, 28.8% have selected inward remittance, 22.5% managerâ&#x20AC;&#x2122;s cheque, 21.3% have responded to FCY check deposits/collection, 20% have ticked draft and only 7.5% have chosen outward remittance. There, it is obvious that check deposits, check payments, cash withdrawal, and ATM card are the most frequently used consumer banking products.

Percentage for cash deposit option was comparatively much lower, as cash deposit option has given to only selected clients on request.

Analysis of question no.5-9 As my target was to evaluate consumer banking services of Citibank, N.A., I have to pay much attention in determining my dependent and independent variable. The level customer satisfaction has always been a helping variable in evaluating services for variety of organization. My chosen dependent variable for this part of analysis was Customer Satisfaction. Service Quality, Service Loyalty, Switching Cost, and Customer perceived value were my four independent variables. There might be many other independent variables, but for time constraints I incorporated only the mentioned one.

Reliability Coefficient and Descriptive Statistics The reliability coefficients, means, mode, median and standard deviations of all the constructs in the current study are displayed in the following two table. The coefficient alphas for the different constructs were computed using the reliability procedure in SPSS. Nunnally (1978) suggested that for early stages of any research the reliability of .

50-.60 is sufficient. The reliabilities of all the constructs in this study found to be above the standard set by Nunnally (1978).

Service

Service

Switching

Customer Customer

Quality

Loyalty

Cost

Perceived Satisfaction 80 0 2.5719 2.5000 2.50 .42133 2.00 4.00

Valid 80 Missing 0 Mean 2.7167 Median 2.6667 Mode 2.33 Std. .39290

80 0 2.9500 2.8000 2.80 .47574

80 0 2.7786 2.7143 2.86 .43301

Value 80 0 2.7375 2.6667 2.00 .68271

Deviation Minimum Maximu

2.20 4.40

2.00 3.86

1.67 4.67

N

1.89 3.78

m Note: Multiple modes exist. The smallest value is shown Table .5.11: Descriptive Statistics

Scale

Number

Service Quality

Items 9

Service Loyalty 5 Switching Cost 7 Customer perceived 3 value Customer Satisfaction Note: n = 80

6

of Alpha .532 .593 .515 .604 .542

Table .5.12: Reliability Coefficient (Alpha)

Mean scores have been computed by equally weighting the mean scores of all the items.

On a five-point scale, the mean score for Service Quality was 2.72 (SD = .392) which indicates Service Quality was on the higher side on the scale. The SD is low so there has not been too much difference of opinion among the respondents. The mean score for Service Loyalty was low (2.95) and SD was 476. Therefore the variable was not well appreciated by the respondents. The mean score for Switching Cost was 2.77 (SD = .433) which is again relatively low on the scale. The mean score for Customer Perceived Value has been 2.74 (SD =.683) which is low. Nevertheless, high standard deviation reflects variety of response of the respondents. The mean scores of customer Satisfaction of Citibank, N.A. for its consumer banking services was 2.57 (SD =.421) indicating lower satisfaction level of the customers.

Correlation A correlation analysis was conducted on all variables to explore the relationship between variables. The bivariate correlation procedure was subject to a two tailed of statistical significance at two different levels highly significant (p<.01) and significant (p<.05).

Service

Service

Switching

Customer

Customer

Quality

Loyalty

Cost

Perceived

Satisfaction

Value Service Quality Service Loyalty Switching Cost Customer Perceived Value Customer

1

.257*

.402**

.394**

.331**

.257*

1

.279*

.209

.530**

.40**

.279*

1

.600**

.500**

.394**

.209

.600**

1

.415**

.530**

.500**

.415**

1

.331** Satisfaction Note: *p < .05, **p < .01

*Correlation is significant at the 0.05 level (2-tailed)

**Correlation is significant at the 0.01 level (2-tailed) Table 5.13: Correlation Matrix for Service Quality, Service Loyalty, Switching Cost, Customer Perceived Value, Customer Satisfaction The result of correlation analysis for all the variables is shown in above table. It examines the relationship between Service Quality, Service Loyalty, Switching Cost, Customer Perceived Value, Customer Satisfaction of Citibank, N.A. The variable, Service Quality was weakly positively and statistically significantly correlated with Service Loyalty, Customer Perceived Value and Customer Satisfaction (r =. 25, p< .05; r =. .39, p< .01; r =. .31, p< .01).However, with Switching Cost, Service Quality was moderately positively and statistically significantly correlated (r=.41, p<.01). Service loyalty has been weakly positively and statistically significantly correlated with Service Quality, and Switching Cost (r =. 25, p< .05; r =.27, p< .05). However, correlation of Service Loyalty was moderate positive and statistically significant with Customer Satisfaction (r =. 53, p< .01). Surprisingly, no correlation was observed between Service Loyalty and Customer Perceived Value. Switching cost has been weakly positively and statistically significantly correlated with Service Loyalty (r =. 27, p< .05). However, correlation of Switching cost was moderate positive and statistically significant with Service Quality, Customer Perceived Value and Customer Satisfaction (r =.40, p< .01; r =.60, p< .01; r =.50, p< .01).

There ware weak positive and statistically significant correlation observed for Customer Perceived Value with Service Quality (r =.39, p< .01). However, with Switching Cost and Customer Satisfaction, the variable has shown moderate positive and statistically significant correlation (r =.60, p< .01; r =.41, p< .01). Service Loyalty, Switching Cost and Customer Perceived Value was moderately positively and statistically significantly correlated with the dependent variable Customer Satisfaction (r =.53, p< .01; r =.50, p< .

01; r =.41, p< .01). Nevertheless dependent variable has shown weak positive and statistically significant relation with the Service Quality. Therefore, validity of my selection of variables proved as all the independent variables had shown significant correlation with my chosen dependent variable.

Regression Analysis Both stepwise and entered regression were conducted to asses the relationship between the study variables. i) Stepwise Regression Analysis

A stepwise regression analysis was performed to identify the relationship between Service Quality, Service Loyalty, Switching Cost, Customer Perceived Value, and Customer Satisfaction of Citibank, N.A. Variables Step 1

B

SE B

(Constant) Service

1.487

.265

.459

.072

Quality

Î&#x2019;

Quality Service Loyalty

.811

.258

.426

.063

.507***

.286

.050

.426***

Step 3 (Constant) Service Quality Service Loyalty Switching Cost

.311

.302

.317

.071

.378***

.296

.048

.441***

.250

.086

.245**

Step 4 (Constant) Service Quality Service Loyalty Switching Cost

â&#x2C6;&#x2020;R

.479

0.145

.522

0.031

.564

0.028

.547***

Step 2 (Constant) Service

R2 .299

-.055

.315

.270

.070

.321***

.315

.047

.469***

.274

.083

.269**

Customer Perceived

.156

.078

.211**

Value Table 5.14: Stepwise Regression Analysis The above table depicts that in Citibank, N.A., Service Quality (p<.001), Service Loyalty (p<.001), Switching Cost (p<.01) and Customer Perceived Value (p<.01) were found to be statistically significantly related with Customer Satisfaction of Citibank, N.A. The predictor variables which were statistically significantly related together explained 56.4% of the variance in Customer Satisfaction where Service Quality, Service Loyalty, Switching Cost, Customer Perceived Value explained about 29.9% (step 1), 18% (step 2), 4.3% (step 3), and 4.2% (step 4) of the Customer Satisfaction respectively.

From the above regression models of stepwise regression, step 4 was found to be the most representative one. All the four predictors explained variation in Customer Satisfaction. Here, β was the highest for Service Loyalty which was found to be 46.9% (p<.001) and signifies for an additional 1 unit positive or negative change in Service Loyalty, there will be positive or negative .469 unit of change in Customer Satisfaction, keeping all the other predictors constant.

Service Quality had β of 32.1% (p<.001) which signifies for every 1 unit positive or negative change in Service Quality, there will be .321 unit positive or negative change in Customer Satisfaction, keeping all the other predictors constant. Then the β of Switching Cost was found to be 26.9% (p<.01) which indicates positive or negative change of every 1 unit in Switching Cost will cause .269 unit positive or negative change in Customer Satisfaction. Lastly, the least β was found to be 21.1% (p<.01) which signifies for every additional 1 unit positive or negative change in Customer Perceived Value will cause .211 unit of positive or negative change in service effort, keeping all the other predictors constant. i) Standardized (Simultaneous) Regression Analysis Entered regression analysis was performed to identify the relationship between Service Quality, Service Loyalty, Switching Cost, Customer Perceived Value, and Customer Satisfaction of Citibank, N.A.

Variable

B

SERVICE B

(Constant)

-.055

.315

.132

.044

.211**

Switching Cost

.274

.083

.269**

Service Loyalty

.315

.047

.469***

.270

.070

.321***

Customer

Perceived

Value

Service Quality

Β

R2 0.564

Table 5.15: Standardized (Simultaneous) Regression on Customer Satisfaction Table 5.15 depicts that in Citibank, N.A. Customer Perceived Value (p<.01), Switching Cost (p<.01), Service Loyalty (p<.001) and Service Quality (p<.001) were found to be statistically significantly related with service effort. Here the value of the β was identical to the above-discussed step 4 regression outputs. Significantly related predictor variables Customer Perceived Value, Switching Cost, Service Loyalty, and Service Quality together explained 56.4% variation in the dependent variable service effort.

Assessment of the Supporting Hypotheses Hypothesis (i) There is a significant relationship between Service Quality and Customer Satisfaction in Citibank, N.A. which was found to be moderately positive (r = .56, p< .01).

Therefore, the result we derived from correlation analysis satisfies hypothesis (i).

The result of stepwise regression indicates that Service Quality (p<.001) was found to be statistically significantly related with the dependent variable Customer Satisfaction in Citibank, N.A. The β was found to be (.321) (p< .001) which indicates 1 unit of positive or negative change in Service Quality would cause .32 unit of change in Customer Satisfaction. Therefore, Service Quality has the second best significant relationship with the change of Customer Satisfaction.

Service Quality explained about 29.9% variation in Customer Satisfaction.

Therefore, the result of stepwise regression analysis provided support for hypothesis (i).

Hypothesis (ii) There is a significant relationship between Service Loyalty and Customer Satisfaction in Citibank, N.A. which was found to be moderately positive (r = .47, p< .01).

Therefore, the result we derived from correlation analysis satisfies hypothesis (ii) The result of stepwise regression indicates that Service Loyalty (p<.001) was found to be statistically significantly related with the dependent variable Customer Satisfaction in Citibank, N.A. The β was found to be (.469) (p< .001) which indicates additional 1 unit of positive or negative change in Service Loyalty would cause .46 unit of positive or negative change in Customer Satisfaction. Therefore, Service Loyalty has the highest significant relationship with the change of Customer Satisfaction.

Service Loyalty explained about 18% variation in Customer Satisfaction.

Therefore, the result of stepwise regression analysis provided support for hypothesis (ii) Hypothesis (iii) There is a significant relationship between Switching Cost and Customer Satisfaction in Citibank, N.A. which was found to be moderately positive (r = .46, p< .01).

So, the result we derived from correlation analysis satisfies hypothesis (iii).

The result of stepwise regression indicates that Switching Cost (p<.01) was found to be statistically significantly related with the dependent variable Customer Satisfaction in Citibank, N.A. The β was found to be (.269) (p< .01) which indicates additional 1 unit of positive or negative change in Switching Cost would cause .269 unit of positive or negative change in Customer Satisfaction. Therefore, Switching Cost has some significant relationship with the change of Customer Satisfaction. Switching Cost explained about 4.3% variation in Customer Satisfaction. Therefore, the result of stepwise regression analysis provided support for hypothesis (iii).

Hypothesis (iv) There is a significant relationship between Customer Perceived Value and Customer Satisfaction in Citibank, N.A. which was found to be weak and positive(r = .22, p< .05). Therefore, the result I derived from correlation analysis satisfies hypothesis (iv).

The result of stepwise regression indicates that Customer Perceived Value (p<.01) was found to be statistically significantly related with the dependent variable Customer Satisfaction in Citibank, N.A. The β was found to be (.211) (p< .01) which indicates additional 1 unit of positive or negative change in Customer Perceived Value would cause .21 unit of positive or negative change in Customer Satisfaction. Therefore, Customer Perceived Value has some significant relationship with the change of Customer Satisfaction.

Customer Perceived Value explained about 4.2% variation in Customer Satisfaction. Therefore, the result of stepwise regression analysis provided support for hypothesis (iv).

Analysis of question no.10 N

Valid 80 Missing 0 Mean 2.6500 Median 2.0000 Mode 2.00 Std. 1.27389 Deviation Table 5.16: Descriptive Statistics Frequency Percent Valid Valid

Cumulativ

Strongly 13

16.3

Percent e Percent 16.3 16.3

Disagree Disagree 35 Neither 8

43.8 10.0

43.8 10.0

60.0 70.0

Disagree Agree 15 Strongly 9

18.8 11.3

18.8 11.3

88.8 100.0

Agree Total

100.0

100.0

Agree nor

80

Table 5.16: Frequency

It has been found that 43.8% of the respondents were disagreed and 16.3% of the respondents were strongly disagreed with Citibank, N.A., having only four branches, could provide satisfactory consumer banking services. Percentages of positive response were very low. Only 11.3% and 18.8% of the respondents have strongly agreed and agreed respectively. These findings demonstrated customerâ&#x20AC;&#x2122;s dissatisfaction with the number of branches Citibank, N.A. currently has. This type of negative response was very certain because only through greater number of branches greater number of clients could be reached. Moreover, it also provides clients with convenience in receiving services from any of the branches near to there residence.

Analysis of Question no. 11 Increasing

Introducti Introducti Introduction Introduction Further

the Numberon of Branches Loans

ofon

ofof 24 hourof

Credit

on-line

Card

banking

moreimprovem

ATM booth ent

customer

Facilities services as it

service

does for its corporate N

80 0

80 0

clients 80 0

4.2625 4.0000 3.00 1.16645

5.0375 5.0000 6.00 .81821

4.8875 5.0000 5.00 .89998

1.6375 2.0000 1.00 .71589

3.5750 3.0000 3.00 1.32908

1.6000 1.0000 1.00 .70442

3.00

4.00

3.00

1.00

2.00

1.00

Valid 80 Missin 0

80 0

80 0

g Mean Median Mode Std. Deviatio n Minimu m

of

Maximu

6.00

6.00

6.00

4.00

6.00

4.00

m Table 5.17: Descriptive Statistics Valid Missing 0

80 Rank 1 Freq % .

16

Increasing

20

Rank 2 Freq %

Rank 3 Freq %

Rank 4 Freq %

Rank 5 Freq %

Rank 6 Freq %

.

19

.

15

19

.

30

38

.

0

0

.

0

0

the Number of Branches Introductio n of Loans Introductio

23.

8

28 24

35 30

27

33.

25

31

0

0

0

0

0

0

27

8 33.

25

31

4

5

0

0

0

0

1

1.3

8

10

32

40

39

4

n of Credit

8

Card Facilities Introductio

0

0

0

0

n of 24 hour

9

on-line banking services as it does for its corporate clients Introductio

12

15

7

8.8

13

16

31

39

17

n of more ATM booth Further

0

0

41

5

3 0

0

0

0

1

1.3

7

8.8

31

improveme nt

21.

38.

8

1

100 80

1

of

customer service Total

80

10

80

100 80

10

80

10

80

0

0

0

0 0

Table 5.18: Summary of Ranking Responses to question no.11 were very significant to judge the key determinant factor for increasing consumer satisfaction level. Here the sample respondents were asked to rank the given options according to their level of importance. According to the client’s preferences option (b) has got the highest preference (35% response) to be in the first ranking position. After that 30% client’s has supported option (c) as their first preference for increasing satisfaction level. However, 20% respondents have preferred to increase the number of branches, option (c), as their first choice. Comparatively less preference (12%) for first ranking position was given to Introduction of more ATM booth. For second preferable ranking option, the same percentages of respondents (33.8%) have selected both the option (b) and option (c). Nevertheless, both the option (d) and option (f) have got 1.3% of response for the first ranking position. On the other hand, option (e) has got the majority response (39%) for fourth preference, option (d) has obtain 40% of the response for fifth ranking position and option (f) has got a hold the mass response (51%) for sixth preference. If the mode and median in the Descriptive Statistics table has been observed, I found that highest mode, indication of repeating response, appeared for the option (b) that was introduction of loans. Second highest mode came into view for option (c)’s responses that means for introduction of credit card facilities, and third uppermost mode was appeared for both the option (a)’s and (d)’s responses respectively. On the other hand, highest mean (5.0375) and median (5) was visible for option (b)’s responses again. Mean value (4.8875) and (4.2625) for option (c) and (a) respectively was also indicating their importance as factors for increasing satisfaction level. Moreover, median for option (c)’s responses was also maximum (5), followed by median of option (a)’s responses (4). The overall analysis ultimately guided me to determine that option (a), (c), (b), (e), (d), and (f) respectively got the first, second, third, fourth, fifth, and sixth preference for increasing customer’s satisfaction level.

Analysis of Question no. 12 N

Valid

80

Mean Median Mode Std.

Missing 0 4.3375 4.0000 4.00 .67400

Deviation Table 5.19: Descriptive Statistics Frequenc Percent Valid y Valid

Disagree 2 Neither 3

Cumulati

Percent ve 2.5 3.8

2.5 3.8

Percent 2.5 6.3

51.3 42.5

51.3 42.5

57.5 100.0

Agree nor Disagree Agree 41 Strongly 34 Agree Total

80 100.0 100.0 Table 5.20: Frequency

It has been found that majority of the respondents (41%) were in favor of full-fledge consumer banking by Citibank, N.A. Percentages of negative response were very low.

Only 3.8% and 2.5% of the respondents have disagreed and strongly disagreed respectively. These findings confirmed that client’s of Citibank, N.A. would wholeheartedly welcome Citibank, N.A.’s step for starting full-fledge consumer banking services.

Assessment of the Hypotheses (2) 3.

Null Hypothesis: “Customers of Citibank, N.A. are not highly satisfied with

its consumer banking services.”

Alternative Hypothesis: “Customers of Citibank, N.A. are highly satisfied with its consumer banking services.”

Cross tabulation In order to conduct hypothesis testing for hypothesis (2), the following cross tabulation and Chi-square Test has been conducted.

Cases

Level of Satisfactory Consumer Banking Performance by Four Branches*Introducing Fullfledge Consumer Banking Services

Valid Missing Total N Percent N Percent N 80 8.0% 922 92.0% 1002

Percent 100.0%

Table 5.21: Level of Satisfactory Consumer Banking Performance by Four Branches*Introducing Full-fledge Consumer Banking Services Cross tabulation Introducing Full-fledge Consumer Banking Total Services Disagree Neither Agree Strongly Agree Agree nor Disagree Level of Satisfactory Strongly 1 8 4 13 Consumer Banking Disagree Performance by Four Branches Disagree 1 2 17 15 35 Neither 1 3 4 8 Agree nor Disagree Agree 8 7 15 Strongly 5 4 9 Agree Total 2 3 41 34 80 Table 5.22: Count From the cross tabulation we find the respondents who has demonstrated either strong disagreement or just disagreement with satisfactory consumer banking performance of Citibank, N.A. having only four branch, majority of them have either agreed or strongly agreed that Citibank, N.A. should start doing full-fledge consumer baking services. Only a few percentages of people have expressed the opposite opinion.

These findings clearly revealed that at present majority of the consumer are not satisfied with Citibank, N.A.â&#x20AC;&#x2122;s consumer banking services.

Chi-Square Test Customer Satisfaction

Value

Df

Asymp.

Sig. (2sided) .10

Pearson Chi-7.497 12 Square N of Valid Cases 80 Table 2.5.23: Chi-Square Test Result

From the chi-square test, I found that the calculated value 7.497 was lower than the critical value 18.549 at the significance level Îą, .05. Hence, null hypothesis for hypothesis 2 has been accepted, and the alternative hypothesis was rejected. That means it proved that customers of Citibank, N.A. are highly satisfied with its consumer banking services. All the independent variables Service Quality, Service Loyalty, Switching Cost and Customer Perceived Value were significantly related with dependent variable Customer Satisfaction proved already. Service Quality, Service Loyalty, Switching Cost and Customer Perceived Value all were therefore relatively low causing satisfaction level to be lower of Citibank, N.A. clients.

Analysis of Question no. 13 N

Valid 80 Missing 0 Mean 1.1000 Median 1.0000 Mode 1.00 Std. .30189 Deviation Table 5.21: Descriptive Statistics Frequenc Percent Valid y Valid

Yes No Total

72 8 80

Cumulati

Percent ve 90.0 10.0 100.0

90.0 10.0 100.0

Table 5.22: Frequency

Percent 90.0 100.0

Q-12 has asked the respondents regarding their existing foreign banker. Surprisingly, 90% of the respondents have agreed that they have existing foreign banker other than Citibank, N.A. Their response proves that Citibank, N.A. alone has not been able to satisfy their consumer banking needs because of its limited service range compare to other foreign banks.

Analysis of Question no. 14 SCB N Mean

Valid 72 Missing 8 1.5417

Median

2.0000

Mode Std.

2.00 .50176

HSBC

Dutch-BanglaOther

72 8 1.7361

Bank 72 8 1.8750

80 0 1.750

2.0000

0 2.000

2.00 .33304

0 2.00 .

2.0000 2.00 .44383

Deviation

43574 Table 5.23: Descriptive Statistics

Valid

Tick

No tick

72

Missing 8 Standard

Frequency

33

39

Chartered

Percent

41.3

48.8

Bank HSBC

Frequency

19

53

Percent 23.8 Dutch-Bangla Frequency 9 Percent 11.3 Bank Other Frequency 20 Percent 25 Other Existing Foreign Banker 25%

66.3 63 78.8 60 75

Table 5.24: Frequency 41%

Standard Chartered Bank HSBC

11%

Dutch-Bangla Bank

23%

Other

Figure 5.4: Other Existing Foreign Bankers 10% respondents were not valid for giving response to this question as they did not have any other existing foreign banker. The responses reveals that majority of the respondents (41.3%) has kept Standard Chartered Bank as their existing foreign banker other than Citibank, N.A.. 23.8% of the respondents, on the other hand, has kept HSBC as their existing foreign banker. Other foreign banks were existing banker for 20% of the respondents. These findings were significantly important in judging competitive positioning for Citibank, N.A. In this respect it seemed that clientâ&#x20AC;&#x2122;s were more eager to keep SCB as their other existing foreign banker.

Analysis of Question no. 15 Market Share SCB Valid 80 Missing 0 Mean 1.2625 Median 1.0000 Mode 1.00 Std. .44277

HSBC 80 0 1.8500 2.0000 2.00 .35932

N

Citibank, N.A. 80 0 1.9500 2.0000 2.00 .21932

Other 80 0 1.9375 2.0000 2.00 .24359

Deviation Table 5.25: Descriptive Statistics Market Share Tick Valid

No tick

80

Missing 0 Standard

Frequency

59

21

Chartered

Percent

73.8

26.3

Bank HSBC Citibank, N.A. Other

Frequency

12

68

Percent Frequency Percent

15 4 5

85 76 95

Frequency Percent

5 6.3

75 93.8

Table 5.26: Frequency Market Shares of Foreign Bank 6% Standard 5% Chartered Bank HSBC

15%

Citibank, N.A. Other

74%

Figure 5.5: Market Share of Foreign Banks According to 73.8% of the respondents, SCB has got the highest market share in Bangladesh among the foreign banks. On the other hand, HSBC has got the highest market share according to only 15% sample respondents. Citibank, N.A., my primary focus, having such a strong brand image has got only 5% of the respondent’s response.

Rests of the respondents have supported other banks in this respect. Again this result signifies Citibank, N.A’s weak competitive positioning compare to strong competitors SCB and HSBC. Assessment of the Supporting Hypotheses (1) Null Hypothesis: “Having full-fledge consumer banking services in Bangladesh does not enable Citibank, N.A.’s Competitor to have high market share.”

Alternative Hypothesis: “Having full-fledge consumer banking services in Bangladesh does enable Citibank, N.A.’s Competitor to have high market share.”

Cross tabulation In order to conduct hypothesis testing for hypothesis (1), the following cross tabulation and Chi-square Test has been conducted.

SCB

Cases Valid N *72

Missing Percent N 90.0% 8

Total Percent N 10.0% 80

Percent 100.0%

Market Share SCB Table 5.27: SCB * Market Share SCB Cross tabulation

SCB Total

Market Share (SCB) Tick No Tick Tick 20 13 No Tick 35 4 55 17

Total 33 39 72

Table 5.28: Count

HSBC

Cases Valid N *72

Missing Percent N 90.0% 8

Total Percent N 10.0% 80

Percent 100.0%

Market Share HSBC Table 5.29: HSBC * Market Share HSBC Cross tabulation

HSBC Total

Market Share HSBC Tick No Tick Tick 6 13 No Tick 4 49 10 62

Total 19 53 72

Table 5.30: Count From the cross tabulation we find the respondents who has ticked or not ticked SCB and HSBC as their other existing foreign bank, majority of them have selected SCB as their

first choice for highest market share. The result was very certain as SCB having vast operation in Bangladesh including appreciable consumer banking services have gained huge consumer acceptance. That is why, in spite taking services from other foreign banks, people were very much aware of their high market share.

Chi-Square Test Market Share(SCB) Value Df

Asymp.

Sig.

Pearson 8.414

1

(2-

sided) .005

ChiSquare N of Valid72 Cases Table 5.31: Chi-Square Test Result Market Share(HSBC) Value Df

Asymp.

Sig.

Pearson 6.754

1

(2-

sided) .01

ChiSquare N of Valid72 Cases Table 5.32: Chi-Square Test Result From the chi-square test, I found that in the first case the calculated value 8.414 was greater than the critical value 7.879 at the significance level Îą, .005. In the second case, the calculated value 6.754 was greater than the critical value 6.635 at the significance level Îą, .01. Hence, in both the cases the null hypothesis for hypothesis 1 has been rejected, and the alternative hypothesis that having full-fledge consumer banking

services in Bangladesh does enable Citibank, N.A.â&#x20AC;&#x2122;s Competitor to have high market share was accepted.

Analysis of Question no. 16 Brand Image Citibank, SCB

HSBC

Market Share Citibank, SCB

HSBC

80 0 2.4750 3.0000 3.00 .65555

80 0 1.9250 2.0000 2.00 .79197

1.00 3.00

1.00 3.00

N.A. N Valid 80 Missing 0 Mean 2.2625 Median 2.0000 Mode 3.00 Std. .80730

80 0 1.9125 2.0000 2.00 .73250

80 0 1.8250 2.0000 1.00 .85351

N.A. 80 0 1.6000 1.0000 1.00 .75641

Deviation Minimum Maximu

1.00 3.00

1.00 3.00

1.00 3.00

1.00 3.00

m Note: Multiple modes exist. The smallest value is shown Table 5.33: Descriptive Statistics Type of Consumer BankingService Quality Products Citibank, SCB

HSBC

Citibank, SCB

HSBC

N.A. Valid 80 Missing 0 Mean 1.4125 Median 1.0000 Mode 1.00 Std. .70610

80 0 2.4125 2.0000 3.00 .60991

80 0 2.1750 2.0000 3.00 .77582

N.A. 80 0 1.6000 1.0000 1.00 .85091

80 0 2.2375 2.0000 2.00 .73336

80 0 2.1000 2.0000 2.00 .73948

Deviation Minimum Maximu

1.00 3.00

1.00 3.00

1.00 3.00

1.00 3.00

1.00 3.00

N

1.00 3.00

m Note: Multiple modes exist. The smallest value is shown Table 5.34: Descriptive Statistics Valid

80

Rank 1

Rank 2

Rank 3

Missing 0

Frequenc

Percen

Frequenc

Percen

Frequenc

Perc

Brand

Citibank,

y 39

t 48.8

y 23

t 28.8

y 18

ent 22.5

Image

N.A. SCB HSBC

18 23 80 13

22.5 28.8 100 16.3

37 20 80 22

46.3 25 100 27.5

25 37 80 45

31.3 46.3 100 56.3

45 22 80 10

56.3 27.5 100 12.5

28 30 80 13

35 37.5 100 16.3

7 28 80 57

8.8 35 100 71.3

N.A. SCB HSBC

38 32

47.5 40

37 30

46.3 37.5

5 18

6.3 22.5

Citibank,

80 19

100 23.8

80 11

100 13.8

80 50

100 62.5

34 27 80

42.5 33.8 100

34 35 80

42.5 43.8 100

12 18 80

15 22.5 100

Total Market

Citibank,

Share Total Type

N.A. SCB HSBC of Citibank,

Consumer Banking Products Total Service Quality Total

N.A. SCB HSBC

Table 5.35: Summary of Ranking Answers to question no.16 were very important to decide on competitive positioning of Citibank, N.A. in terms of some given attributes. Here, the respondents were soliciting to position the given options according to their level of significance. In case of Brand Image, majority of the respondents (48.8%) have responded in favor of Citibank, N.A. HSBC, however, has got the second highest preference (28.8% response) to be in the first ranking position, and SCB has obtained 22.5% response to be in the first poison.

Following that 46.3% of the clients has supported SCB as their first preference to be in the second ranking position. In spite of getting more priority to be in the first ranking position again the same percentages of the people (46.3%) ranked HSBC as their first preference to be in the third position. The reason was the difference of percentages of response for SCB and HSBC to be in the first position was comparatively lower. In terms of Market Share, 56.3% respondents have preferred SCB that was very obvious in terms of their relatively vast operation in Bangladesh. Comparatively less preference (16.3%)

for first ranking position was given to Citibank, N.A., following 27.5% to HSBC. For second ranking position HSBC has got 37.5% response and for third ranking position Citibank, N.A. has got hold of 56.3% of the response. In case of Type of Consumer Banking Products, for first preferable ranking option, 47.5% percentages of respondents have selected SCB. Second highest preference for first ranking position HSBC has obtained 40% of the response. Surprisingly, only 12.5% of the respondents have positively responded for Citibank, N.A. to be in the first position. According to majority people (42.5%) for Service Quality, SCB ought to have in the first ranking position.

Though HSBC has got 33.8% response, Citibank, N.A. has got 23.8% response to be in the first ranking position. In support of these findings, greater percentages (43.8%) of the respondents ranked HSBC to be in the second position. However, Citibank, N.A. has again got the highest preference to be in the third ranking position. If the mean and mode in the Descriptive Statistics table has been observed, I found that highest mean (2.2625) and mode (3.00) of responses appeared for the brand image of Citibank, N.A. Again for market share and type of consumer banking products option SCBâ&#x20AC;&#x2122;s mean value respectively (2.4750) and (2.4125) were the highest among all. Modes of responses in these regards were also in favor. The overall analysis ultimately directed me to conclude that only for brand image Citibank, N.A. has got priority from their respective clients.

However, for the other remaining attributes namely market share, type of consumer banking products, and service quality, clients enthusiastically responded for SCB. For all these attributes HSBC got the second preference from majority of the clients. These results helped me to come to a conclusion that competitively in a weaker position.

Analysis of Question no. 17 This was the only open-ended question I asked to my respondents. There responses were very interesting as well as effective for evaluating consumer banking services of Citibank, N.A. Here I would like to mention only the summary findings from their opinions. Customers of Citibank, N.A. only valued it for their undoubtedly huge brand image worldwide. They eagerly wanted Citibank, N.A. to go for full-fledge consumer banking services as it dose worldwide to maintain its overall image. In view of the present condition, according to many clientsâ&#x20AC;&#x2122; consumer banking services of Citibank,

N.A. was very limited, that wanted to be expanded in the near future. Surprisingly many clients have praised other foreign bank’s services. At the same time pointed to comparatively weaker position of Citibank, N.A. in terms of their service quality and distributional aspects. Interestingly, many clients have criticized their exaggerated official procedure through which the clients have to gone through every year. Some clients wanted Citibank, N.A. to open new branches in other locations of Dhaka, so that client’s living far away could get easy access to its services. All these opinions actually have reflected that Citibank, N.A.’s current image of consumer banking services in the mind of its clients is not at all satisfactory. However, majority of the clients were wholeheartedly expecting it to go for full-fledge consumer banking services.

Analysis of Demographic Question No. 18-21 Gender N

Valid 80 Missing 0 Mean 1.4125 Median 1.0000 Mode 1.00 Std. .49539

Age Limit Gross 80 0 3.5375 3.0000 3.00 .99293

Income 80 0 2.7750 3.0000 4.00 1.14709

MonthlyOccupatio n 80 0 4.1625 3.0000 3.00 1.98376

Deviation Table 5.36: Descriptive Statistics Gender Frequenc Percent Valid Percent Cumulative Valid

Male Female Total

y 47 33 80

58.8 41.3 100.0

58.8 41.3 100.0

Percent 58.8 100.0

Table 5.37: Frequency Age Limit Frequenc Percent Valid Percent Cumulative

Valid

y 20-29 11 30-39 33 40-49 18 50 or18

13.8 41.3 22.5 22.5

13.8 41.3 22.5 22.5

above Total

100.0

100.0

80

Percent 13.8 55.0 77.5 100.0

Table 5.38: Frequency Gross Monthly Income Frequenc Percen Valid Percent Cumulative Valid Tk.20,

y 000-15

t 18.8

18.8

Percent 18.8

40,000 Tk.40,

000-60,18

22.5

22.5

41.3

000 Tk.60,

000-17

21.3

21.3

62.5

Above30

37.5

37.5

100.0

80,000 Tk.1,00,000 Total

80

100.0 100.0 Table 5.39: Frequency

Occupation

Valid

Frequenc Percent

Valid

Cumulativ

y 12 36

15.0 45.0

Percent 15.0 45.0

e Percent 15.0 60.0

employed Technical 4 House- 5

5.0 6.3

5.0 6.3

65.0 71.3

wife Doctor Other Total

15.0 13.8 100.0

15.0 13.8 100.0

86.3 100.0

Service Self-

12 11 80

Table 5.40: Frequency

The responses to demographic questions reveals that majority of the respondents (58.8%) were male. However, 41.3% of the respondents were female clients. 41.3% of the respondents were in age limit of 30-39. On the other hand same percentages of respondents (22.5% each) were under 41-49, and 50 or above age limit category. The greater percentage of respondents’ gross monthly income was above Tk.1,00,000. Even 22.5% and 21.3% of the respondent’s gross monthly income were in between Tk.40,00060,000 and Tk.60,000-80,000 respectively. Hence, this result explains that most of the client’s were under upper-class segment of the society. 45% of the respondents were self-employed, namely doing businesses of their own. Other mentionable response for occupational category included service, technical work, Doctor etc. Astonishingly, 6.3% of the respondents were house-wife. However, sources of their income mainly came from their husband’s income.

Cross tabulation Cases Valid N

Gross Monthly Income * Occupation 80

Missing

Total

Percent N

Percent N

Percent

100.0%

.0%

100.0%

0

80

Table 5.41: Gross Monthly Income * Occupation Cross tabulation Occupation ServiceSelfGross Monthly Income

Tk.20, 000-40,000 3 Tk.40, 000-60,4

employed 2 6

000 Tk.60, 000-80,000 3 Above 2

10 18

Tk.1,00,000

Technica Housel 2

wife 1 3 1

2

Doctor Other Total 4 1 3 4

5 2

15 18

4

17 30

Total

12

36

4

5

12

11

80

Table 5.42: Count A cross tabulation has been conducted to find out the occupation of the respondent’s having income above Tk.1, 00,000. The above table shows that 18 clients out of 80 (22.5%) who were self-employed have gross monthly income of above Tk.1, 00,000.

5.4 Key Findings The following conclusion can be drawn after analyzing all the questions: 

In Citibank, N.A. number of operating account and payroll account are quite similar.



Therefore, corporate-linked (GRB or TTLC)/ or embassy-linked individuals play a vital role in its consumer banking target segment.



The most significant reasons behind people’s selection of Citibank, N.A. is its



Worldwide reknowned brand image. Lowest percentages of response for “service quality” and “variety of consumer banking products” actually reflects the bank’s limitations on those most important service attributes.



It is obvious that check deposits, check payments, cash withdrawal, and ATM card are



The most frequently used consumer banking products. Percentage for cash deposits is comparatively very low as in Citibank, N.A. only selected clients get the opportunity to deposit cash.



The most important findings was that customers of Citibank, N.A. are not highly



Satisfied with its consumer banking products and services. This low level of satisfaction arises because of customers lower preference for Citibank’ N.A.’s consumer banking service quality. Moreover, lower level of satisfaction arises due to low Service Loyalty, Switching Cost and Customer Perceived Value.



According to majority of the customers having only four branches are not sufficient to



Provide satisfactory consumer banking services.



Increase of satisfaction level would occur from various options. Among all



Introduction of loans, introduction of credit card facilities, introduction of number of branches, and introduction of more ATM booth are respectively vital.



Most of the Citibank, N.A. clients agreed that it should start doing full-fledged



Consumer banking.



In spite of taking consumer banking services from Citibank, N.A. most of the clients



Have kept other foreign commercial banker. Response for HSBC arises, following highest response for SCB mostly.



Majority of the respondents are aware that SCB has got the highest market share.



Citibank, N.A. on the other hand has got the lowest market share.



Citibank, N.A. has got the highest preference only for its brand image.

Conversely,



SCB has ranked first for its market share, type of consumer banking products, and service quality. HSBC has got second preference for all those aspects.

Citibank, N.A. has obtained lowest client response on those aspects. Weak competitive positioning of Citibank, N.A. has been exposed through these.

Part 2: Chapter 6 6. Recommendations and Implementation (Proposed Positioning and Strategies) Recommendations have totally been based on both the findings of primary data source and secondary data source. Results of my survey, portraying low level of customer satisfaction for Citibank, N.A.’s consumer banking products and services, have played a significant role in originating my recommendations.

Key findings from consumer

banking potential in Bangladesh, key challenges and SWOT analysis have also been my focus in deriving recommendations. Challenges for expanding consumer banking operation by Citibank, N.A. have already been identified during analyzing the current scenario. Moreover, the weaknesses and threats have already been scrutinized during SWOT analysis. Hence, some suitable recommendations to face the consumer lower satisfaction level, the challenges, weaknesses and threats for consumer banking operations are given below: 6.1 Recommendations •

Dedicated Sales Force: Committed sales relationship managers and service officers for all customers are highly required in all branches, so that clients feel safe doing their transactions and in case of resolving queries relating to consumer banking products and service. This recommendation is aimed to improve service quality aspect of consumer banking.

•

Increase Number of Branch and ATM Booth: More ATM booth should have been introduced along with increase number of branches, so that Citibank, N.A. could have a better exposure, and could reach to a greater number of targeted people.

Raising the number of ATM booth will cater to those individuals’ needs who want convenience in their transaction.

•

Software based Phone Banking/E-banking: It should have introduced Software based phone banking to attract more customers through providing superior convenience in receiving consumer banking services. E-banking of Citibank, N.A. is extremely popular among its corporate clients. Citibank, N.A. can also

introduce it for the individual clients to have greater acceptance of consumer banking products and services.

•

Focused Segment: Specific consumer banking products should be targeted towards focused segments. The nature of those products should cater to their specific needs. Such as loan products with specific features can be initiated keeping in mind growing number of middle class people.

•

Loan Products: Introduction of secured loans for individual clients can strengthen its asset base to a high extent. Salaried target market is mentionable in this respect. Introduction of loan products will also help it to compensate its high liability from Deposits products.

•

Credit Cards: Introducing the most popular credit cards can also be invigorating Citibank, N.A.’s consumer banking performance. It is the credit card that gives individual privileged to have ‘buy now pay later’ option. Hence, attractiveness of credit card among individuals is rising day by day.

•

24 Hour banking/ or Evening Banking: At least facilitating clients with evening banking hours can raise immense support for Citibank, N.A.’s consumer banking operation. Highest market share holder Standard Chartered bank has introduced evening banking hours for their customers. Citibank, N.A. in order to raise customer satisfaction should also take this kind of step.

•

Innovative Products/ Services: Like Standard Chartered bank’s Excel Banking services, Citibank, N.A. can also start thinking of innovative consumer banking products or services keeping in mind rapidly changing individual needs.

6.2 Consumer Bank - Proposed Positioning Based on my recommendations three positioning for Citibank, N.A.’s consumer banking has been stated below: 1. "Welcome to world class international banking, with an array of superior banking products and services, from the world's greatest financial services company."

2. "Citibank gives you the luxury of banking and unparalleled advantage to stay ahead in life. Your Relationship Manger will provide you with personalized advice and service round the clock."

3. "Chose to bank the way the world does - from our state of the art branches or through round the clock Citi Phone banking."

6.3 Proposed Entry Strategy for Consumer Banking The table presented below shows consumer banking entry strategy for 5 consecutive years with the relevant pros and cons.

Strategy Entry with up market

Pros Low investment, quick

Cons Fall back in race for

Wealth/ preferred

liability book

limited wallet v/s

business/ middle market

entrenched

savings. First launch Dhaka

competition

with 2 branch + 3 offsite ATM strategy. Add 2 ATM's in year 4 Launch Chittagong in year 2 with 1 branch + 1 ATM Limited secured lending

Support for liabilities

Market views it as a

and Personal loan to GRB/

strategy

boutique player

professionals Expand lending to target

Credit imprint with limited

Lose early mover

market (TM) in year 3

risk

advantage in emerging

TTLC employees,

Explore cards in year 4

consumer credit

Consumer Finance to Mid

Ability to ramp up quickly

market Approach will not

segment and Sub-Prime

in synchronization with

support one-bank

through NBFC post pilot

infrastructure

strategy

Build up in the economy

limited ability to ring

with Citibank Vehicle in year 3 NRB's deshi proposition remittances from Middle

fence GCIB target

East

market

6.4 Consumer Bank Product Opportunity The following consumer banking product opportunity is currently apparent given present consumer banking condition: 6.4.1 Citibanking 

Top end Wealth Management / Business Preferred



Middle market Savings

6.4.2 Personal Loans 

Salaried employees of GRB/ TTLCs



100% secured lending to Self-Employed

6.4.3 Non Resident Business 

Small Ticket remittances, opportunity for float/ forex revenues

6.4.4 Consumer Finance 

Strong opportunity, but no credit imprint

6.4.5 Credit cards 

Infrastructure hurdles, no credit imprint

6.5 Strategies Some specific strategies are briefly described below that might aid Citibank, N.A. in expanding its consumer banking services.

6.5.1 Product Strategy –Citi banking 

Two branch strategy - aimed at capturing top end most profitable customers



Differentiation through RM, Citi Phone, state of the art branches, 7 x 365 service



Wealth Management Branch in suburbs - Gulshan area



Business Banking from part of existing branch - Motijheel area



ATMs at three offsite locations



Launch Chittagong in year two



Wealth Management - Savings, TIDE, Govt. Bonds



Business Banking - Current Account flanked by transaction services like Cash



pu/dl, free drafts, collateralized trade products



Acquisition through DSA structure



Sales and Service RMs, non clerical CSRs

6.5.2 Product S

1



Strategy aimed at top end customers - understand credit behavior and leverage GCIB relationships



Secured credit to all categories - credit imprint and profitability



Unsecured Loans - Income based lending to GRB, TTLC, white collar employees and Doctors



Secured loans - Loans against Govt. Bonds / Fixed Deposits



Indirect DSA acquisition structure



Expand to Chittagong in year two

Personal Loans - Proposed Program Indian Citibank, N.A. has already gained huge success in their consumer banking.

Therefore, this plan has been based on personal loan program existed in India. However, only suitable ones have been accepted for implementing in Bangladesh.

Proposed-Bangladesh

Category Target Market

Existing- India

Salaried - Category A (GRB, TTLC)

Retail Program

Salaried Category A & B

and Doctors

Self Employed - Doctors,

Sell Employed – Doctor’s and CA’s

Engineers and others fall under

only

Category A

GRB and TTLC only based on CBG

Corporate

GRB and TTLC only based on CBG

(Corporate Banking Group)

Program

(Corporate Banking Group)

recommendation

recommendation

Limited Self employed Unsecured – Salaried only

Limited Self employed Collateral

Unsecured

Secured by FDs or Sanchay Patra – All Tk 10 lakhs unsecured, Tk. 100

Loan Amounts Maximum

lakhs secured Tk. 1.0 lakhs

Salaried – Rs. 3 lakhs, Selfemployed- Rs. 10 lakhs

Minimum

Salaried – Rs. 0.4 lakhs, Selfemployed - Rs 1.0 lakh

60 months limited by collateral

Tenure Maximum

maturity

48 months, 60 months for Doctors

12 months

Minimum

Salaried Tk. 8M take home per

Eligibility Income

12 months

month

Salaried Rs. 6M take home per

Doctors – Tk. 2.0 lakhs ITR,

month

Secured - no minimum

Self-Employed – Rs. 2.0 lakhs ITR

Salaried - 60yrs, Self-employed -

Age

65 yrs

Salaried - 60yrs, Self-employed 65 yrs

2 yrs - salaried. 3 years for

Work

At least 3 years or else max loan

Doctors- unsecured loan

Experience Loan Eligibility Salaried

Rs. 3 lakhs

Multipliers on take home –

Determinant

4/7/9/11

3/6/8/10

Self-employed

Multipliers on cash profit

Multipliers on cash profit - 3

Determinant Documentation

-4/1.25/2/1

Multipliers on take home –

Application form, Loan

Application form, Loan

agreement, Promissory note,

agreement, Promissory note,

Proofs for identity, employment.

Proofs for identity, employment.

Profession,

Profession,

Income documentation - salary

Income documentation - salary

slip or ITR (Income Tax Return)

slip or ITR (Income Tax Return)

6.5.3 Product Strategy - Non Resident (float/ Forex revenues) 

Small ticket remittances - primarily from Saudi Arabia and the Gulf countries



Limited opportunity for wealth management products



Concentrate on float income and Forex revenues

6.5.4 Product Strategy -Consumer Finance 

Huge opportunity in the absence of any serious player with a program lending offer.



Build credit imprint

6.5.5 Product Strategy - Cards 

Limited market size, under-developed acceptance



CIF estimated at 120 M, SCB key player with excel based portfolio.



Citibank strategy



Generate investment dollar



Build credit imprint

6.6 Synopsis of Implementation 6.6.1 Positioning “Welcome to world class international banking, with an array of superior banking products and services, from the world's greatest financial services company" Product Strategy  Citibanking - Top end Wealth Management / Business Preferred & Middle market Savings  Personal Loans - Salaried Target market from GRB/ TTLCs and Government & 100% secured lending to Self-employed  Non Resident Business - Small Ticket remittances, opportunity for float/ forex revenue  Consumer Finance - Strong opportunity. but no credit imprint  Credit cards - Infrastructure hurdles, no credit imprint Distribution Strategy:  2 city model - Dhaka in year one and Chittagong in year two  2 branches and 3 ATMs in Dhaka, one branch and one ATM in C'Gong  Leverage cluster office for Credit, Marketing and Operations Pricing Strategy:  At present market penetration pricing should have been used in order to compete in highly competitive consumer banking sector. Charges should be set by carefully analyzing industry average.

Pricing Strategy: ď&#x192;° Citibank, N.A. should start giving promotions in broadcast media to get better exposure of it consumer banking services within a short span of time.

All these strategies need to be gone through a trial process based on small sample before actual implementation in order to avoid any huge financial risk. Only the feasible strategies identified through trial process should have been accepted and implemented accordingly. A plan regarding time line of implementation stages should be drawn consequently. Based on my recommended positioning and strategies, Citibank, N.A.â&#x20AC;&#x2122;s proposed 5 year consumer blue print is presented below:

2006

2007

2008

2009

2010

6.7 Conclusion

Figure 6.1: Citibankâ&#x20AC;&#x2122;s 5 years Blueprint

Citigroup is the world famous global financial services company with millions of customer accounts in more than 110 countries. It provides a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, insurance, securities brokerage, and asset management. Citibank, N.A., is a 100% owned branch office of Citibank, New York, Full-fledged operation of Citibank, N.A. started on June 24, 1995. In his relatively short period of operation has gained a lot of progress in their activities in Bangladesh, mainly through corporate banking. Compare to other foreign commercial banks, namely Standard Chartered Bank and HSBC, it has grown at 66% during the period 2001-2005. However, Citibank, N.A. has not yet started doing full-fledged consumer banking in Bangladesh. The nature of consumer banking they are involved with is very limited to their corporate-linked individual clients and to few significant local individuals. However, as majority of the earnings of Citibank, N.A. worldwide comes via their consumer banking, currently Citibank, N.A. has shown lot of interest to explore its potential in Bangladesh. Throughout the whole report therefore, I

had tried to focus on consumer banking. In order to identify its potential, hence, an indepth study of consumer proposition was needed. That had actually aided me to identify consumer banking prospects in the context of Bangladesh. In order to determine feasibility of consumer banking, I had to gather information of other competing foreign commercial banks, who were involved with full-fledged consumer banking and having an appreciable market share as well as making profits. For that purpose I had selected both Standard Chartered Bank, and Hong Kong and Shanghai Banking Corporation Limited.

Comparison with Citibank, N.A’s tapered consumer banking practices with these competitor banks, actually assisted me to come to a conclusion regarding current consumer banking position of Citibank, N.A. Because of its indisputable image of “World’s No. 1 Bank” many people have become their consumer banking customers.

However, its conical view of doing consumer banking in Bangladesh ultimately had not gain any substantial customer base for this. In addition, lower satisfaction has been observed among majority of the customers. This conclusion I derived through conducting a survey among Citibank, N.A.’s consumer banking customers. However, the bright side of this study was that it had been able to discover that most of the Citibank, N.A.’s consumer banking customers enthusiastically want it to go for expansion as well as full-fledged consumer banking. However, in order to meet client expectation Citibank, N.A. is needed to be undertaken some effective Course of action to alter its current consumer banking propositions. Currently weaker competitive positioning of Citibank, N.A. in terms of its consumer banking stand, has to be changed. Strong market share and profitability can only be achieved if it can reach to greater number of people through introducing worldwide established consumer banking. However, in the context of Bangladesh strategies might need to modify to fit in this market. At present in the South Asian market, Citibank, N.A of India and Pakistan has achieved tremendous success through their unbeatable consumer banking. As in Bangladesh middle class segment is growing constantly, it is offering a very prospective target market for introduction of full-fledged consumer banking. Therefore, keeping these phenomenon’s in mind based on my overall findings and analysis, I have come up with some action plan necessary to go for comprehensive consumer banking. The most awaited credit facilities such as loan, credit card are needed to be given priority. Current service standards need to be upgraded to the worldwide standard level of Citibank, N.A. to ensure superior

client satisfaction. Additional branches would ensure greater exposure to customers.

Keeping that in mind Citibank, N.A. should increase its branches. Furthermore, as competitors like Standard Chartered has already set an example of innovative consumer banking product and services, Citibank, N.A. should also emphasize on. Hence, not only in terms product, but also in terms of pricing, promotion and distribution Citibank, N.A. has to outweigh its competitors to revive customer satisfaction level to a significant height. That entire action plan, however, is needed to be implemented in a proper way to achieve success in consumer banking. From the perspective of huge potential of consumer banking in Bangladesh, integrating all the recommended strategies for the improvement of current positioning of consumer banking and introduction of fullfledged consumer banking operation is aiming to create a distinctive image of Citibank, N.A. in the mind of consumer keeping aside its brand image.

Bibliography 1. Annual Report of Citigroup 2003-2005 2. Citigroup Prospectus, 3. Brochures of Citibank 4. Brochures of Standard Chartered Bank 5. Brochures of HSBC 6. Website of Citigroup, Citibank, N.A. Bangladesh, SCB, Bangladesh and HSBC, Bangladesh.

7. Other relevant websites 8. The Daily Star Newspaper / the Bangladesh Observer/ New Age (Web Edition) 9. Statistical Year Book 2004-2005 (Bangladesh Bureau of Statistics) 10. Publications of Bangladesh Bank, “Bank Porikroma” and “Economic Trend”