Banking sector to see a paradigm shift, says ABB chairman

Express (August 18, 2011)

K Mahmood Sattar, chairman of the Association of Bankers Bangladesh (ABB) has said riding on a robust capital base and driven by new technologies, the banking sector of Bangladesh will see a paradigm shift in near future.

"Our banking sector is already fortified with a strong capital-base in compliance with a set of regulations from the central bank over the years and you will see a paradigm shift in the sector with the onslaught of mobile technologies," Mr Sattar, also the managing director & CEO of City Bank Ltd told the FE in an interview recently.

He said 44 per cent of Bangladesh population is mobile-connected, so the connectivity will bring a huge change in the banking sector under which transactions will be very smooth and hassle-free.

Bangladesh Bank has already allowed a few banks to operate mobile banking and more will follow them within a few years, Mr Sattar said.

Commenting on the entry of new banks, the ABB chief said banking business is no more a business like trading houses as it was 20 years back.

"Now it is not at all possible to get quick return opening new banks as the central bank has already put strict rules and regulations including a robust capital-base," Mr Sattar said.

Elaborating his point, Mr Sattar said it needs Tk 4.0 billion as paid-up capital for opening a new bank now which were only Tk 40 million for first generation private commercial banks (PCBs), Tk 100 million for second generation PCBs, Tk 300 million for third generation PCBs and Tk 400 million for fourth generation PCBs.

"Moreover, due to strict regulatory restrictions, you cannot get quick bucks overnight through opening a new bank," he added.

Currently there are 47 banks in the country including 30 PCBs and a move is underway to allow more banks.

Commenting on the transformations of the country's banking sector during the last four decades, the ABB chief said every banks now follow a strategy to cope with the growing competition.

The establishment of a risk management unit (RMU) in every bank is a revolutionary step by the Bangladesh Bank (BB), he said.

"RMU is a fully non-banking job and the members of the unit are doing continuous analysis on risk factors," Mr Sattar said.

Commenting on the possible effects of recent US economic turmoil on Bangladesh economy, he said the export market will remain out of danger but the remittance-flow will be affected due to the new crisis.

He said Bangladesh export market should be diversified and government should ensure better road infrastructure and power connectivity.

Replying to a question on the present state of Bangladesh stock market, Mr Sattar said uneducated investors are blaming the central bank for the debacle.

"There is a trend on making quick-bucks by the investors ignoring the basic principles in the stock market, but it is not rational," he said.

"There should not be any blame game as a clear dividing line exists between the BB and the Securities and Exchange Commission (SEC)," he explained.

Commenting on his leadership role of ABB in the near future, Mr Sattar who heads the association of the top banking executives since 2007 said : ABB will continue to work to strengthen the banking sector in line with the governance and regulatory norms.

Commenting on the performance of City Bank Ltd, he said the bank saw many noticeable changes in the last four years including logo change and launching of many new products like American Express Credit Card and Mastercard Platinum Debit Card.

Of them, the latter is the first dual currency platinum debit card of Bangladesh.

"The bank has now two subsidiary companies in the stock market and lot of changes took place as far as corporate governance is concerned," Mr Sattar said.

Prior to joining City Bank Ltd in July 2007, Mr Mahmood Sattar served the Eastern Bank Limited (EBL) since January, 2001.

Mr. Sattar started his career with the ANZ Grindlays Bank in 1981. He had worked in Mumbai, India, as corporate dealer in treasury and served as the Manager of Corporate Banking for more than two years in Melbourne, Australia.