Assignment on Historical Background of The City Bank Limited

 Historical Background of The City Bank Limited:

City Bank is one of the oldest private Commercial Banks operating in Bangladesh. It is a top bank among the oldest five Commercial Banks in the country which started their operations in 1983. The Bank started its journey on 27th March 1983 through opening its first branch at B. B. Avenue Branch in the capital, Dhaka city. It was the visionary entrepreneurship of around 13 local businessmen who braved the immense uncertainties and risks with courage and zeal that made the establishment & forward march of the bank possible. Those sponsor directors commenced the journey with only Taka 3.4 crore worth of Capital, which now is a respectable Taka 330.77 crore as capital & reserve. City Bank is among the very few local banks which do not follow the traditional, decentralized, geographically managed, branch based business or profit model.

Under a real-time online banking platform, 4 business divisions are supported at the back by a robust service delivery or operations setup and also a smart IT Backbone. Such centralized business segment based business & operating model ensure specialized treatment and services to the bank’s different customer segments.

 The bank currently has 87 online branches and 10 SME service centers spread across the length & breadth of the country that include a fully fledged Islami Banking branch. Besides these traditional delivery points, the bank is also very active in the alternative delivery area. It currently has 46 ATMs of its own; and ATM sharing arrangement with a partner bank that has more than 550 ATMs in place; SMS Banking; Interest Banking and so on. It already started its Customer Call Center operation. The bank has a plan to end the current year with 100 own ATMs.

 City Bank is the first bank in Bangladesh to have issued Dual Currency Credit Card. The bank is a principal member of VISA international and it issues both Local Currency (Taka) & Foreign Currency (US Dollar) card limits in a single plastic. VISA Debit Card is another popular product which the bank is pushing hard in order to ease out the queues at the branch created by its astounding base of some 400,000 retail customers. The launch of VISA Prepaid Card for the travel sector is currently underway.
City Bank has launched American Express Credit Card and American Express Gold Credit card in November 2009. City Bank is the local caretaker of the brand and is responsible for all operations supporting the issuing of the new credit cards, including billing and accounting, customer service, credit management and charge authorizations, as well as marketing the cards in Bangladesh. Both cards are international cards and accepted by the millions of merchants operating on the American Express global merchant network in over 200 countries and territories including Bangladesh. City Bank also introduced exclusive privileges for the card members under the American Express Selects program in Bangladesh. This will entitled any American Express card members to enjoy fantastic savings on retail and dining at some of the finest establishment in Bangladesh. It also provides incredible privileges all over the globe.
City Bank is one of the largest corporate banks in the country with a current business model that heavily encourages and supports the growth of the bank in Retail and SME Banking. The bank is very much on its way to opening many independent SME centers across the country within a short time. The bank is also very active in the workers’ foreign remittance business. It has strong tie-ups with major exchange companies in the Middle East, Europe, Far East & USA, from where thousands of individual remittances come to the country every month for disbursements through the bank’s large network of 97 online branches.The current senior management leaders of the bank consist of mostly people from the multinational banks with superior management skills and knowledge in their respective “specialized” areas. The newly launched logo and the pay-off line of the bank are just one initial step towards reaching that point.

 City Bank prides itself in offering a very personalized and friendly customer service. It has in place a customized service excellence model called GAP (Graceful-Appropriate-Pleasing) that focuses on ensuring happy customers through setting benchmarks for the bank’s employees’ attitude, behavior, readiness level, accuracy and timelines of service quality.

The City Bank Limited was one of the 12 Banks of Bangladesh among the 500 Bank in Asia for its asset, deposit & profit as evaluated by “Asia Week” in the year 2000. Other than that, The City Bank Limited received the “Top Ten Company” award from the prime minister of the People’s Republic of Bangladesh.

  Mission, Vision and Objectives of CBL

Corporate Mission of CBL

      To contribute to the socioeconomic development of the country

      To attain the highest level of customer satisfaction through extension of services by dedicated and motivated team of professional

      To maintain continuous growth of market share ensuring Quality

      To maximize bank’s profits by ensuring its steady growth

      To maintain the high moral and ethical standards

      To ensure participative management system and empowerment of Human Resources

      To nurture an enabling environment where innovativeness and performance is rewarded.

 Corporate Vision of CBL:

To be the leading bank in the country with best practices and highest social commitment.

 Objectives of CBL:

Despite extreme competition among banks operating in Bangladesh, both local and international The City Bank Limited made a remarkable progress practically in every sphere of its functions. The active of the CBL are very implicit and vast comparing to that of other banks in the country today. The theme of the bank is “For Relationship Banking”. The prime objectives of the CBL are to create a strong capital base, to earn good profit and pay satisfactory dividend to honorable shareholders with proper social commitments. To achieve the objectives the management is continuously working for the improvement of bank’s assets quality by identifying potential depositors and good borrowers. Because it believes “The line of excellence never ends”. The strategic plans and business will be its strength in this very competitive environment.

Source: Annual Report – 2009

  Line of Business of CBL:

CBL manages its business and operation vertically from the head office through 4 distinct business divisions namely

      Corporate & Investment Banking;

      Retail Banking (including Cards);

      SME Banking; &

      Treasury & Market Risks.

Three major functions of  the Bank-

      Taking Deposit

      Extending Loans & Advances

      Foreign Exchange Business

 Deposits are often called the lifeblood of commercial banks. No commercial banks can be thought of without deposits. In fact modern commercial banking starts with deposits from the public followed by lending or financing trade, commerce and trade. Deposits are treated as:

      Deposits as the major source of fund

      Deposit as basis of lending

      Deposit as source of income

      Deposit and credit creation

 Under the umbrella of Foreign exchange business there are three main functions as follows:

      Export Business

      Import Business

      Foreign remittance

 So in simple words, Banking means taking deposit, extending loan and advances and doing foreign exchange business in order to attain profit & contribute to GDP.

Form the above discussion we can say that Bank as a financial intermediaries collects deposit form surplus areas and provides loans and advances to deficit areas (where needed) and also engaged itself in foreign exchange business, the sum-up of all these activities is known as Banking.

The City Bank Limited is the first private sector Bank in Bangladesh. The Bank established in March 27, 1983 with an authorized capital of Tk. 1.75 Billion under the entrepreneurship of twelve prominent & leading businessman of the country. Today The City Bank serves its customers at home & abroad with 83 branches spread over the country & about three hundred oversea correspondences covering all the major cities and business center of the world.

  Current Functions of CBL:

a) Description of Services Offered by CBL: The Services offered by CBL are discussed below:

1.   Service of CBL

 The CBL concentrates the following categories of banking services:

      General Banking

      Retail Banking

      Loans and Advances

      SME

      Corporate

 International Trade and Foreign Exchange-

      Export

      Import

      Remittance

 Online Banking Services-

      Debit Card and Duel Currency Credit Card Facilities & The American Express Cards.

 2. Retail Banking:

One of the most remarkable success stories of last 50 years Banking Industry globally has    been the conceptualization and innovative execution of banking with individual customers, their friends and families. The industry has termed it as Retail Banking or Personal Banking or Consumer Banking. The City Bank limited recently started its journey in Retail Banking. More than 700 staffs have been trained so far on the vital concepts of service excellence and sales. In the product side ATM fleet has been launched, Debit card has been issued, SMS Banking has been offered, 3 new deposit products have come up and our communications in media has been increased, manifold in the endeavor to build a Retail Banking brand namely “City Retail Happiness Counts”. Retail Banking includes:

      Deposit

      Loan

      Debit Card

      Credit Card

      NRB

 3. SME Banking:

Considering the potential growth and demand situation the City Bank Limited has extended credit facilities to small and medium enterprises through SME Banking in the year 2006 and 2007. A separate division has established in the Head Office with collaboration of all branches to process and handle loans under SME for attaining a respectable market share and successful operation of the scheme. The Bank has organized several training program for development of adequate human resources.

Following services are provided by SME Banking-

      City Muldhan

      City Sheba

      City Shulov

      City Nokshi

 In the year 2007, major initiatives have been taken to re-launch SME Banking. Organization and processes are being restructured with focus to enhance business. SME asset size in 2007 went up to BDT 2,000 million and the number of borrowers in SME was 3,000.The bank ha s also taken measures to provide complete banking solution to SME by devising both cash and non-cash based product appropriate and fit to support the requirements of the concerned business. Small enterprise will have a better opportunity to avail PPG based funded product. The needs of medium sized enterprises are also being fulfilled through multiple products offering in the conventional manner. The City Bank SME launched “City Nokshi”. “City Nokshi” is a 10 percent   rate per annum as per the guidelines of Bangladesh Bank and is available only for the women entrepreneur of the country.

  4.  Corporate and Investment Banking:

As part of its commitment to provide global quality service. The City Bank Ltd, one of the largest local Banks, has launched its Corporate & Investment Banking Division recently. This shift , from branch banking model to business driven matrix, is the first step of the banks plan to revitalize its way of doing business in 2008. The C&I Division will comprise of a number of relationship teams centered in Dhaka and Chittagong to provide who will act as one stop contact point for the customers of the bank. This model has been successfully globally to provide better service and create increased customer satisfaction. The relationship teams have been staffed mainly through internal quality resources. The C& I relationship teams have already taken over the existing large accounts and servicing the customers to their satisfaction. Total new booking in last few months is more than BDT 3,000 million. The C&I Division will also have product teams i.e. structured finance, Islamic finance, Leasing, Cash management who will meet the specialized product needs of the corporate customers. The time ahead is going to be very challenging for C&I. The major challenges shall be to increase the quality of the portfolio keeping in mind the business targets and also ensure quality services in this transaction phases with timely formation and support from other departments i.e. centralized credit administration, operations.

 Following services are provided by Corporate Banking:

 Working Capital Finance

      Trade Finance

      Short/mid-Term Finance

      Project Finance

      Islamic Finance

      Structured Finance

      Cash Management

      Investment Banking

      Schedule of Charges

      Interest Rate on Lending

 5. Dual Currency Credit Card:

Today’s customer wants services and information to be provided at all times and places. This has become possible by ATMs and POS terminals and helped banks in achieving “Anytime, Anywhere Banking”. Therefore there is a need for an automated system that will connect the branches through online to provide better services to the customers. The most modern technology based bank product for making hassle free financial transactions and drawing of cash money all over the world is given by Credit Card. The City Bank Ltd is the first among domestic banks to introduce a unique dual currency CITY CARD under the logo of VISA International in Bangladesh. After obtaining principle membership of VISA on 19th February, 2003 the bank is pleasing its commitment to be leader as card issuer in the arena. Tremendous responses are there from the market for this plastic money. Up to March, 2008 the number of CITYCARD is 10,215.

 6. Computerization and Online Service:

With computerization the bank had gone another step ahead towards providing pragmatic, safe and prompt banking services. All 84 branches including Islamic Banking Branch are brought under computerized net. Bank has implemented online real time banking through an agreement with Info sys Technologies Limited for supply of world reputed banking software “FINACLE”. Within March, 2008 real time banking facilities have been introduced in 37 branches of CBL. Under this system, client will be able to do the following type of transactions:

      Easy to withdraw or deposit from any online branch

      Fund transfer with one click, no need TT/DD

      Customer can easily tell which payments have cleared.

 7. Islamic Banking:

The City Bank Limited started its Islamic Banking operation by opening its first Islamic Banking Branch at 9/H, Motijheel, Dhaka. Islamic Banking Branch has just completed 5 year of its operation. Islamic Branch is also rendering sales and service to a good number of broker houses including DSE’s central trade account in the capital market. The salient features of Islamic Banking are as follows:

      To conduct all its activities as per Islamic Shariah

      To conduct its monetary matters free of interest

      To establish banker-customer relationship on the basis of partnership

      To follow Islamic principle in all its investment port-folio

      To develop living standard of the poor incoming group

      To render excellent services to the clients cordially

      To conduct welfare related activities to the people.

 8. SWIFT Banking (Since 2000):

The City Bank Ltd. is one of the first few Bangladeshi Bank who has become member of SWIFT (Society for Worldwide Inter-Bank Financial Telecommunication) in 1983. SWIFT is members owned co-operative, which provides a fast and accurate communication network for financial transactions such as letters of Credit, Fund transfer etc. By becoming a member of SWIFT, the bank has opened up possibilities for uninterrupted connectivity with over 5,700 user institution in 150 countries around the world.

 9. SMS Banking:

City SMS gives you 24-hour access to the key financial information of our customers City Bank Account. It is the simplest way of finding out customers account’s daily / month – end balance. With City SMS , a customer neither have to wait for his or her statement to arrive through mail nor have to make a phone call at branches to inquire about his or her balances and last few transactions. Once a customer becomes a member of SMS banking, he or she will enjoy 24-hour access it the key financial information.

Facility:

Through City SMS Banking you will be able to access his or her account information like balance; transaction and a range of other financial information by typing a presently following functionality are available through City SMS Banking

 10. Corporate Governance:

The bank recognizes the importance of Corporate Governance and is committed to maintain highest standard. A team of experienced professionals maintains the following committees to run the Bank efficiently:

      Management Authority

      Administration and Disciplinary Action Authority

      Technical and Audit Authority

      Credit committee

      Procurement and purchase Committee

      Asset and liability Committee

 11. Training Program:

The City Bank Limited has launched a huge training program for its staff as part of its restructuring plan. So far, 774 staffs have received training on Customer Service and face to Face Sales; 65 staff received training on departmental operating Instructions and 268 staff received training on Orientation to Credit. Apart from these regular training are going on with BBIM, BIM, and CRISL etc. City Bank Management gives top priority to its peoples leasing and development issues. That’s why the current training project of City Bank is given a name “Learning & Development making the winning moves”.

 b) Functional Division of CBL: The Bank accomplishes its functions through different functional divisions/departments along with their major functions are listed below:

 1. Financial Division:

      Financial Planning , budget preparation and monitoring

      Payment of salary

      Controlling inter-branch transaction

      Disbursement of bills

      Preparation / Review of returns and statement

      Preparation of financial reports and annual reports

      Maintenance of Provident Fund, Gratuity, Superannuation Fund

      Reconciliation

 2. Credit and risk management:

      Loan administration

      Loan disbursement

      Project evaluation

      Processing and approving credit proposals of the branches

      Documentation, CIB (Credit Information Bureau) report etc

      Arranging different credit facilities

      Providing related statements to the Bangladesh Bank and other department

 3. Human Resource Division (HRD

      Recruiting

      Training and development

      Compensation, employee benefit, leave and service rules program and purgation

      Placement and performance appraisal of employees

      Preparing related reports

      Reporting to the Executive Committee/Board on related matters

      Promotional camping and press release

 4. Information Technology (IT) department

      Software development

      Network management and expansion

      Member banks reconciliation

      Date entry and processing

      Procurement of hardware and maintenance

 5. Branch control & Inspection Division

      Controlling different function of the branches and search for expansion

      Conducting internal audit and inspection both regularly and suddenly

      Ensuring compliance with Bangladesh Bank(BB), monitoring BB’s inspection and external audit reports

 6. Retail Division

      ATM card, Credit and system operation and maintenance

      SWIFT operation

      Credit Card Operation (Proposed)

      Customer and vendor relationship

 7. City Bank Treasury and Market Risk Division:

City Bank Limited has a dedicated Treasury team who is capable of providing all treasury Solutions. Through business partners CBL is providing a wide range of Treasury products. In CBL Treasury, there are various teams who are specialized in their own area to ensure the best possible solution to our customer obligation. Such as:

      Foreign Exchange

      Money Market

      Corporate Sales

      ATM and Market Research

Strategy of CBL:

CBL believes in the practice of Market-Oriented Strategic Planning , developing and maintaining a viable fit between the organization’s objectives, skills and resources, The aim of such approach is to shape  and reshape the bank’s businesses and service so that they yield target profit and growth. The strategic planning of CBL consists of two organizational levels, which are:

a) Location Based Strategy

b) Business Level Strategy

a) Location Based Strategy:

 Since the growth and profit of banking business largely depends upon the location of branches where large connection of other businessman and industries are involved, CBL Main Strength is its location based strategy. The 83 branches of CBL are divided into five different regions, which are:

      Dhaka Division, comprises 37 branches

      Chittagong Division , comprising 15 branches

      Comilla Division , comprising 5 branches

      Sylhet Division , comprising 9 branches

      Bogra Division , comprising  10 branches

      Khulna Division , comprising  7 branches

 The concentration of business and lifestyles of the people are not the same in these five areas. So, the strategies of the five areas differ from one another, but they are designed with distinctive local touch. Head office constantly monitors the progresses of all the five areas. At present, The bank is not interested in launching more branches. Currently CBL is focusing in strengthening the existing branches

b)     Business Level Strategy:

 The business strategy of the Bank is to strengthen its retail business, following a conservative leading approach. But the Bank’s major portion of the profit generates from its Retail banking and SME banking.

                  Retail Banking Strategy

                  SME Banking Strategy

 Retail Banking Strategy:

The City Bank Ltd. recently has started its journey in Retail Banking. More than 700 staffs have been trained so far on the vital concepts of service excellence and sales. In the product side ATM fleet has been launched , Debit card and credit ha s been issued, SMS Banking has been offered, 3 new deposit products have been introduced, manifold in the endeavor to build a Retail Banking brand namely “City Retail Happiness Counts”.

 SME Banking Strategy:

Considering the potential growth and demand situation The City Bank Limited extended credit facilities to small and medium enterprises through SME Banking in the year 2006 and 2007. A separate division has been established in the Head Office with collaboration of all branches to process and handle loans under SME for attaining a respectable market share and successful operation of the scheme. The bank organized several training program for the development of adequate human resources.

City Bank Limited