The New Nation - Internet Edition

US rescues ailing Citigroup bank

BBC, London

The US government has announced a rescue plan for troubled banking giant Citigroup after its shares plunged by more than 60% last week.

The US Treasury is set to invest $20bn (£13.4bn) in return for preferred shares in Citigroup.

The Treasury and the Federal Deposit Insurance Corp will also guarantee up to $306bn (£205bn) of risky loans and securities on Citigroup's books.

The plan follows a $25bn injection of public funds in the bank last month.

Citigroup's market value fell to $20.5bn on Friday, compared with $270bn in 2006.

Last week the company announced 52,000 job losses worldwide, on top of 23,000 job cuts previously announced. It employs around 12,000 people in the UK.

Citigroup has lost more than $20bn in the past year because of the global financial crisis, suffering four straight quarterly losses.

Citibank UK deposit holders are covered by the Financial Services Authority. The Financial Services Compensation Scheme guarantees up to £50,000 per Citibank account holder, should the bank go bust.

'Protecting taxpayers'

The action plan was announced after emergency talks over the weekend between the bank and the treasury department, the Federal Reserve and the Federal Deposit Insurance Corp.

Citigroup is one of the leading US banks and has operations in more than 100 countries.

Many analysts had calculated that the huge financial institution was too big to allow to fail.

"With these transactions, the US government is taking the actions necessary to strengthen the financial system and protect US taxpayers and the US economy," the three agencies said in a statement.

"We will continue to use all of our resources to preserve the strength of our banking institutions, and promote the process of repair and recovery and to manage risks," they added.

The cash injection will come from the $700bn financial bail-out fund created last month.

Focus on details

Many analysts believe the plan to rescue Citigroup will help reduce uncertainty in the market.

"We expect the US bail-out of Citigroup as well as Obama's promise of a major stimulus plan - with key Democrats suggesting numbers between $500bn and $700bn, much bigger than expected - to allow stock markets to gain across the globe, " said Dariusz Kowalczyk at CFC Seymour in Hong Kong.

Markets are keenly awaiting for more details of the plan to be revealed.

"Clearly, the market focus today will be on the release of a concrete rescue plan for the bank, details of which remain fluid; reports so far have noted that any infusion plan is provisional and subject to change," said Sue Trinh at RBC Capital Markets in Sydney.

"Does this mean support for other financial institutions will be this big? Does this mean there will be more problems around calculation of so-called toxic assets?

It's too early to say," said Tony Morriss at ANZ Bank in Sydney.

Management's future

Under the agreement, Citigroup does not have to replace chief executive Vikram Pandit and other top managers, but the government will be able to make decisions on their compensation.

Mr Pandit, who took the top job at Citigroup in January, has come under fire for failing to turn around the bank.

"You're seeing an inept management team being rewarded by the US government," said William Smith at Smith Asset Management in New York.

The bank will not be able to pay out more than 1 cent per share quarterly dividend. The dividend now stands at 16 cent per share.

Seeking to stabilise the financial system, the US government has bailed out Bear Stearns, Fannie Mae, Freddie Mac and American International Group and injected hundreds of billions of dollars into financial institutions.

StanChart in $2.7 billion cash call to boost capital

Reuters, Singapore/ London

Emerging markets bank Standard Chartered (STAN.L: Quote, Profile, Research, Stock Buzz) plans to raise 1.8 billion pounds ($2.7 billion) from a rights issue to boost its capital base and give it flexibility to pursue acquisitions, it said on Monday. The London-based lender said the economic picture had deteriorated this month and, although the bank was performing well, the outlook was unclear.

Peter Sands, chief executive, said investors were keen for banks to hold more capital during turbulent market conditions and there was merit in retaining an excess of cash.

It could also be used for deals, he said. "Having more capital will give us greater flexibility to take advantage of growth opportunities emerging from the turmoil, both organic and inorganic," he said. "Many of our competitors are in disarray, lacking capital or liquidity or distracted by problems," Sands told reporters on a conference call. By 3:51 a.m. EST its London-listed shares dipped 3.2 percent to 734 pence, compared with an issue price of 390 pence for the capital increase.

The dilution from the rights issue was added to by declines in the won currency in Korea -- where Standard Chartered has exposure -- and news of more structured credit losses, analysts said.

Standard Chartered's core tier 1 capital ratio -- a key measure of financial strength -- was 6.1 percent at the end of June, when it would have been 7.4 percent had the fundraising been included. Using the same comparison, Its tier 1 ratio would have been 9.8 percent instead of 8.5 percent.

The cash injection by the bank, which has dodged the massive losses from the credit crisis suffered by some of its competitors, came as analysts called for it to beef up its capital cushion to withstand potential losses in Asia and the Middle East.

CAPITAL CRUCIAL

Other big banks have raised capital this year and, as the industry braces for the impact of recession in many countries, the U.S. government agreed on Monday to bail out Citigroup while UK rival Barclays sought investor approval for a controversial fundraising.

Standard Chartered said its biggest shareholder, Singapore state investment company Temasek TEM.UL, planned to take up its rights and was also participating in the underwriting of the issue.

"If you compare Standard Chartered to a few of its peers, it doesn't really have toxic assets," said Kwok Chern-Yeh, a fund manager at Aberdeen Asset Management Asia, which owns Standard Chartered shares and manages about $37 billion in assets.

"But it has made quite a few acquisitions in the last year and a half so it is shoring up its capital."

The issue price of 390p per share is at a 48.7 percent discount to Friday's closing price. In Hong Kong, the bank's shares fell 6.4 percent to HK$88.00 each and were suspended shortly after the rights issue announcement.

Kwok said Standard Chartered's exposure to Pakistan, South Korea, Taiwan and India made it vulnerable to potential losses from bad debts.

"The concern is that they may have to take some provisions amidst this downturn in the economic cycle, which will hit their bottom line," he said.

The bank said in a statement that it had continued to perform strongly in the second half, and that it remained well capitalized and highly liquid and comfortably met capital requirements across all its geographies.

It said it had good income momentum, albeit slower than in the first half.

Prime Bank wins SAFA award for annual report

Annual Report 2007 of Prime Bank Limited has been awarded the Bronze Medal in the Category 1: Banking Sector by South Asian Federation of Accountants (SAFA).

The award is conferred on the basis of evaluation administered by SAFA's Committee on Improvement, Transparency, Accountability and Governance (IT AG) of the published Annual Reports of entries from South Asian Countries.

This is a milestone in banking history of Bangladesh.

Ahmed Kamal Khan Chowdhury, Deputy Managing Director and CFO of the bank received the medal at a ceremony held recently at Hyderabad, India as a part of Silver Jubilee Celebration of SAFA.

Trading of 2 insurance companies begins today

NATION BUSINESS REPORT

The two insurance companies--Standard Insurance Limited and Northern General Insurance Company Limited--will make debut today (Tuesday) at both the stock exchanges of the country.

The Board of Directors of the Dhaka Stock Exchange (DSE) in its meeting held on Sunday approved the listings and fixed the trading date of the two companies.

Both the insurance companies will float 0.9 million ordinary shares with the face value of Tk 100 each to raise Tk 90 million from the stock markets.

The pre-IPO (initial public offering) paid up capital of the Northern General Insurance, which was incorporated in April 8,1996 was Tk 60 million.

As of December 31, 2007, its earning per share (EPS) is Tk 20.53 and net asset value (NAV) Tk 152.15 per share, according to the prospectus.

The fund raised through IPO will be utilised to strengthen the capital base of the Northern General Insurance.

The pre-IPO paid up capital of the Standard Insurance that eas incorporated in November 3, 1999 was Tk 60 million.

As of December 31, 2007, its earning per share (EPS) is Tk 19.52 and NAV Tk 126.70 per share, according to its prospectus.

The Standard Insurance will strengthen its capital base and expand its business utilizing the fund raised through IPO.

The subscription of the Northern General Insurance opened on September 14, 2008 and closed September 18 for resident Bangladeshis and September 27 for non-resident Bangladeshis.

The subscription of the Standard Insurance opened on July 7, 2008 and closed September 11 for resident Bangladeshis and September 20 for non-resident Bangladeshis.

Pubali Bank opens 362nd branch at Gachbari Bazar in Sylhet

NATION BUSINESS REPORT

Pubali Bank Limited has opened its 362nd branch at Gachbari Bazar in Sylhet.

Member of the Board of Directors of Pubali Bank Ltd Sk. Wahidur Rahman formally inaugurated the branch as the chief guest, while Managing Director of Pubali Bank Ltd Helal Ahmed Chowdhury presided over the function.

Directors of PBL Moniruddin Ahmed and Ahmed Shafi Chowdhury also attended at the opening ceremony.

In his speech, Sk Wahidur Rahman said, 'Pubali Bank is committed to provide the best and innovative banking services in fastest possible time according to the market needs. With a view to providing better services and taking the clients' increasing demand into account Pubali Bank has opened its Gachbari Bazar branch in Sylhet.

Moniruddin Ahmed and Ahmed Shafi Chowdhury also spoke on the occasion. They urged all to avail banking services through the Pubali Bank.

In his speech, Helal Ahmed Chowdhury thanked Pubali Bank chairman Hafiz Ahmed Mazumder for his effort to open the branch at Gachbari Bazar.

He said Pubali Bank has been providing better services to its clients since 1959 with commitment and dedication.

The Managing Director mentioned that the Pubali Bank gives highest priority to serve its customers. In order to serve the clients in an effective and efficient manner, it has introduced the modern technologies.

Referring to the efficient management, satisfactory level of deposit and adequate foreign currency reserve, Helal Ahmed Chowdhury said that Pubali Bank is capable of contributing more and more to industrialisation and foreign trade of the country.

He said Bangladeshi expatriates can remit their money through Pubali Bank swiftly and safely.

The Managing Director urged all customers of Sylhet region to avail this opportunity.

He also expressed the hope that the newly opened branch would substantially contribute to the business development of the area concerned.

Helal Ahmed Chowdhury also urged the local people for extending co-operation to the bank.

General Manager of Sylhet Region Abdul Karim Chowdhury, local elite and renowned businessmen also attended the function.

DBBL opens 59th branch at Chhatak in Sunamganj

Dutch-BangIa Bank Limited has opened its 59th Branch at Chhatak, Sunamganj (Mehetaj Shopping City, Girls' School Road, Chhatak) on Thursday.

The opening ceremony started with a Milad-Mahfil seeking blessings of the Almighty Allah for successful operation of the Bank. Like other branches, this Branch also provides Truly On-line Banking facilities to the clients from the very begging of the day.

The Branch was inaugurated by Md. Yeasin AU, Managing Director of the Bank. He also opened an ATM booth at the Branch premises to facilitate day-night 24 hours banking services by drawing money through DBBL Nexus Debit Card. A brief speech of the inaugural ceremony he said that, DBBL extended financial support to the honourable businessmen and industrialist form since its inception. DBBL is also providing financial facilities the potential small and medium entrepreneurs.

Ali mentioned that DBBL also reaches remittances to the beneficiaries of the Bangladeshi expatriates live in aboard in very short time.

Present local elites, business personalities, bankers, educationists and local journalists of the inaugural ceremony opined that, Dutch-Bangla Bank Limited is not only rendering present-day customers need banking services but also the Bank spends a significant portion of its annual profit for carrying out a wide range of philanthropic activities from which the society is at large benefited.

HSBC pushes HK shares down 1.6 pct, turnover drops

Reuters, Hong Kong

Hong Kong shares fell 1.6 percent in dismal volumes on Monday, led by global lender HSBC, as the U.S. government's lifeline to global banking giant Citigroup failed to ignite buying in financial counters.

Mainboard turnover languished at HK$35 billion ($4.5 billion), its lowest in 20 months, excluding half days and typhoon-interrupted sessions, as investors kept away from the market amid predictions it will soon slip below its October low. Monday's turnover is slightly over half the average daily turnover in the third quarter.

"Two months ago, something like a Citigroup bailout would have set fire to the market but now people have understood that you just sell into strength," said Benjamin Collett, head of hedge fund sales with Daiwa SMBC.

Europe's largest bank, HSBC Holdings, pared losses to 3 percent at HK$74.75 after it opened at a seven-year low of HK$73. HSBC arm Hang Seng Bank dropped 2.4 percent while another local lender, BOC Hong Kong, shed 7 percent.

Kabir Securities opens branch in Chittagong

NATION BUSINESS REPORT

Kabir Securities Ltd, a member of Chittagong Stock Exchange, has opened its third branch on Jubilee Road in Chittagong recently to increase its client range, said a press release. AB Siddique, chief executive officer of CSE, was present at the inaugural ceremony as chief guest while Mohammed Alamgir Kabir, chairman of Kabir Securities, attended as special guest. Senior officials of CSE and Kabir Securities were also present.

Krishi Bank MD opens training course

Bangladesh Krishi Bank organised two training courses titled 'International Trade and Foreign Exchange' and 'Evaluation and Management of Project and Working Capital' of two weeks for Senior Officers at Training Institute auditorium in Dhaka on November 23 last. Mohammad Mukter Hussain, Managing Director of BKB inaugurated the training course as chief guest. Deputy Managing Director Md Joynal Abedin was present as special guest. Among others, General Manager of Dhaka division Md Siddiqur Rahman along with senior faculty members of BKB Training Institute and Principal of the institute Md Mostafizur Rahman were present on the occasion.