American Express Bank by AbdurRab1


									                        American Express Bank

American Express Bank a subsidiary of American Express, a travel agency as
well as a bank incorporated in the USA, conducting business in 37 countries
including Bangladesh. The bank provides services to corporations, well-to-do
entrepreneurs, financial institutions and other wholesale and retail customers. The
bank started its operations in East Pakistan in February 1966 when it opened a
branch at Motijheel, Dhaka with a capital of Tk 20 million. It opened a new branch
in Chittagong in 1967. After the independence of Bangladesh in 1971, these
branches continued to operate in the country. In February 1999, a third branch was
opened at Dhanmondi, Dhaka. Foreign banks operating in Bangladesh are required
to bring US$10 million each as capital from their parent offices and keep the
money with the BANGLADESH BANK. The capital reserve of American Express Bank
deposited with the Bangladesh Bank is, however, US$13.07 million equivalent to
Tk 533 million. On 31 December 2000, total capital and liabilities of the bank were
Tk 10.08 billion.

The functions of the American Express Bank in Bangladesh were initially confined
mainly to commercial and correspondent banking, and treasury services to
multinational companies, but were later expanded to include local entrepreneurs
and financial institutions. The American Express Travel Related Services (TRS),
an affiliate of the bank, provides the public with travel management services. The
bank pioneered the use of SWIFT in Bangladesh. It has participated in two
syndicated industrial loans of Tk 200 million each. The bank participates in
charitable activities in the country. It has arranged a number of training
programmes on corporate banking, foreign exchange dealing and treasury
management for local bankers and corporate officials. It also sponsors overseas
training and seminars for Bangladeshi bankers. The total volume of foreign
exchange business handled by the bank in servicing imports and exports of goods
and remittances during 1999-2000 amounted to Tk 12.29 billion, 15.5% of which
was related to exports, 6.3% to imports and 78.15% to remittances. Currently, the
bank has correspondent relationships with 1995 foreign banks/bank offices
throughout the world.

The American Express Bank in Bangladesh is controlled by its headquarters in
New York in conformity with the stipulations laid down by the Banking
Companies Act, 1991 of Bangladesh and also the directives issued by the
Bangladesh Bank from time to time. The Asia Pacific Regional Office of American
Express Bank in Singapore oversees the overall operational activities of the bank's
branches in Bangladesh. The country manager, appointed by its headquarters, is
the CEO of the bank in Bangladesh. In December 2000, the number of employees
of the bank in Bangladesh was 150.

Total deposits of the bank in different accounts in December 2000 were Tk 8.464
billion as against Tk 93 million in 1974. In 1974 the loans and advances of the
bank were Tk 97 million and in 2000, these stood at Tk 1.769 billion. Its credit-
deposit ratio was 34.68% in 2000. Total assets of the bank, excluding off-balance
sheet items, were Tk 153 million in 1974 and Tk 10.008 billion in 2000. The
bank's involvement in off-balance sheet items was Tk 13.62 billion in 2000. Its
increased participation in off-balance sheet items has caused lower credit-deposit
ratios between 1980 and 2000. The bank's investment other than loans and
advances increased from Tk 20 million in 1974 to Tk 2.483 billion in 2000. Most
of these investments were in government securities, including TREASURY BILLs.
In July 1998, the interest rate offered by the bank on savings deposits was 6.50%,
while the average lending rate charged by it on loans to different sectors was
12.07%. The bank's lending rate on agricultural credit varied between 10% and
14%; rates on term loan varied from 9.25% to 14.25%; and the lending rate on
other commercial purposes was between 12.5% and 15.5% per annum. Total
outstanding loans of the bank upto 30 June 2000 amounted to Tk 1.031 billion, of
which Tk.21 million was overdue. The rate of its classified loan was 1.07% in
2000. The bank has no direct loans to the government of Bangladesh except its
investments in various government securities. The value of all assets of the bank,
including off-balance sheet items, in December 2000 was Tk 23.81 billion, of
which liquid assets accounted for Tk 8.11 billion.

The major economic areas to which the American Express Bank has lent most of
its funds upto 30 June 2000 included industry (both large and medium) - Tk 1.358
billion and others, mainly trade and commerce and export/import - Tk 237 million.
It has made no loans to the agricultural sector of the country. Up to 1999, the bank
lent Tk 639 million to 10 industrial projects.

As on 31 December 2000, the total and net income of the American Express Bank
was Tk 1.07 billion and Tk 280 million respectively. Its total operating expenditure
in 2000 was Tk 260 million. The bank's interest income and income from
commission and exchange were greater than its total interest and operating
expenses in almost every year in the 30 years of its activities in Bangladesh. It has
earned greater amount of non-interest income from off-balance sheet activities
throughout the nineties. On the other hand, increase in the recovery of classified
loans has reduced its provision requirements, which has also contributed to
increase in its total income in the late 1990s.
As the oldest foreign commercial bank in Bangladesh, the American Express Bank
has contributed greatly to the reorganisation of the country's banking system after
independence in 1971. The bank played a significant role in the revival of the
country's banking structure shattered by the   WAR OF LIBERATION.     Its lending in
industry and trade made a significant contribution to the growth of the economy
through mobilisation of funds and financing value addition sectors.

Collection from The Banglapedia.


Abdur Rab (forhad)

Department of Public Administration.

Jahangirnagar University

Dhaka, Bangladesh.


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