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Standard Chartered bank
A project of
“Commercial Bank Management”


                          Muhammad Abu-Bakr Siddique


                            The contents of report

    A brief history of standard chartered

    Expansion in Africa and Asia

    Standard chartered in the 1990s

    Recent alliances and developments

    Mission statement & brand values

    Total offices at national and international level

    Other departments of standard chartered bank

    Products & services

    Main services

    Awards and achievements

    Swot analysis

    Financial results, graphs and explanation

    Risk management in standard chartered bank

    Recommendations

    Bibliography

                        A brief history of Standard Chartered

Standard Chartered is one of the world’s leading banks headquartered in London. Its businesses
however, have always been overwhelmingly international. The main events in the history of

Standard Chartered and some of the organizations with which it merged are provided in this

The early years

Standard Chartered is named after two banks, which 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 even during the siege of Makeking in 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 gold field in the world passed through the Standard Bank on its way to London.

      Standard Bank opened for business
      In 1892 the in Zimbabwe,
      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.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,
      Myanmar in 1862
      Pakistan and Indonesia in 1863,
      the Philippines in 1872,
      Malaysia in 1875,
      Japan in 1880
      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.

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 that 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. To
this were added provisions against loans to corporations and entrepreneurs who could not meet
their commitments. 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.

Recent alliances and developments

In 2000, Standard Chartered acquired Grindlays Bank from ANZ Bank, increasing its presence
in private banking and further expanding its operations in India and Pakistan. Standard Chartered
retained Grindlays' private banking operations in London and Luxembourg and the subsidiary in

Jersey, all of which it integrated into its own private bank. This now serves high net worth
customers in Hong Kong, Dubai, and Johannesburg under the name Standard Chartered
Grindlays Offshore Financial Services. In India, Standard Chartered integrated most of
Grindlays' operations, making Standard Chartered the largest foreign bank in the country.

On 15 April 2005, the bank acquired Korea First Bank, beating HSBC in the bid. Since then the
bank has rebranded the branches as SC First Bank.

Standard Chartered completed the integration of its Bangkok branch and Standard Chartered
Nakornthon Bank in October, renaming the new entity Standard Chartered Bank (Thailand).
Standard Chartered also formed strategic alliances with Fleming Family & Partners to expand
private wealth management in Asia and the Middle East, and acquired stakes in ACB Vietnam,
Travelex, American Express Bank in Bangladesh and Bohai Bank in China.

                            Mission Statement & Brand Values

Mission Statement:

“To offer outstanding value to our customers by providing knowledgeable, efficient and
reliable services in a personal, helpful and responsive manner.”

Over the 150 years of quality services that SCB has provided to its customers, the Bank has had
various mission Statements. However this is the one that is currently being followed by the

Brand Values:

From the above mentioned mission statement the bank has developed some very deep-rooted
brand values. These values are mainly designed with the intention of communicating with the
customers. However they also serve the purpose of showing each employee exactly what a
customer expects when he walks into Standard Chartered. The employees are constantly
reminded of the customer expectations and have to continuously evaluate how their behavior is
conformant with what the customers have in mind. This is why it is common practice to display
these values in almost each department and on all the notice boards.

These values are there for all employees and apply especially to the personal loans department.
As it is the people of this department who are mainly going out to meet the customers and getting
the opportunity to communicate these values to them.

The values that have been developed over the 150-year life of this organization are as follows:

       A commitment to being there for you, in good times and bad. We help you achieve your
       aspirations by guiding you towards the right choice, not just the easy one.

       We understand the balance between global and local. You trust us to be established and
       internationally networked, while at the same time sensitive to your individual needs. Our
       strong network across culture helps us build stronger relationships based on ideas, not

       Creative thinkers are not limited by convention. They allow their minds to soar beyond
       predictable solutions. That's how we approach each challenge posed to us, which is why
       we base our products and services on ideas that are innovative, perceptive and instinctive.

       We respect you, and the life you live. By understanding your needs and tailoring the right
       financial solutions for you, we earn your trust.


Standard chartered is operating more than 150 branches in about 25 cities of Pakistan. Standard
Chartered has a history of over 150 years in banking and operates in many of the world's fastest

growing markets with an extensive global network of over 1,400 branches (including
subsidiaries, associates and joint ventures) in over 50 countries in the Asia Pacific Region, South
Asia, the Middle East, Africa, the United Kingdom and the Americas. As one of the world's most
international banks, Standard Chartered employs 60,000 people, representing over 90
nationalities, worldwide. This diversity lies at the heart of the Bank's values and supports the
Bank's growth as the world increasingly becomes one market.

Standard Chartered Bank is an international bank, focused on the established and emerging
markets of Asia, Africa, the Middle East and Latin America with an extensive global network of
more than 600 offices in over 50 countries. The three principal business groups are Treasury,
Consumer Banking and Corporate and Institutional Banking. Their main objective is to offer
outstanding value to their customers by providing knowledgeable, efficient and reliable service
in a personal, helpful and responsive manner. Central to this service philosophy is the
professional consultative approach they take with each customer. By getting to know the
customer better, they can identify the customer's needs and match them with quality products
which suit their best.


As standard chartered started their business in Pakistan in 2006 so as such there is no Pre-IS era
of standard chartered bank in Pakistan. They are using IT since the start of their business in
Pakistan. IT creates an evolution in whole world in every business and so in banking system.
Now in standard chartered with the help of IS the daily transactions are recorded in branch
computers and these branch computers are then connected to the main head office server so in
this way they keep their daily process update on daily basis. As Time is money, and due to IS
standard chartered bank make thousands of transactions per day. In fact, IS makes whole process
much more quick, simple and reliable. Due to IS employees can easily connect with other
branches, customer service gets improved, online banking emerged and lot of others benefits.
Standard Chartered Online is an innovative Online Banking service that you can tailor to suit
your precise banking needs. It gives you convenient, round-the-clock banking services ranging
from day-to-day account transfer transactions to real-time valuable financial information. Now
you can manage your finances anytime, anywhere.

Other Departments of Standard Chartered Bank

There are various departments in this bank due to the wide range of services that it offers to its
clients. Each dept. serves a very important role in making the difference between a satisfied and
a dissatisfied customer. The major departments that I was able to learn about are:

IT Department:

       Even though this department works at the back end and customers are never aware of
       whether IT people exist in SCB or not. IT has a very important role to play. As it is this
       dept. that comes up with all the latest upgrades to the system to make it more efficient
       and effective. It is they who clear out the “bugs” in the BPS system that generates
       Account Statements. IT also ensures that the inter branch connection of this bank is
       maintained continuously through properly functioning PABX, Fax machines, systems etc.

Personal Financial Services Department:

       This department basically consists of 4 Personal Financial Consultants (PFC’s) who have
       the task giving all sorts of financial services to the client. They can be asked for
       information about any product of the bank or any advice to help in reaching the best
       decision by the customer. It is basically there job to assist the customer in any way
       possible. Their task also includes opening all types of accounts and letting customers
       know of the best-suited option for them.

Corporate Department:

       This department mainly dealt with all matters related to corporate accounts. By corporate
       accounts I refer to all the companies that have opened accounts of their entire staff with
       SCB. Management of these accounts is done in this separate dept. of SCB. Other than
       management this department also has to achieve a certain target of getting a certain
       number of corporate arrangements to make this banks corporate customer base stronger.
       SCB has corporate accounts of US Embassy, Australian High Commission etc.

Cash Management and Remittances:

       This department is mainly concerned with the most critical and nerve wracking work in
       the entire bank. This department includes the management of all cash related activities
       and therefore also includes the tellers and all activities related to withdrawals or deposits
       by customers. The management of funds and the transfer of money within the bank is
       also managed by this dept. and the additional services that this dept. performs are money
       transfers, issuing new check books, making drafts etc.

Credit Card Department:

      This dept. is basically concerned with all functions related to the credit cards of SCB.
      There is a Visa card and a Gold card that is being offered by SCB. Getting customers to
      buy these cards and also satisfying customers who have previously got this card is the
      major function of this dept. however the dept also manages its own collections of bad
      debts or people who pay late. So it is a relatively self-sufficient dept that covers an entire
      product of SCB.

Priority Banking:

      This dept basically exists for those customers who can open a minimum current account
      for RS. 1 million or who open accounts of at least 2 million rupees in case of savings
      account. Priority banking solely deals with customers who fit the above-mentioned
      criteria and not with the regular customers. A separate teller that is only for Priority
      Customers deals with matters of such clients. Apart from this, finding such clients and
      making them open accounts with SCB is also the task of this department’s staff.


      This department as the name implies deals mainly with all telemarketing activity of SCB
      within Islamabad. They provide information regarding the banks products. They also
      serve clients by telling them their account balances or credit card limits that are
      outstanding. This department provides further facilitation by helping get clients for Credit
      cards, Personal loans and Auto Loans. Customer complaints are also made to this
      department if they are via telephone.

Auto Loans:

      This dept. basically deals with all SCB Car financing loans. This dept. also has a fully
      equipped sales team like the Personal loan dept. and it is their job to get customers to
      finance their cars through SCB.

                                 Products & Services

-Finance Lease
-Operating Lease
-Auto Leasing
-Bemisaal Investment Certificates

Standard Chartered Leasing Limited- Product Offering
 Finance Lease:

 At Standard Chartered Leasing, we tailor lease financing facilities to suit customer's individual
 needs. Lease periods vary from 3 years to 5 years and rentals can be structured according to
 cash flow forecasts of customers.

 Operating Lease:

 Standard Chartered Leasing provides operating leases for generators and vehicles especially for

 SCBPL customers. Under an operating lease, Standard        Chartered Leasing insures          and

 maintains     the   leased   assets,   while   the   customer   uses   it   on   a   rental    basis.

 Auto lease:

 Standard Chartered Leasing Auto Lease offers flexible product range personalized to suit the
 specific requirements and financial needs of individual customers. We at SCLL make sure that
 our product is in compliance with the cash flow requirements and the changing individual
 needs                         of                         our                     customers.

 Our dedicated professional executives ensure that we not only respond quickly to our
 customers     requirements     but     also     provide    customized     innovation.

 Bemisaal Investment Certificates:

 Standard Chartered Leasing offers a perfect investment opportunity- Bemisaal Investment
 Certificates are the perfect choice for investment that offers security, amazing returns as well
 as liquidity to both individual and corporate customers.

Consumer Banking:

Standard Chartered provide Mortgages, Credit Cards, Personal Loans, Auto Loans, Islamic
Banking, and Wealth Management products. In order to maximize customer convenience, they
offer 24-hour Phone Banking, eStatements, SMS Banking, ATM Cards and VISA Debit Cards,
as well as Online Banking and state of the art branches.

Wholesale Banking:

Wholesale banking provides Transactional banking, Debt Capital Markets, Corporate Finance,
Derivatives & Fx Options, Commodity Finance and deposit products.

Islamic Banking:

Standard Chartered Saadiq's dedicated Islamic Banking team provides comprehensive
International banking services and a wide range of Shariah compliant financial products that are
based on Islamic values.

                               Awards and achievements

                  Private Banker International Awards 2008

                  Outstanding Private Bank in Asia Pacific

                2008 Euromoney Awards For Excellence

                  Global Finance Stars of China Awards 2008

                  Best SME Lending, Foreign Bank in China

Asia Interactive Awards 2008

For best microsite (SWAT - Secure Web Action Team)

                CNBC Financial Advisors Award 2008

                Best Financial Advisors Award amongst Banks in India

                               Wholesale Banking awards

The Asset Triple A Asian Awards 2008

      Best Transaction Bank in Korea - SC First Bank
      Best Cash Management Bank in South Asia
      Best Trade Finance Bank in Korea
      Best Sub-Custodian in Korea
      Best Domestic Custodian in Korea

                      EMEA Finance Middle East Banking Awards 2008

Euromoney Awards for Excellence 2008

      Best Cash Management Bank in the Middle East
      Best Debt House in United Arab Emirates
      Best Debt House in Kuwait
      Best Debt House in Thailand
      Best Global Private Bank
      Best Foreign Exchange Bank in Africa

                      FinanceAsia Country Awards 2008

                       Best Foreign Commercial Bank in Pakistan

                           ICFA Global Awards 2008

                           Custodian of the Year, Asia and Australia

                           Custodian of the Year, Middle East and Africa

                         Profit Digital FX Awards 2008

                         Best Emerging Markets Platform Award

Trade Finance Awards for Excellence 2008

      Best Trade Finance Bank in Sub-Saharan Africa - Global
      Best Trade Finance Bank in Middle East and North Africa - Global (with HSBC)
      Best Soft Commodity Finance Bank - Global
      Best Trade Finance Bank in Singapore
      Best International Trade Finance Bank in India

      The Banker CSR Awards 2008

       Best Overall Bank

       Best Corporate Finance

       Banking the Unbanked

 Asian Investor Achievement Awards 2008

 Best Fund Administrator, Islamic Products

 Seatrade Middle East & Indian Subcontinent Awards 2008

 The Ship Finance Award

 The Banker Awards 2008

 Bank of the Year in Emerging Markets

 Bank of the Year in Gambia

Asia Risk Awards 2008

Commodity/Energy Derivatives House of the Year

 CFO World

 Best International Business

 Best Supply Chain Finance Provider in Asia

 Best Offshore Business

Leaders in Innovation i Award Winner 2008

Most Innovative Securities Service Provider Asia

tmi Awards for Innovation and Excellence in Treasury Management 2008

Best Bank Financial Supply Chain - Asia

Best Bank Risk Management - Asia

GTR Leaders in Trade Awards 2008

Best Trade Finance Bank in Asia-Pacific

PFI Awards

Middle East and Africa Bank of the Year

                                      SWOT Analysis

A thorough study of the Personal Loans department has resulted in the compilation of the SWOT
analysis. This analysis is also important because the Department under consideration is a
marketing/ sales department and a SWOT analysis is always useful in assessing departments of
this nature.

There are various strengths of this department. These are:

The department firstly has the name of a very prestigious bank attached with it. The bank that
this department represents has a good image of providing quality services to customers who are
looking for the best. The BDE’s themselves say that once they show their card and people
recognize that they are from SCB, customers immediately give them more attention and respect.

The major strength of the Department is the team members of the 2 teams that currently exist.
These members are mostly made up of the best sales people working for this particular product.
Most of the members have enjoyed positions of sales man of the month in Credit cards or
Personal loans at various other banks such as Citibank, Union Bank etc. This has resulted in each
of the sales people having an already well established network through which they can achieve
relatively higher targets and still have a considerable number of leads in the pipeline for each

       The product that this department offers has a clear edge over its competitors in certain
       areas. This allows the team to market something that is better than what the market
       offers. The competitive advantage that this product holds has been discussed previously
       in the competitive analysis.

       The repute of the bank in areas apart from Personal loans is also very positive. Therefore
       customers of other products of SCB are also sometimes willing to enjoy another product
       of this bank. This results in the department getting customers without the hassle of
       making sales calls and proper presentation. These bonus customers also make a
       contribution to the total applications and in some months, they contribute to more than a
       few loans.


The major weakness is that Standard Chartered is at present facing more than a few dissatisfied
customers of credit cards as more banks are offering lower rates and fees. These customers are
having a slight impact on the banks image as word of mouth circulates their dissatisfaction. This
then has a direct impact on personal loan sales and other products of the Bank.

       The department at present is facing the problem of continuous hiring and firing. This is
       resulting in greater difficulty of coordination and the synergy that may exist in a stable
       environment. During the course of my internship of 6 weeks I saw at least 3 people who
       left their job, 2 who were fired and approximately 7 employees who were hired.

       Apart form this there is also the problem that time has to be taken out to train and induct
       the new employees. There is however no designated trainer and therefore the BDE’s have
       to carry out the training. This results in improper training and extra burden on the BDE’s
       who already have a very stressful job.

       The management environment of this department promotes fear and the adopted
       leadership approach is to treat employees as Theory X workers. This is resulting in a
       certain extent of dissatisfaction and also promoting a greater sense of insecurity amongst
       the BDE’s. The result is loss of productivity that exists due to the difference between
       complete commitment of the employees and the approach of “just surviving” that they
       have adopted at present.

       The limited numbers of companies that are on the approved list of companies and the
       restriction of self employed professionals not being eligible for personal loan are also
       limiting the department from making major inroads into the Islamabad market.


The major opportunity lies in the surfacing of new organizations that are getting approved and
added to the Personal Loans Approved list of companies. “Box farm signatories” as they are
called, are polling in and opening new avenues for the sales team, creating new customers and
providing the BDE’s with new leads.

Another opportunity is the rate of conversion of already approved loans into enhancements and
top up cases. As more people are utilizing this service it is really an area that all BDE’s are
looking forward to cash in.


The major threat that this department has is the stress levels that are running high due to certain
employees not being able to meet their targets. This is having a negative impact on the figures
for the entire department and causing increasing tensions. This may result in declining
applications if this situation is not resolved in an appropriate manner.

Another threat is the entry of new banks into this area of personal cash financing. As more banks
are starting to offer this facility this industry is becoming increasingly competitive and the
already saturated target market is not showing great potential for growth. We can see this from
the loan that Citibank is currently offering with 0% interest these days.

The State Bank has limited the credit limit on credit cards to RS. 4999999. This is 1 rupee less
than the maximum loan amount of SCB. So people who wish to have this sort of money are
shifting from financing their needs through personal loans to instead utilizing the limit on their
credit cards.

From the above analysis we can see that the Personal loan Dept. at present is evenly balanced.
But the future holds many threats both foreseen and unforeseen and how the management and
the sales team take these threats is what is going to set whether this department excels or starts
facing declining applications as time goes by. The BDE’s are eagerly looking forward to
harnessing the potential of the

opportunities that have been presented here. And their energy and enthusiasm along with the
hard work hours that they put into the job will most probably tip the scales in favor of SCB.

                                          Financial results

                                            (Five years)
       Amounts are in Millions

                                   2005          2006         2007     2008      2009

Profit after Tax                    4,507         5,709       2,767     630        669

Net Interest income                5,276        10,336      16,192    1,419      16,284

Non Interest Income                2,450         3,687      6,147     6,566       6,883

Total Assets                      111,668       246,318    255,545    264,617   312,874

Total Equity                       8,406        40,230      43,066    42,757     47,746

Total Debt                        103,262       206,088     212,479   221,860   265,128


Return on Assets (%)                3.9          3.2         1.23       0.27       0.25

Return on Deposits (%)             5.39         3.64         1.56       0.36       0.32

Return on Equity (%)                53           30          17.79     3.75        3.49


Debt to equity                     12.28       5.12         4.93       5.19       5.55

Debt to asset                      0.92        0.84         0.83       0.S4       0.83

Equity to assets (%)               7.53       16.33        16.85      16.16      15.26

Equity to deposits (%)            10.049      25.644       24.309     24.495     23.070

Earning assets to deposits (%)    90.35      106.77        99.04      106.93     110.55


           Profit After Tax                                        Net Interest income
 6000                                                           20000
                                                                10000                                                Net
 2000                                             Profit
                                                  After Tax
    0                                                                  0                                             income



        Non Interest Income                                                   Total Assets
 8000                                                          400000
 6000                                                          300000
 4000                                              Non         200000                                                Total
 2000                                                          100000                                                Assets
    0                                                                  0



                Total Equity                                                         Total debt
60000                                                         300000

40000                                                         200000
20000                                                         100000                                                 Total debt
    0                                                              0



            EARNING RATIO





     2005   2006   2007    2008   2009








     2005   2006   2007    2008   2009








     2005   2006   2007    2008   2009


                  SOLVENCY RATIO







           2005    2006   2007      2008    2009







          2005     2006   2007      2008    2009







          2005     2006   2007       2008    2009

                            EAT D

                           Explanation of Data and Graphs
During FY09, the revenues after tax for SCB have shown an improvement. The revenues grew
from a level of Rs 630 million in FY08 to Rs 669 million in FY09. However, they are still much
less than the revenues of Rs 5,709 million in FY06 and Rs 2,767 million in FY07. The net mark-
up income of the bank has remained almost consistent during the last three years. It was at Rs
16,192 million in FY07, then it increased to Rs 16,419 million in FY08 and declined a bit to
reach a level of Rs 16,284 million in FY09. However the non-mark-up income of the bank has
shown a growth over the last 5 years. It stood at Rs 3,687 million in FY06, then it increased to
Rs 6,147 in FY07, Rs 6,566 million in FY08 and Rs 6,883 million in FY09, showing a growth of

During FY09 the net interest income of the bank has remained almost consistent. With the
interest earned, there has been an increase in the interest earned on loans and advances to
customers. It increased from Rs 17,737 million in FY08 to Rs 18,688 million in FY09. Another
major increase was seen in the interest earned on investments that were classified as available for
sale securities. The interest earned on these increased from Rs 3,503 million in FY08 to Rs 7,124

Within interest earnings, a decline was seen in the interest earned on loans and advances to the
financial institutions. The interest earned on it declined from Rs 358 million in FY08 to Rs 141
million in FY09. Within mark-up interest expensed, expense has increased on deposits. The
expense has increased from Rs 5,752 million in FY08 to Rs 9,148 million in FY09. Also, the
expense on securities sold under repurchase agreements has increased from Rs 239 million to Rs
471 million in FY09. Also, interest expense on borrowings from SBP under ERF schemes has
increased from Rs 252 million in FY08 to Rs 501 million in FY09. Despite the bank s
conservative stance towards high yield consumer lending, the bank s gross interest income grew
by 14% from Rs 23,307 million in FY08 to 26,653 million in FY09.

This can be attributed to the healthy growth of 37% in wholesale bank interest-based revenues in
line with the growth of 17% in corporate advances from Rs 86 billion to Rs 101 billion, and
growth in investments which more than doubled from Rs 30 billion to Rs 84 billion. However,
overall net interest income is marginally down by 1% owing to the rise in cost of deposits, which
can be mainly attributed to a minimum rate requirement of 5% on savings deposits stipulated by
the State Bank of Pakistan in June 2008. Non-interest income continues to make a healthy
contribution to the overall revenue of the Bank with a 4% growth over last year.

During the year FY09, the non-interest income of SCB increased from Rs 113,714 million in
FY08 to Rs 13,749 million in FY09. The increase was seen in the fee, commission and brokerage
income; which increased only slightly from Rs 3767 million in FY08 to Rs 3,913 million in
FY09. Sharp decline was seen in the dividend income, which decreased from Rs 14 million in
FY08 to Rs 7.8 million in FY09. Also there was a gain on sale of federal government securities
of Rs 467 million in FY09 as compared to a loss of Rs 335 million on sale of federal government

On the earnings side, the different earnings ratios have shown a declining trend over the last 5
years. The major reason for this has been the declining profits after tax of the bank. The RoE
declined from levels of 53% in FY05 to 17.8% in FY07 and then further declined to 3.5% in
FY09. Also the return on deposits has declined from 5.39% in FY05 to 0.32% in FY09. Similar
trend has been seen in the ROA for the bank. It has declined from 3.9% in FY05 to 0.25% in

The asset base of Standard Chartered Bank has increased over the last 5 years. The total assets of
the bank stood at Rs 111,668 million in FY05 at have increased to Rs 312,874 million by FY09.
However the proportion of different components in the overall asset mix has been fluctuating.
During FY09 the proportion of investments increased as compared to that of the previous 4
years. The total investments of the bank stood at Rs 83,785 million in FY09 as compared to Rs
29,587        in       FY08        and       Rs       40,696       million       in        FY07.

In investments category, an increase has been seen in the held for trading market treasury bills.
They increased from Rs 989 million in FY08 to Rs 7,265 million in FY09. Also the investment
in market treasury bills in available for sale category has increased from Rs 17,078 million in
FY08 to Rs 63,388 million in FY09. Another major increase has been observed in the Sukuk
bonds classified as available for sale. They have increased from Rs 300 million in FY08 to Rs
1,800 million in FY09. The increase of Rs 1,500 million in Sukuk investments reflects the PIA

A major concern for SCB is the worsening asset quality. There has been an increase in the Non
Performing Loans of the bank over the last 5 years. The NPLs stood at Rs 8,421 million in FY06
as compared to Rs 12,389 million in FY09. Also the provisions have shown an increase from a
level of Rs 1,477 million in FY06 to Rs 7,454 million in FY09. Non-performing consumer loans
continue to be the key issue in the current economic scenario with interest rate hikes constantly
deteriorating the repayment capacity of individual borrowers, and consequently catalysing
consumer loan losses. Hence provisioning and write-offs against consumer loans has increased
especially in FY08. Application of SCB Group policies for general provision against consumer
loans has also resulted in significantly higher provisions during FY08 than that specified under

the prudential regulations. Focused measures for arresting the trend of delinquencies are being
taken by the bank. Reinforcing recovery and collection teams and processes and also realigning
credit policies with changing market dynamics has already been taken by the SCB.

The debt to equity ratio for SCB has declined considerably over the last 5 years. The ratio stood
at 12.28 in FY05 - the period when it had not acquired the Union Bank. However it declined
from FY06 and onwards and has remained around 5. The major liability on the bank s balance
sheet is the deposits of the customers. The deposits of the bank have shown an increasing trend
over the last years. They stood at Rs 83,646 million in FY05, then increased to Rs 156,878
million in FY06 and have reached a level of Rs 206,958 million in FY09. The Bank has
successfully enhanced its deposit base from Rs 174 billion to Rs 206 billion representing an 18%
growth,        being         amongst        the       highest       in         the       industry.

This has been a direct result of our customer centric approach, enhanced brand positioning and
expanded footprint. This has not only improved our market share, but has also strengthened our
customer base, which creates future business prospects to cross sell our product suite. The
surplus liquidity generated through deposit mobilisation is primarily invested in risk-free
government securities, thereby maintaining a high level of liquidity along with positioning the
book for any interest rate shift. Another major observation within the deposits of the bank is the
increase in the fixed deposits. The fixed deposits of the bank have increased from Rs 46,870
million in FY07 to Rs 51,228 million in FY08 and have further increased to Rs 58,402 million in
FY09 Also the savings deposits of the bank have declined. They declined from a level of Rs
68,996 million in FY07 to Rs 61,960 million in FY08; however they gain increased to Rs 79,300

As can be observed from the graph below the earning assets of the bank have shown an
increasing trend over the last 4 years. The lending’s to the financial institutions has increased
from Rs 3,873 million in FY06 to Rs 20,568 million in FY09. However this is a decline as
compared to the levels of Rs 31,467 million of FY08. The decline has been seen in the
repurchase agreements, which have declined from Rs 1,2476 million in FY08 to Rs 3,446
million in FY09. These carry mark-up at rates ranging from 11 percent to 12.4 percent per
annum, payable at maturity, and are due to mature by January 2010. These arrangements are
governed             under              Master             Repurchase                Agreements.

The advances of the bank have shown a consistent trend over the last 4 years. They have
increased from Rs 129,004 million in FY06 to Rs 124,447 million in FY09 - showing only a
slight fluctuation. The amount of advances in FY09 is segmented into Rs 134,642 million in the
form of loans, cash credits, and running finance, Rs 6,588 million in form of bills discounted and
purchased        and     Rs       1,6784      million      of      provisions       for     NPLs.

As is evident from the graph of solvency ratios, the ratios have increased during the last 5 years.
The equity to assets grew from 7.53 in FY05 to 16.33 in FY 06 and has since then remained
around 16. It was 15.26% in FY09. The equity to deposits grew in FY06 to 25.644 % from 10%
in FY05. And since then has remained around 23%, it stood at 23.07% in FY09. The earning
assets to deposits increased from 90.35% in FY05 to 99.04% in FY07 and then further increased

The overall profitability of the bank has shown a declining trend over the last 4 year. There was a
major decline in the profits of the bank in FY07. They declined from Rs 5,709 million in FY06
to Rs 2,767 million in FY07. They further declined in FY08 to Rs 630 million, and have shown a
slight improvement in FY09 to Rs 669 million. All this has contributed to declining EPS of the
company       to      Rs       0.17     in    FY09       from      Rs       3.06      in     FY05.

                   Risk management in Standard Chartered bank.
Operational Risk

Operational risk is the risk of direct or indirect loss due to an event or action resulting from the
failure of internal processes, people and systems, or from external events. The Bank seeks to
ensure that key operational risks are managed in a timely and effective manner through a
framework of policies, procedures and tools to identify, assess, monitor, control and report such
risks. New changes in SCB Operational Risk Framework are made effective from 1st of January
2010. Fundamental to the design of changes applicable to Operational Risk Framework is the
principle that businesses and functions are responsible for the identification and management of
the operational risks that result from their activities and that the Risk Function controls the level
of operational risk exposure, ensuring that it remains within acceptable limits. Thus Operational
Risk is now part of the Risk Management function, and Operational Risk Officers report
independently to Chief Risk Officer of the Bank. The Operational Risk Committee has been
established as a sub-committee of the Risk Committee to supervise and direct the management of
operational risks across the Bank. ORC is also responsible for ensuring adequate and appropriate
policies and procedures are in place for the identification, assessment, monitoring, control and
reporting of operational risks.

Compliance and Regulatory Risk

Compliance and Regulatory risk includes the risk of non-compliance with regulatory
requirements. The Compliance and Regulatory risk function is responsible for establishing and
maintaining an appropriate framework of compliance policies and procedures. Compliance with
such policies and procedures is the responsibility of all managers.

Legal Risk
Legal risk is the risk of unexpected loss, including reputational loss, arising from defective
transaction or contracts, claims being made or some other event resulting in a liability or other
loss for the Bank, failure to protect the title to and ability to control the rights to assets of the
Bank (including intellectual property rights), changes in the law or jurisdiction risk. The Bank
manages legal risk through Legal & Compliance function, Legal risk policies and procedures and
effective use of its internal and external lawyers.

Reputational Risk
Reputational risk is any material adverse effect on the relations between the Bank and any one of
its significant stakeholders. It is Bank policy that the protection of the Bank's reputation should
take priority over all activities including revenue generation at all times.
Reputational risk is not a primary risk, but will arise from the failure to effectively mitigate one
or more of country, credit, liquidity, market, legal, regulatory and operational risk. It may also
arise from the failure to comply with Social, Environmental and Ethical standards. All staff are
responsible for day to day identification and management of reputational risk.


                        Problems & Suggestions for the Management

While interning at Standard Chartered even though I noticed that the employees have a strong
commitment to work and are provided with a relatively cooperative work environment. There are
still a few problems that were being faced by the employees who were working in the personal
loans department. Some discussions were also done with the BDE’s and the following are the
issues that they felt were contributing to a less productive and comfortable atmosphere:


       The Personal Loan staff is at present being treated as the typical Theory X workers. The
       only motivation that they are provided with apart from money is that they will face a very
       angry “Boss” if they are unable to achieve their targets.

       Employees have been complaining about lost visiting card diaries, mobile phones and
       other articles. These articles are “lost” from their desks or their personal storage space.
       This has added considerably to the already tense environment.

       On my first day I chanced to witness a person who was being told to present his
       resignation to the “Man in Charge”, as he had not been able to achieve his targets.
       However this exchange was done right in the middle of the department with a clear
       intention of disgracing the employee. The major reason as perceived by the other
       employees, for this interchange being done so publicly was to make them see an example
       of what might happen to them if they failed to achieve their respective targets.


From the above mentioned problems we can see that the problems that are being faced are very
basic in nature and can be avoided with a few “nice words of comfort.” Some suggestions that I
came up with are as follows:

       The Regional Manager has clearly maintained an open door policy. However the
       employees of the personal loans department are not entirely comfortable with the idea.
       This inhibition is further reinforced by the strict behavior that has been adopted by the
       Team Manager and the Team Leaders. To remove this problem the regional manager
       should hold a meeting to inform the employees of their importance and brief them as to
       how this open door policy will work.

       If the open door policy is not working then the Team Manager must take it upon him to
       keep a few hours each day to listen to the problems of the employees and also help them
       with any special cases that they might have brought.

       The management must decide to move along the continuum between strictness and
       leniency and try to set a more relaxed way to deal with the employees of the Personal
       Loan Department in particular and the entire organization in general.

       In the end I would just like to reinforce that a few nice words and smiles can make a
       world of a difference in the relationship between a superior and a subordinate. This along
       with the other suggestions can definitely improve staff morale and motivate them to
       achieve a more positive direction.

                           Suggestions for improving the Product:

How Time can be minimized?

The competitors of SCB get the Legal documents signed during the time of approval of the
application. Where as in case of Standard Chartered the legal documentation is carried out only
after the approval of the application and amount of loan for a particular case.

       If the process of other banks is followed and Legal documentation is carried out at the
       time of application then some extra time can be saved.

       Mode of repayment in all cases is by Post-Dated-Checks, the applicant provides checks
       of his/her salary account and he mentions the installment and the date at which it will be
       presented according to the Legal Amortization schedule for the installment, which
       requires 12, 24 or 36 PDCs. The problem in this system is that local banks like; HBL,
       MCB, ABL take a week to give checkbooks to the customer. The Banks could have an
       agreement amongst themselves to furnish requests for other banks on priority basis. This
       may be a very large-scale solution to some. Therefore a simpler solution is to ask the
       customer to request for his/her checkbook as soon as the decision to take the loan is
       reached. This can be the 1st thing that BDE’s tell the clients. This will ensure some
       saving of time.

       The process involves Credit department and Asset operation department. The Credit
       department approves the deal and then Asset Operation prints the Legal documents for
       the approved deal and then the process is carried out further. The extra time added due to
       the documents going from one department to another and then back to the original
       department can be reduced in a way that Legal documents are added in a formal
       application and the Credit Dept. is given the authority to provide Legal documents.

How Quality can be improved?

              The quality of any services department relies as much on product itself as it relies
               on the staff that it acquires. The staff is selected on merit and proper training of
               the staff is a must for ensuring quality. Proper incentives are also required to keep
               them motivated and agile.

Department recently reduced the salary package and strengthened the commission structure. This
must be reviewed to ensure quality improvement.

              The product is only targeted to salaried class and the segments of Businessmen
               and Self-employed persons are not considered. The product must have flexibility
               to accommodate those segments. As the quality of this product can be improved
               mainly through showing greater volumes of disbursed loans so that the bank
               realizes its increased importance and gives the strategies of this department
               greater thought.

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