Internship Report on American Express Bank CHAPTER NUMBER 1 INTRODUCTION OF THE REPORT: Background of study American Express Bank Ltd. A partner you trust, worldwide The topic of my study is AMERICAN EXPRESS BANK, which is a part of American Express Company. That is a diversified worldwide travel, financial and network Services Company founded in 1850. It is a world leader in: Ø Charge and credit cards Ø Travelers’ cheques Ø Financial planning Ø Business services Ø Insurance and international banking American Express Bank was incorporated in the United States of America. In Pakistan it has commenced its operations in 1948 and is currently being conducted in Pakistan through branches in Karachi, Lahore and Islamabad. It is engaged in banking business permitted under the banking companies’ ordinance, 1962. The financial statements of American express bank are prepared in accordance with the requirements of the state bank of Pakistan, which are specified in the companies’ ordinance; 1962.Audit is also conducting in accordance with the international standards of auditing as applicable in Pakistan. Proper books of account have been kept by American express bank limited, Pakistan branches as required by the companies ordinance 1984. The balance sheet and profit and loss account together with notes thereon have been drawn up in conformity with the companies’ ordinance 1962 and the companies’ ordinance 1984, and are in agreement with the books of account and with further in accordance with accounting policies consistently. Then there are two types of users of financial statements, internal and external. Internal users are the people who control and direct the business for the purpose of securing profits and maintaining a sound financial condition. While external users are govt bodies and other agencies. Zakat deductible at source under the Zakat and Ushar ordinance 1980 is deducted by the branches and deposited in the central Zakat funds. American express established global network services in 1997 to form strategic alliance with banks and financial services institutions around the world to issue cards on American express’ global merchant network. GNS has built over 70 partnership arrangements in more than 70 countries. American Express has been a major participant in the global foreign exchange and money markets for over 100 years. American Express has along history of being good citizen in the communities in which it works. It believes that a company should contribute to the large society in which it operates and should enhance climate in which it does business. One manifestation of the company’s concern for good citizenship is the philanthropic contributions it makes around the world, some of which are highlighted on the pages of this report. Healthy communities are important to the well being of society and the overall economy. They also provide an environment that helps companies such as American Express to grow, innovate and attract outstanding talent. I choose American Express bank for my internship because it is a foreign bank and performs an important role in international banking. I hope to learn more about banking sector during my training period. And I really learned much about operations of this international bank, the problems, which they have to face while working in Pakistan and the opportunities, they have to grow here. The detail of working of different departments is given on next pages of this report. PURPOSE OF STUDY The purpose of my study is first of all to gain knowledge about banking sector. I want to know basically that what is the difference in the operations of a foreign bank and public bank. What are strengths and benefits available to an international bank and are the problems they have to face while working in Pakistan. And more over I also observe their hierarchal structure and their management polices. As during my internship I most of the time work in marketing department of American express bank, so the purpose of my study is to observe their marketing procedures and dealing with clients and in this regard, I note their strengths and weaknesses. SCOPE OF WORK The main focus of my work as I mentioned above is on marketing section of American Express bank. Here I learn how to deal with client, how to satisfy his queries, how to convince him that he becomes willing to establish a long lasting relationship with bank. Moreover I also did Telebanking here; the bank gave me an assignment to convince the clients whose balance in their accounts is less than requirement. So I made phone calls to them and learned, how to talk with unsatisfied clients, and tried to answer their queries to satisfy them. Then the bank gave me target of opening new accounts within a short period of time, I also achieved my target within that time. So I also got the opportunity during my internship to apply and improve my marketing skills. METHODOLOGY OF RESEARCH In order to collect data and information about operations of bank, I adopted following methods: Ø Made interviews of related persons. Basically I gathered all the information by using this technique. I went to each department and tried to interview the employees working over there. Ø Through written material, I tried to get any available written material about different departments of bank, and then I made my notes from them. Ø Through personal observation, as my internship is basically in marketing department so I used my personal observation and leaning abilities to improve my marketing skills, and to find what their weaknesses, what are the opportunities which they can avail. DIFFICULTIES FACES IN GETTING DATA The bank that I choose is an international bank, which is engaged in much diverse type of business around the world. Since the internship of students in all over the working organizations is not much supported by the staff working over there, because it causes unnecessary hindrance and disturbance in their work. The very first and most important difficulty, which I faced, was the unavailability of any written form of data. This bank had no formal job description, analysis support sheets or if the had any, they were not interested in giving it to internees. The staff over there especially the one dealing directly with clients are all the time so busy even after the lunch break (due to evening banking) that they find hardly any time to train or guide he interns, who are inexperienced and unless they are fully briefed they can not help the staff in their work. I also want to do work in corporate sector of the organization, but to the reason that it is closing down, I did not get opportunity to work over there. But the most serious problem that I face is the” problem of rotation” as at my first day I had been assigned to wok in marketing department without asking my area of interest and then during my whole internship period I was forced to work over there, I requested for rotation from time to time but no one paid attention. So I missed the opportunity to see work of all other departments. Moreover the staff of my department did not allow me to go to other departments for briefing, so I got information about other units with great difficulty. CHAPTER NUMBER 2 INTRODUCTION OF AMERICAN EXPRESS HISTORY OF AMERICAN EXPRESS COMPANY In 1850, when American Express Company was founded, the United States was not yet 75 years old and had a population of 23.1 million people. American Express Company was founded on March 18, 1850 at the mansion house in Buffalo, New York. The three men who established it were • HENRY WELLS • WILLIAM G.FARGO • JOHN BUTTERFIELD These three were not newcomers to the express business. Each was engaged in its own express enterprise, and all three of those firms were competing for business along routes that were based in and around the state of New York. Establishment as Travelers Company As the railroads grew the three men could see the opening of the frontier and the demand for express services that westward movement was creating. They were not just at the right place at the right time; they were shrewd businessmen who could back up their ambitions with the capital necessary to achieve some degree of scale in the express business. The myths and legends that grew up around that business and which have since become a part of popular culture through movies and television were considerably more romantic than its reality. An express man’s work was hard labor; long hours and tedious travel over what were often rough or nonexistent roads. In he public minds, express men were heroes of almost mythic proportions. That myth was grounded in reality and people fueled it in two ways saw in their day-to-day interactions with express men and through the popular media of the day. Express men’s work was dangerous and sometimes violent. There were instances when they were injured or killed. Some even died in sinking ships. Express men were people who had seen and survived: “violence” and death, Indian raids, stage robberies, financial panic, buzzards in the mountain passes, building heat and thirst on the desert, train robberies. As with the railroads, the growth of illustrated periodicals like Gleason’s pictorial drawing-room companion, Vanity Fair and Frank Leslie’s illustrated newspapers played a vital role in knitting together the cultures of growing cities and rural towns. The magazines not only exposed people to news and trends so generating a demand for consumer goods of all kinds. In the 1850s, most travel was still done on horseback, in carriages or wagons or by train or steamship. A transcontinental railroad system was not yet in place across the United States. Therefore, travel by train often had to be supplemented with travel by ship, coach or horse to reach one’s ultimate destination. Postage rates for correspondence were relatively more expensive for the times and if you include cash or valuables in your letters, they were usually stolen. The express company handles anything larger than letters and the railroads carried bulk freight. There were no parcel post service in the United States at the time and it was unthinkable that they might ever by the kind of express companies that developed later, such as Airborne express DHL or Federal Express. The express business transporting financial papers, small parcels and packages from one town to another had become a well-established and profitable line of work for many people during the 1840s. Competition was more than healthy: it was cutthroat. Propelled by the growth of a vast network of railroads that began to crisscross the United States, the country began to realize its manifest destiny the movement of its population “from Sea to shining Sea”. As more and more people headed across the frontier, the railroads firmly tied the Midwest economies to the east, rather than to the south (as had been the case previously when most traffic was shipped via the river system). European goods were imported to New York and then shipped to west via the railroads. The express company fought bitterly for the valuable exclusive contracts that the railroads granted to one express company or another to use their line, as people’s relatives and friends move westward, the traffic of goods increase as well. In 1849 alone approximately 75,000 adventures made what one historian called” the unspeakable hard journey from the eastern United States to California to search for gold and to create a life for themselves and their families. America was increasingly being loose to confederation of towns, states and regions. The vast railroad network helped bring together for the first time economies and cultures of different parts of the country. As an indication of the explosive growth of the railroads, 90,000 miles of railroad track had been laid by 1850 and figure tripled by the end of the decade. The railroads were an integral part of the fabric of the United States, serving as more than just a mean of transporting people and goods through out the country: they were helping join together a vast and diverse land in to a unified society. ESTABLISHEMENT OF AMERICAN EXPRESS BANK In 1860’s American express company made its services available to the U.S govt during the civil war by transporting vital supplies, including presidential election ballots to army depots. American express company’s messengers even ventured on to battlefield to deliver packages and letters to soldiers. And to accept packages and mail for delivery to dying soldiers families. The express companies also were called upon occasionally to perform the somber task of delivering the bodies of soldiers to their families. American express company started its banking operations in 1914.American express company promised to pay endangered fierce customer loyalty, and the brand attributes of safety and integrity had been reinforced with customers in dramatic and very personal ways. American express enjoys a strong brand, loyal customer base and well-established operating presence in many parts of the world. And the opportunities for developing the company’s international payments business are immense. Business activities were intensified and expanded across 25 key geographic markets after establishment of bank. ESTABLISHMENT OF AMERICAN EXPRES BANK IN PAKISTAN In Pakistan it was established in 1949, first of all in Karachi. The head office of Amex is in Karachi at shaheen commercial complex. In Pakistan it has three more branches now and running a successful business through these branches in all over the country. Following are the branches of Amex. Ø CLIFTON branch Karachi Ø BLUE AREA branch Islamabad Ø MALL BRANCH Lahore I did my internship in mall branch Lahore, so my report covers all of its main departments and their operations. As the mode of banking direction of Amex is changing all over the world, in early times of its establishment it mainly operated only in corporate section but now chief executive of Amex has realized the importance of consumer banking and he is trying to introduce Amex with the new image of consumer bank instead of corporate one. In the whole world where ever the branches of Amex corporate section are is closing down and new products regarding promotion of consumer banking are trying to be developed. So in Lahore branch I got the opportunity to work in the retail departments. I spent most of the time of my internship in personal banking department and also tried to learn about the work of other retail departments by interviewing the employees working over there or by gathering written material about that department. The details of working of different operations units are given on next pages of this report. OBSERVATION OF SANCTIONS IMPLEMENTED BY UNITED STATES Whenever a new relationship is going to be established with Amex, the employees of it must have to observe the united state sanctions. That is to check that the new client, whether it is commercial or individual, does not come under the restricted area. To check that he is not the resident of restricted countries or he is not doing business, or has trade relations with these countries. Whether bank is issuing the letter of credit or opening an account or granting loan, all these sanctions must be observed. Otherwise violation of these sanctions can result in imprisonment and fine. COUNTRIES UNDER SANCTIONS Following are the countries, which came under the sanctions. Ø Cuba Ø Iran Ø Iraq Ø Libya Ø Myanmar (Cuba) Ø North Korea Ø Sudan Ø Syria Ø Talliban Ø Unita Ø Yugoslavia SDN, SDT, SDNT, SDNTK, FTO. AMERICAN EXPRESS BLUE BOX VALUES During the decades since these values were introduced, the blue box values have become part of the fabric of life in American express. Amex teaches their employees that all their activities and decisions must be based on, and guided by, these values. These are as follows: v Placing the interest of client and customers first. v A continuous quest for quality in everything we do. v Treating our people with respect and dignity. v Conduct that reflects the highest standards of integrity. v Teamwork- from the smallest unit to the enterprise as a whole. v Being good citizens in the communities we live and work. v A will to win. v Personal accountability. CLIENTS OF AMERCIAN EXPRESS BANK The clients of AEBL can easily be separated into two main and then four sub-categories. These categories are as follows: 1. Primary Clients 2. Secondary Clients 1. Primary Clients: The primary clients, as the name shows, include those customers that are mainly targeted and preferred customers for the bank. For further clarity and detail these are categorized into two sub-categories, i.e. (a) Financial Service Institutions (b) Wealthy Individuals The Financial Institutions They are the basic and the main Amex. These are those banks or institutions that need funds and they borrow from Amex, or saying in other words those institutions that deposit their funds with Amex. This sort of arrangement is especially helpful when some institution does not have any branch in some geographic area, e.g. Allied Bank has its account with Amex New York because it does not have any branch in New York. Wealthy Individuals They are their second preference, as these individuals will not only bring larger amount of funds but can also be source of public relations and contacts. For instance the owner of the packages has account with Amex. Now not only he but all his relatives, most of packages employees and LUMS have their account opened with Amex. Secondary Clients The secondary clients are further sub-divided into two main categories i.e. 1. Corporation & Government. 2. Retail Clients. The third preference for the Amex is the large Public and Private limited companies, which are having their main offices registered inside the land of Pakistan. These customers are big source of funds. The fourth category, i.e. retail clients is related to those individuals, which are not placed in wealthy individuals’ category. CHAPTER NO.3 ORGANIZATIONAL CHARTS Hierarchical Structure The hierarchical structure of Amex shows that it is following a functional departmentalization sort of structure. Functional departmentalization means a method for organizing activities into separate units, each of which undertakes a distinctive function, e.g. marketing, operations etc. Amex is enjoying some advantages of this system such as, communication and decision making is easy, functional specialists are being prepared; strategic control is preserved at the top management level. However, it does not have any escape from disadvantages such as, coordination among departments is difficult, training opportunities for broad managers are limited, changes are difficult and chances of interdepartmental conflicts are open. Chain of Command. The chart of Amex shows that chain of command, i.e. management layers, are normally six for each department, i.e. Manager, Senior Assistant Manager, Junior Assistant Manager, Senior Banking Assistant, Banking Assistant Supervisor. These six layers are in addition to the top management, i.e. Branch Manager and Directors. Pooled Interdependence There are various departments which are independent to one another, but if any thing goes wrong with one of the departments then it would affect whole of the organization. Unity of Command. It refers to the notion that no subordinate should report to more than one boss. However in Amex unity of command is strictly followed. Span of Control. Span of control is Amex is quite small, as a matter of fact it is not more than three or four. ORGANIZATION CHARTS HIERARCHIAL SETUP AMERICAN EXPRESS BANK PAKISTAN. OPERATIONS SECTION ORGAIZATION CHART LAHORE BRANCH, 2003 OPERATIONS, HIERARCHICAL SET UP Director Operations HEIRARCHICAL SETUP, 2003 PERSONAL MARKETING DEPARTMENT Chapter number 4 Review of literature VISION STATEMENT OF AMERICAN EXPRESS BANK To the extent we act according to these values, we believe, we will provide outstanding trading service to our clients and customers, earn a leadership position in our business and provide a superior return to our shareholders. MISSION STATEMENT OF AMERICAN EXPRESS BANK Amex is a full-fledged commercial bank and provides a complete range of commercial banking services and selected capital market services to both domestic and international clients. The important part of AMEX’s mission is: To provide banking services that is of high standards, comparable to the standard of banking services that are provided in the United States. It is intend that this standard set an example to the domestic financial market and give impetus to its further development and improvement. And To provide an ultra- modern, technologically advanced systems and procedures and such kind of staff training that they commit to ensure the safety and secrecy that depositors should expect. To this end bank ensures: • SECURITY: through financially sound banking procedures and risk (asset and liability management) • LIQUIDITY: through cash availability on demand, short time investments and coverage, and speed in processing credit transaction. • PERSONALIZED SERVICE: through courteous well-trained employees, modern processing and on-line communication systems. In Pakistan Amex is the bank that is providing western level of services as determined by: • Efficiency, speed of delivery, accuracy and pro-active communication • Confidentiality about account information as well as business ideas, strategi4es and issues • A complete relationship based on and fostered by mutual and long-0term cooperation and trust • The use of an advanced information technology system, which enhances the awareness of staff, as well as that of other banks, about the need to provide and implement modern technology at large. MANAGEMENT POLICIES The intent of documenting a set of management procedures is to provide a framework from which all Amex employees have a clear understanding of responsibilities and procedures for management decisions, project priorities, and changes in plans and request for services. UNDERLYING PRINCIPLE The underlying principle of this document is an ongoing, continuous documentation whereby topics can be added and modified as the Amex executives see fit. BUSINESS PROCEDURES Periodically Amex executives meet formally to discuss the previous period progress, future activities that will be started, and to resolve any outstanding issue. In addition Amex functional leaders will meet periodically to discuss all above mentioned issues. QUARTELY MANAGEMENT MEETINGS FOR TAKING ANY BUSINESS DECISION If a business decision has been referred to executives, they have 30 days from receipt of the issue to mutually agree on a resolution. If the executives cannot come to a mutual agreement within this timeframe, they should schedule the topic for resolution within the next quarterly management meeting. If a resolution is needed prior to the next meeting, a special session should be scheduled which is to be attended by all members. In these meetings a specific format will be adhered to which would include the way topics are to be presented with timeframes and other follow-up guidelines. A segment of these meetings are also devoted for resolutions of daily business topics that cannot be mutually agreed by Amex executives. If this kind of topic is brought to this group for resolutions, they have 60 days from the meeting to come to a resolution. If this group cannot resolve the issue, it should be brought up to senior management for final resolutions. SENIOR MANAGEMENT MEETINGS Within 15 days after receipt if issue, senior management has to be agree on a set of business procedures. There should be two additional senior managers for each party and a mutually agreed neutral advisor. Amex’s project office team has following key responsibilities. They can be summarized in three categories. • To provide project management and planning support to the development teams • To help in categorizing and to direct the flow of project activity. • Facilitate the preparation of the monthly communication within Amex. TECHNOLOGY DIRECTION The global business technology architecture is formally documented and accessible to each member of the Amex account and appropriate Amex team members. Ultimately, we expect to publish this from a central location using Amex worldwide web server, which will accessible by a web browser such as Netscape. The GBS IT architecture document is structured to establish a meaningful linkage of Amex business strategies to technical, strategies. Each desired IT characteristic identified during the business enterprise modeling process directly supports Amex business objectives. Each IT characteristic will be directly supported by a set of technical strategies. The document contains a basic framework for all architecture components, all current decisions, and placeholders for future decisions. Documenting the rational behind the architecture that is truly valuable and useful to Amex FINANCIAL ADMINISTRATION Amex financial team acts as the primary liaison on all financial issues. The primary area of responsibility includes invoices and credits between the two organizational and support for month end and quarter end closes. As a great rule, all invoices and/or credits, which are outside the scope of the master agreement, should be accompanied by a document signed by Amex executives. It is the responsibility of the business line managers to obtain the necessary signatures and forward the documents to the respective finance teams. All the basic financial statements such as balance sheet, profit- loss statement and cash flow statements are basically prepared at Karachi head office. INFRASTRUCTURE Internal audit/ compliance Overall, several key areas are supported by the audit and compliance team: Ø Audit tracking/ corrective action Ø Regulatory compliance consulting and support Ø Import/ export compliance Ø Business continuity Support of the regulatory architecture for Amex is another function of the audit and compliance team. Planning system solutions to control reporting requisites for the bank and consulting on business solutions to remain proactive and regulatory dictates are all part of this operational process. It provides support not only to usual and customary changes that occur annually but also design new processes, as requested, for new regulatory changes. The audit and compliance team provides oversight of the branch activity. Communications: To keep Amex management informed of the all branches accomplishments, all of the braches prepare a monthly status of mutually agreed topics to be forwarded. Subset of these topics includes: Ø Project activity which includes: • Summary effort tracking • Strategic initiatives effort tracking • Discretionary enhancements effort tracking • Consulting effort tracking • Service request tracking • Detailed project status reporting Ø Global audit activity Ø Short-term contract deliverables Ø Help desk activity Ø Service level agreements Ø Brach key accomplishments TRANSFER OF MANAGEMENT § The transfer of management procedures must be performed each time the responsibility and authorities of branch are taken by an incoming manager regardless whether the management transfer is temporary or permanent: it is fully understood that the degree of detail may vary for temporary transfer as opposed to a permanent one. § The local management must fully cooperate with incoming manager in providing information on confidential matters, key personnel, business plans, special client relationships, and the current state of operations, loans, funding sources, treasury exposures, and all other important managerial aspects. § A complete transfer certificate signed by both the incoming and outgoing managers must be done to evident the transfer. § Under no circumstances, except to comply with specific instructions from the appropriate area/regional head, should an outgoing manager leave the location until both managers have completed the transfer of management process and have signed the transfer certificate. § Management responsibility is not shared. It is fully transferred as of the date and time specified in the transfer certificate. § Thereafter, the incoming manager becomes fully accountable for all aspects of the branch, country, business unit or process for which he/ she has accepted responsibility. § Though the incoming manager id fully responsible to take actions to improve “inherited” § Standards or to obtain settlement of criticized assets etc. His/ her performance should later be appraised only on developments occurring subsequent to his transfer date. CELEBRATION OF IMPORTANT EVENTS: During my internship the important event of 14th august came, and thus I got the opportunity to observe, how American Express Bank celebrates the important and national events like this. As there is a national holiday at 14th so bank always celebrate it a day before that is on 13th of august. I was pleased to observe the enthusiasm of the management of American Express Bank in celebrating this ceremony. The bank gives an official breakfast at 8’0 clock on the morning of 13th of august to all the staff of bank. The breakfast is enjoyed by the staff altogether. Then in the evening of 13th there is again a small ceremony of cutting the cake. After the banking hour that is five thirty all the staff of branch get together in the conference room and the head of any department cuts the cake that has the beautiful flag of Pakistan carved on it. It is than served to staff along with cold drinks. On that day all the staff is being required to dress up in special way that is white shirt and green tie are for men and white suit and green dopatta are for ladies. The clients on that day are served with sweets and handsome tiny batches of Pakistan flag. The sound system of branch also plays the patriotic songs from the 10th of august to 13th of august. . Chapter number 5 MAJOR DEPARTMENTS OF AMEX LAHORE BRANCH As I mentioned earlier Amex is closing down the corporate sector and coming towards the consumer banking. So during my internship period I mainly worked in the retail departments. Following are the major units of retail sector, which I observed during my internship. Ø PERSONAL MARKEING Ø CLIENT SERVICES Ø REMITTANCES& GOVT SECURITIES Ø EXPORT DEPARTMENT Ø CASH DEPARTMENT Now I describe the functions of these departments of bank. I basically worked in personal marketing during my internship; however I tried to learn about the work of these other departments either through interviewing the employees working over there or through taking notes from any written material, which they provided to me on my queries. PERSONAL MARKETING This is the very important department of retail sector. Mainly the work of this department is to deal with clients and satisfy their needs. This department also plays an important role in developing new and strong relationships with clients by giving good services and respectable treatment to them. It also facilitates clients to meet their requirements by helping them in depositing their payments, issuing their cheque books or answering their queries regarding their accounts. There are two important functions of this department. Bringing of new accounts and opening of accounts Issuing of credit reports and forwarding them for acceptance Types of accounts There are two types of account: • Current account • Savings account In Amex the current account has two other types: Ø Normal account Ø Kamiyab business account And savings account is also of two types: Ø Normal account (semiannually) Ø Rupee plus account (daily) Kamiyab business account KAMIYAB BUSINESS Current account Sure shot at success! This is the new product of Amex; it has been launched about four to five months ago. So the whole team of personal marketing is emphasizing on opening more and more these accounts to achieve their given target Services and facilities: Following are the major services& facilities which are offered by this product in order to attract the small-scale businessmen and thus to open as many accounts as possible 24 Hours Countrywide ATM Network: It provides you access to 24-hour withdrawal through our countrywide network of over 100 MCB ATMs Countrywide banking: The account holders of it can operate their accounts from any of our branches. Free pay order and demand draft: On maintaining an average balance of RS. 200,000 in this account, there is free issuance of pay order, demand draft and transfer of funds. Banking at your doorstep The account holders will have a option to have their pay orders and demand drafts picked& delivered to their homes and places of business. Evening banking The account holders can avail evening banking facilities, Monday through Friday at any of our branches. Telebanking Through our Telebanking facility the account holders will be ale to get account balance information, including account balance statements by fax In addition to these if you have Kamiyab business account you can get: Ø Home/ Office delivery of airline tickets. Ø Discount on airline tickets in case of foreign travel Ø Facility of discounts on the worlds most widely accepted and renowned American express traveler’s cheques. RATES OF INTEREST ON SAVINGS ACCOUNT NORMAL ACCOUNT RATE: Per annum 3.00% Term deposit rates:(per annum) For deposit up to rupees. 10,000,000 One month deposit 1.25% Three month deposit 1.50% Six month deposit 1.73% (on monthly intervals) 1.73%( on quarterly intervals) 1.75%( on maturity) Twelve month deposit 2.22%( on monthly intervals) 2.23%( on quarterly intervals) 2.24%( semiannually) 2.25%( on maturity) RUPEE PLUS ACCOUNT RATES: Balance between Rs 250,000 to Rs 1,999,999 1.00% Balance between Rs 2,000,000 to Rs 9,999,999 1.25% Balance between Rs 10,000,000 to Rs 149,999,999 1.75% For Rs 150,000,000 and above Refer to treasury FUNCTION NO ONE: TO OPEN AN ACCOUNT The duty of sales persons is to persuade more and more clients to open their accounts with Amex. So they go in to the market to attract small businessmen towards the bank. For opening any account an accounting opening application, two signature cards and one cheques book request is used. Following documents are also required for opening of any account. FOR INDIVIDUAL ACCOUNT: i. Original N.I.C (RM shall make a photocopy and attest it by confirming to have seen the original) ii. In case the N.I.C does not contain a photograph, the bank should also obtain any other document such as driver’s license etc that contains a photograph otherwise a photograph. iii. Employees certificate or attested copy of any such supporting document in case of a salaried person iv. In case client is self employed, evidence of business in shape of business card and RM’s confirmation of having visited his place of business. v. In case of illiterate person, a passport size photograph of the new account holder, besides taking his/ her right and left thumb impression on the specimen signature card and all other necessary areas of the account opening form. vi. College/ University’s valid identity card’s copy in case of accounts of students vii. Form w-9 to be filled out and signed in case of U.S national or U.S residents viii. Form QA-22 to be filled out and signed in case of foreign national residing in Pakistan. ix. Copy of passport along with page where valid visa is stamped required in case of non- residents accounts. x. Rupee account of non-residents to be blocked as per SBP regulations. JOINT ACCOUNT: The same documents are required for both persons, as mentioned in the individual account. SOLE PROPRIETER ACCOUNT: i. Same documents as in individual account. ii. Stamp of the firm to be affixed alongside all signatures. iii. A formal request from proprietor for opening of account on firm’s letterhead confirming that he is the sole proprietor. PARTNERSHIP: i. Attested copy of N.I.C of all partners. ii. Attested copy of partnership deed duly signed by all partners of the firm. iii. Attested copy of registration certificate with registrar of firms. In case partnership is unregistered, this fact should be clearly mentioned on the face of account opening form. iv. Original resolutions from partners/ letter of authority regarding operating of account commensurate with the clause regarding operation of bank accounts in the partnership deed. v. Signature of all partners on the partnership portion of account opening form. vi. The stamp of partnership firm to be affixed alongside signature of partners. Club, SOCIETY, ASSOCIATION OR TRUST ACCOUNS: i. Attested copy of N.I.C of all trustees. ii. Attested copy of certificate of registration iii. Certified true copy of bye laws/rules & regulations of the trust. iv. Resolution of the governing body/ executive committee for opening of account and appointing signatories for operation of the account. v. Attested copy of NIC of signatories. vi. An undertaking signed by all authorized persons on behalf of the institution mentioning that as& when any change takes place in the persons authorized to operate upon the account, the bank should be informed immediately. LIMITED COMPANY ACCOUNTS: i. Certified true copy of certificate of incorporation. ii. Certified true copy of certificate to commence business in case of public limited company. iii. Broad resolution clearly mentioning opening an account with us and appointing authorized signatories with clear operating instructions. iv. List of directors (preferably with signature of all) or signed by company secretary. v. Attested copy of memorandum and articles of association. vi. Certified true copy of form-29 (updated as per list of latest directors) vii. Attested copy of NIC of all directors. viii. Company’s seal to be affixed alongside signatures of authorized signatories on all required places on the account opening form. LIAISON/ REPRESENTATIVE OFFICE/ AGENTS ACCOUNT: i. A valid power of attorney by the principal in favor of the agent/ representative, duly consularized by Pakistan high commission in the country of the principal. ii. Copy of passport/NIC of agent/representative duly consularized by Pakistan high commission or the principal. iii. Rules/regulations/ memorandum& articles of association of principals duly attested by Pakistan high commission. iv. Copy of certificate of incorporation of principal duly consularized by Pakistan high commission to confirm the existence of the principal in that country. RESPONSIBILITIES OF PERSONAL MARKETING DEPARTMENT IN ACCOUNT OPENING PROCEDURE • Determine that there are no restrictions (i.e. local laws, central bank guidelines etc) and sanctions against opening an account for a specified individual and company. • Determine what other references are required. For every account to be opened a reference of any other account holder, or client’s previous bank’s reference letter is required. • Obtain all required documentation as mentioned above for different categories of account and after examining them complete the client profile. • The profile and documentation should be signed at appropriate places to evidence a proper review and approval by the relationship manager. In the nutshell, we can say that following three steps must be get completed by employees of personal marketing. Ø Complete and approve account opening Ø Obtain all required documents and get them approved by his/ her supervisor for all new accounts. Ø Ensure that client information standards are met; client profiles are thoroughly and accurately completed and approved by RM. PREPRATION OF KYC AND ITS IMPORTANCE In opening any new account whether demand, savings, call, time or certificate of deposit, loan, investment or any other relationship account, the guiding principle of Amex kyc policies must be followed. This entails giving careful consideration to and only doing business with those clients whose character, integrity, and business/financial reputation are in good standing. To prepare kyc after opening of an account is very important work of employees of this department. Kyc is abbreviation of know your client. After being open accounts of persons whether it is individual account or joint account kyc is named as personal client profile. And an account of a company is opened than it is commercial client profile. As the name is mentioning kyc contains main information about client that is account title, primary or any other residential addresses, in case of employee his designation and name of place where he works. If client is a businessman than his name of business, his primary trade area, his business major suppliers and customers, any subsidiaries or affiliates if it has any and address of company or organization in which he works. The main and important part of kyc is the estimation of account holder wealth. It has two sections in one its total wealth is to be given and in second his per annum income is to be given. Here it must be mentioned its estimated business investment, personal and residential property and savings. As most of clients are not open and willing in telling their true income, so this making of this part is based upon good judgment of employees and good dealing with client, as if during employee and client conversation if employee succeed in building confidence if client on him, client can than also tell him about his wealth without any hesitation. In the last part of kyc detail of deposit at the time of opening the account is to be given that is how much cash or how large cheques is deposited at that time. Than the anticipated activity that is expected to be occurring on per annum basis is given which must be commensurate with per annum income. After that signatures of RM, RM’s supervisor and of employee of client service department who checks the documents of newly opened account. FUNCTION NO TWO: APPROVING CREDIT FOR CLIENTS Second important function of this department is to prepare and forward for approval the credit request of clients. For this purpose a credit report s made by employees of this department. This is of four pages report in which all the terms and conditions of giving loan are mentioned. At one page executive summary of report is given and other pages contain the information that against what collateral the loan is granted and the time limit of loan etc. In the credit report it is also mentioned whether this over draft facility that is credit facility is DPRF (demand personal revolving finance) or DPF (demand personal finance). DPRF is a running finance facility that is client can anytime deposit the borrowed amount back in to the bank thus making the principal amount large as a result of which his markup amount which he is to pay on availing this facility becomes smaller. Due to this reason mark up rate on this facility is somewhat high as compare to DPF facility, because in that case client cannot pay back the principal amount before maturity. Types of loans They are of two types: v Class-one loan v Class-two loan In class-one loan: loan is given against those assets that are readily convertible in cash for examples for class-one loan collateral acceptable are: Ø SSCs Ø DSCs Ø Dollar banks Ø Bank guarantees Ø Other national savings These are all called sovereign securities because government backs them STEPS INVOLVED IN PROVIDING CREDIT FACILITY TO CLIENTS I. First of all customer make a request on borrower fact sheet II. If loan limit is les than or equal to Rs.499, 000 no CIB report is required, but if loan limit is above this, than CIB report is necessary. As CIB maintains Information about borrowers, and according to STATEBANK no loan should be given to a defaulter, so CIB report ensures that borrower is not a defaulter. III. After that credit report is prepared by the employee of personal marketing and is forwarded to Karachi (head office) for approval. IV. After approval, collateral is taken V. This collateral are then sent to the bank that has issued them for the purpose of verification and lien making, that is the issuer bank give assurance of issuance and verify that no other activity has been done against them already by it. VI. Then loan documentation has to be done; after all of these steps 75% of the face value of the securities is to be granted to client VII. At he time of advancement of loan two accounts open automatically: v OD ACCOUNT: that is overdraft account in which limit amount of loan is present and client uses it as he wishes. v MARK- UP ACCOUNT: in which mark-up of facility is to be deposited, which is charged quarterly or according to terms and conditions of credit report. Its rate is also approved in CR report. ATM CARD FACILITY American Express Bank is continuously striving to develop products and services for the ease and connivance of its clients, so it has welcomed its clients to the world of the xpress advantage. This is a new facility that provides a lot of services for the connivance of its clients. To begin with Amex has made available the widest network in Pakistan by joint operation with MCB and MNET, all American Express Bank’s Xpress Advantage card holders are able to make cash withdrawals 24 hours a day from MCB and MNET ATMs. There are almost 105 ATMs machines available in all over Pakistan. The number of machines in each city is as following: NAME OF CITY NUMBER OF ATMs Karachi 45 Islamabad 10 Lahore 17 Rawalpindi 04 Multan 03 Faisalabad 03 Gujranwala 03 Hyderabad 03 Sialkot 02 Peshawar 04 Quetta 03 Sukkar 03 Rahim yar khan 03 Sargodha 02 Types of card ATM card of Amex is of two types. v Blue card v Gold card For issuance of blue card minimum balance in the account must be up to Rs. 200,000 and daily limit of withdrawal of cash for this type of card is Rs. 10,000 and for having a gold card minimum balance in the account is Rs. 500,000 and daily limit of withdrawal of cash is Rs.20, 000. After issuance of both types of card, I t is necessary to maintain the average minimum balance in the account, otherwise there is deduction of Rs.50 on per transaction. CLIENT SERVICES Client Services is an important Department. It deals with all the matters related to clients from opening of an account or locker till the termination of relationship. Following are the important procedures being conducted by this department. I. Opening of Account. II. Issuance of Cheque book. III. Closing of Account. IV. General Ledger maintenance. V. Signature verification. VI. Issuance of loose cheque VII. Stop payment notification VIII. Issuance of statements of accounts ACCOUNT OPENING PROCEDURE Details regarding opening and closing of account are as follows. v Client accounts are opened with Management’s authorization. v Client accounts are established in compliance with Client Due Diligence (Know Your Client) Policy and Procedures. v Proper account documentation, including any documents required by local regulatory authorities, is obtained. v Specimen signatures are properly safeguarded. v The requirements for account closing, including the approval process and sending of confirmation to the client. Documentation and Regulatory Compliance. Following persons are responsible for ensuring that local and US regulatory, and financial reporting requirements are strictly complied with. v The Senior Country Executive v Country Credit Officer. v Head of Internal Control v Country (Financial) Controller v COO/Operations Head. This should specifically include proper completion of any documentation required for withholding or non-withholding of taxes pursuant to US Internal Revenue Services, and where applicable, local regulatory requirements.” ASSIGNING THE ACCOUNT NUMBER To open an account is the responsibility of personal marketing department to check its required documents and to give account number is responsibility of client services. Moreover this department also issues ATM card and make a check on the activity of account. The designated employee of client services ensures that all client profiles are properly completed, all required client information is obtained, and all documentation is in order. This should be completed prior to the establishment of a new relationship and should be evidenced on the Client Profile (and/or checklist, if used locally). He has to perform following procedures. I. As per Client Due Diligence Policy, conduct an independent review of all applications to confirm conformity with the KYC Policy and Procedures. II. Independently check new client profiles, conduct periodic reviews and assessments of randomly selected profiles to ensure the integrity of Client Due Diligence process. III. Scan (using a high resolution PC scanner), microfilm/microfiche, or record on optical disk or any other acceptable magnetic media, as sanctioned by local legal counsel, the account opening from, all signature cards to create backup copies, and any other documentation, and record on a control log. IV. Client Services department must retain a copy of the documents in the local section of the record maintained. REFERING TO HEAD OFFICE Then on receipt of scanned documents, the Client Services at Karachi. § Open CIF and client account(s) on receipt of properly completed and approved documentation. § Ensure proper completion of any documentation required for the withholding or non- withholding of taxes relating to interest and dividends payable to the client. CHEQUE BOOK ISSUANCE a) FIRST CHECK BOOK Checkbooks are not to be issued nor drawings of any kind permitted until the account opening procedure has been completed and final approval has been obtained. Check deposits, subject to local management’s approval’s , may be accepted to open an account, but funds may not be disbursed until the account documentation and verifications are completed, including the final approval, and clearance of funds. b) REGULAR CHEQUE BOOK ISSUANCE. When one cheque book is finished, then the customer can apply for a new cheque book. Each cheque book contains a special Requisition Slip for the issuance of new cheque book is about to finish, customer is required to fill in this slip and hand it over to the Designated Officer at Client Services Department. § Normally it takes 2 days to prepare the cheque book from the day of receiving the Requisition. But if, sometimes the client is himself present at the premises then the checkbook can be issued to him at the spot. Rupee Cheque books are available in following denominations. • 25 leaves • 50 leaves • 100 leaves CHECKPOINTS OF ISSUING CHEQUE BOOK To ensure that Cheque books are properly issued to the clients, this department implements the following controls. ☼ Always obtain an acknowledgement from the client when cheque book is going to be issued. ☼ Develop and implement procedures for cheque books sent by mail to ensure that acknowledgements are sent along with the cheque books for the clients to sign and return, and acknowledgements are actually received back from the clients. ☼ Verify signature(s) on all acknowledgements. ☼ Immediately notify exceptions to the local operations management. CLOSING OF ACCOUNT Following procedure is adopted to close the accounts, account can be closed on either Clients request or by the Bank it self if it fulfills some criterion. 1. In case if client requests The client should send a written request by mail, an authenticated method, or request closure in person. If the request for closure is by mail, a signature verifier must check the client’s signature(s) for authenticity. Given disposition of funds and advice where to pay (the account can only be closed when there is a zero or a credit balance, including interest and other charges if applicable). 2. In case if the Bank closes Account: If any account falls in certain condition that it becomes necessary for the closure then bank it self terminates the account. CLOSING OF ACCOUNT PROCEDURE. On receiving the Account closing advice, the Client Services Performs the following procedures. 1. Send a memo to Operations requesting closure of a client’s account. 2. Forward a client’s request for closure. 3. Determine closure based on inactivity of a client’s account. 4. Request release/discharge of security documents in favor of AMEX branch, if applicable. Give a written notice of closure of the account to the client as customary in the market place or in accordance with local law. (The Bank should have proof that the client received the written notice e.g. tested telex answer back or return receipt). 5. Sent out a pre-closing notice to all operating areas, once a request for closure is approved. The recipients must then sign and date the notice. This action is necessary to ensure that the account is not closed before all transactions are completed. 6. Ascertain that any security documents in favor of the Amex branch have been released/ discharged. 7. Send confirmations of closure to the client and relevant RM, after closing the account. 8. Recall unused checkbooks from the client if the local banking law or practice requires the AEB branch to do so. Destroy all unused checks upon receipt. 9. Remove signature cards from the active signature verification files, mark them “closed” and file appropriately in a closed account file following the procedures. DORMANT ACCOUNTS Dormant accounts are susceptible to manipulation. Therefore, for safety reasons, it is necessary to segregate such accounts under a separate control and apply special safeguards. Circumstances for assigning an account Dormant status An account is deemed to be dormant when any of the following circumstances apply: 1. There has been no client-originated activity in the account for the following periods. a. Current Account – 1 year. b. Savings Account – 3 years 2. Others as determined by local practice. 3. When more than one account is maintained by a client and client-originated activity has taken place in any one of his/her accounts during the specified period, the inactive account(2) need not be deemed dormant only for the reason of no activity. Similarly when a client has signed a balance confirmation when requested by an AMEX branch is person or by mail, during the specified period, the account need not be deemed dormant for the reason of no activity. 4. An account statement (or any other communication mailed to the same address appearing on the statement) is returned for reasons other than incomplete/incorrect address or postal error. This does not apply to countries where poor and inaccurate local postal system might cause frequent transfers of client accounts to dormant status and subsequent reactivation. In such instances, the local operations management may develop their own dormancy criteria, document and implement local procedures and include them in the local section of this manual. 5. If the account holder (or one of the account holders in the case of a joint account) is deceased or becomes mentally incapacitated. 6. If the balance of account becomes subject to a court order, injunction order of disposition by an administrator or executor. 7. If, in the opinion of management, there exists a loss of client contact (other than stated above) that warrants treatment of the account as dormant. Detection of Dormant Accounts. A designed senior operations employee should review, at least every six months, all current accounts to determine whether they should be transferred to dormant status. In addition she/he must also review accounts with nil or below minimum balance for possible account closures. Ø Amex branches should close accounts only in conjunction with the concerned RM. Ø Amex branches must give special attention to any transactions occurring in an account after a long period of inactivity, the absence of which would have caused the account to be classified as dormant. Custodians of Dormant Accounts. Local operations management must appoint joint dormant custodians to monitor control and approve all transactions relating to dormant accounts. Local operations management must also limit the following functions to joint dormant custodians only. v Access to dormant account information, signature cards and printouts. v Approval of all transactions posted to dormant accounts. v Reactivation of dormant accounts. MAINTENANCE OF GENERAL LEDGER FOR ACCOUNT OPENING AND CLOSING. Under manual operation, each American Express Bank branch must maintain a register of open/closed accounts to show the running total of accounts maintained by that branch. The branch must balance this record at month-end to total the number of accounts by category, e.g. Savings, Current etc. and immediately investigate and resolve discrepancies. Under an automated environment, the system should allow the AMEX branch to have this information at any time. The branch must, however, ensure that changes/deletions to the Master file records are properly controlled and authorized by designated employees. SIGNATURE VERIFICATION. This is another important function that is performed by the Designated Officers at Client Services. Signature verification is intended to establish authenticity of a check, written instructions, loan documents, and acceptance. The Officers of client service initials should evidence signature verification by an employee. The tellers’ PAID stamp on a check or saving withdrawal slip/ticket is considered as evidence of signature verification, if the tellers perform the signature verification function. Some Amex branches may stipulate limitations as to the amount that employees are authorized to verify signatures. Any such authorization or limitations should be documented and a copy thereof retained in the local section of this Manual. In those offices where the employee verifying signatures is not required to place his/her initials, detailed procedures on the signature verification process including how the accountability will be established for an error or failure in individual cases, should be documented. If a signature cannot be verified or does not agree with the specimen, such notation must be attached to the involved instrument. The instrument should be referred to management for approval or rejection. ISSUANCE OF LOOSE CHEQUES Loose or bank client cheques can be issued to any client in any quantity and therefore are more susceptible to fraud/forgeries than the regular checks. The following controls must be implemented to minimize the risk. Ø Only issue loose cheques to the client(s) against a written request, and for over the counter cash withdrawals only. This does not however, apply to loose cheques issued as part of the “starter kit”. Ø Always verify signature(s) before issuing a loose cheque to a client. Ø Update the loose cheques log at the time of issuing. Ø Use separate serial numbers for the loose cheques, where possible. Ø Designate an employee (other than the cheque custodians) to fully count and reconcile loose cheques inventory on a monthly basis. Ø Develop, document and implement procedures for “internal printing” of blank cheques, where applicable, and retain a copy thereof. STOP PAYMENTS NOTIFICATION Client Services also perform this important function. Amex branches must designate a senior operations employee to process all stop payment orders. The Department generally accepts stop payment orders only if received in writing from the client or via a tested telex or authenticated SWIFT message. If a client has telephoned, she/he must confirm the order in writing within 14 days of the telephonic request. Action upon Receipt for Stop Payment Orders § All written stop-payment orders (not received via tested telex or authenticated SWIFT message) must be time stamped upon receipt and signature verified. § The designated employee must initial the stop payment request alongside the client’s signature. § The employee handling stop payments must check relevant client’s account to ascertain whether or not the check has been paid. If the cheque has not been paid, an acknowledgement should be sent to the client. § The acknowledgement must be sent using a standard format approved by local counsel, incorporating a waiver clause and retention period. § All notifications of stop payments must be recorded in client’s account record log such as the Client Accounting System. § A master file containing the original instructions must be maintained as an “open file”. Once the cheque has been stopped, the stop payment instructions must be removed to a closed file for the required retention period. § When a cheque presented for payment is the subject of a stop payment order, the cheque must be clearly marked “Payment Stopped” and returned to the presenter(s). Retention of Stop payment Instructions. Dependent upon local legal restrictions, stop payment orders should remain open for 180 days from the date the instructions were received from the client. Unless contrary to the local practice, any cheque dated over six months should considered “stale” and when presented for payment, must be referred to a designated management official before encashment/payment. Multiple Stop-payment Orders. If a client request stop payment on a large number of blank checks, it is advisable to close the account and open another in the client’s name. Release of Stop-payment Instructions. An Amex branch must obtain the client’s request in writing, by a tested telex or an authenticated SWIFT message, whenever an Amex branch is instructed to remove stop-payment instructions. The employee processing the request must verify signature(s) on all written request, initial to evidence signature verification, attach the removal request to the original stop payment order and remove the original stop-payment request from the open file. ISSUANCE OF STATEMENTS OF ACCOUNTS In accordance with the proper handling of all the matters related to clients, issuance of Periodic Account Statements is also an important step involved. All account statements must be dispatched to the clients in accordance with the Product definition. v Demand accounts – Once a month. v Saving accounts – Once every six months. v Time, Call and settlement accounts – Pursuant to local practice. Based upon the clients’ needs and local practice, local operations management may develop and document its own periodic frequencies (in excess of the standards set above) and retain a copy in the local section of this manual. Procedure may also be developed to ensure that for every account a statement is generated and delivered to the client. Amex branches must balance all statements with the Client Accounting System before they are mailed. However, if there may be any difference remains unmatched, despite every effort to balance the accounts. Amex branches must use a numeric tick-sheet or a similar control sheet to ensure that all account statements are in fact generated. Local operations management must designate a department to mail the statements and other form of dispatch to clients. Amex branches must control the statements to be mailed up to the point they are delivered to the appropriate postal authorities. The same applies to other types of deliveries to the clients. The clients’ services department must retain all undelivered statements returned for reasons other than incomplete/incorrect address or error on part of the postal authorities. This department should only deliver such statements upon receiving written request from the account holders or hand them over personally to the client against client’s signature. It must refer to the local operations management any statements, which remain undelivered for more than two months, to enable the local operations management to decide whether the relevant accounts should be classified as dormant. In some cases daily statements are sent to clients when ever there is any movement in the account, the designated department should exercise control in the above stated manner, at least once a month, after all charges or similar items are processed. For example, Nishat Textiles, Siemens Engineering, Ammar Textile, Packages. Error in Statements. Statements should contain a prominent notice that all inquiries and correspondence concerning exceptions and errors should be addressed to Client Services Department. All inscriptions should appear on each statement to best safeguard the interests of the Bank with regard to possible later claims from the client arising from matters revealed or suggested by the statement. Such inscription should be to this effect. We will understand that you find this statement of your account to be corrected unless within__ days from its date this branch receives from you notice of any exceptions thereto in writing. (The number of days and precise wording should be decided by local law and custom and local counsel’s opinion). REMITTANCES&GOVERNMENT SECURITIES Main functions of the department. A. Outward money transfer. B. Inward money transfer. C. Government Securities. A.OUTWARD MONEY TRANSFERS. I. Pay orders II. Demand draft in various currencies. III. Swift and Telex transfer. IV. Inter branch transfer. V. Transfer funds between accounts (Book Transfer). B.INWARD MONEY TRANSFERS. I. Swift payment order. II. Telex transfer III. Outstation cheque-local IV. Outstation cheque-Foreign V. Book transfer (between accounts) VI. Inter branch transfer. C.GOVERNMENT SECURITIES I. Issue of SSC and DSC II. Payment of profit III. Encashment of Certificates IV. Reimbursement of Profit V. Reimbursement of enchased Certificates. OUTWARD MONEY TRANSFER A.ISSUE OF PAYORDER AND DEMAND DRAFTS-LOCAL CURRENCY To receive instructions from remitter (client) this could be in the following manner. I. At pay and receive desk in the dept. II. Through mail (Time and date stamp should be applied). The instructions could be in the form of I. Letter with instructions to debit account. II. Cheque drawn on Amex. III. On prescribed (printed) form IV. Against deposit of cash V. Against (suspense) by order of bank itself. VERIFICATION OF INSTRUCTIONS. I. Get signature verified from cash dept (Manager). II. Check sufficient available balance in account to meet the amount of transaction, charges and withholding tax if any. III. Check the date of instructions, it should not be postdated. IV. If the instructions are in shape of a cheque refer cheque control list. V. If the instructions are against cash ensure cash has been deposited. Ensure that 0.3% tax has been deducted/received prior to issuance of the pay order/draft otherwise refer to client for correction of instructions, here a flow chart of issuance of pay order and draft for local currency is given. In it in mention the whole procedure of pay order or draft issuance. ISSUE OF FOREIGN DRAFTS To receive instructions from remitter (client) this could be in the following manner. I. At pay and receive desk in the dept. II. Through mail (Time and date stamp should be applied). The instructions could be in form of I. Letter with instructions to debit account. II. Cheque drawn on AEBL. III. On prescribed (printed)form VERIFICATION OF INSTRUCTIONS. I. To get the signatures verified from cash dept (Manager). II. To check sufficient available balance in account to meet the amount of instrument. III. To ensure additional funds are available to meet the charges. IV. To check the date of instructions it should not be post dated. V. If the instructions are in shape of cheque refer cheque control list. VI. Check the status of account and obtain necessary authorization for processing of the transaction if it falls under the status of Dormant/Block/Hold. VII. If the instructions are completed and corrected go ahead to process the draft transaction otherwise refer to client for the correction of instructions. VIII. Debit client account in system. IX. Demand draft charges will be recovered by debiting remitter account. X. Authorized employee will review and sign the draft and after verification of the particulars of the beneficiary and amount. XI. Deliver the draft to client and take his signatures on the copy of the draft to record the receipt of the instrument. XII. File the instructions (retain photocopy of cheque) with the office copy of draft. CHECKLIST To issue drafts and swifts and book transfers remittance department often receives cheques as the instructions to debit the clients account. Following points must be considered while receiving cheques. I. Cheques should be drawn on AEBL. II. Cheques should be in favor of AEBL. III. Cheque should not be post date. IV. Cheque should not be stale (six months old). V. Cheque should be signed by the drawer/drawers VI. If drawer is an artificial person cheque should carry its stamp. VII. All alteration cuttings must be authenticated. VIII. Amount in words and figures must agree. IX. Cheques received in mail must be bear date, time and AMEX crossing stamp. X. Cheque should not be mutilated. XI. Cheques received at pay and receive desk and instructions should carry instructions of the face, overleaf or attached duly signed by the drawer. XII. Cheque should not be restricted (Payment stopped). GOVERNMENT SEURITIES SPECIAL SAVING CERTIFICATES. SSC’s are common form of saving certificates issued by Govt. of Pakistan. These are interest bearing certificates and are available in following denominations. v Rs.5000 v Rs.10, 000. v Rs.50,000 v Rs.100,000 v Rs.500,000 v Rs.10,00,000 Each type of Certificates has six coupons attached to it. These Certificates are issued for 3 years of maturity. Profit is paid every 6 months as calculated by a fixed percentage specified by the State Bank of Pakistan. Every time the profit is paid, a coupon is detached from the certificate and profit amount is either paid to the customer directly in the form of cash or credited to his account if he maintains an account with AMEX. These Certificates can be cancelled any time before its maturity, but not before 30 days of issuance. In case of premature cancellation, whole of original amount is paid back without making any deductions and any profit accumulated is also paid along with. In case if the profit is not received regularly when it becomes due then additional profit is paid for the days it remained invested. LIBOR Rate (London Inter bank Borrowing Rate) is applied to calculate the profit on SSC in case of accumulated profit payment. The rate, which was on the date when security was purchased, is applied to calculate the amount of profit. These Securities can be reinvested with the whole amount or with the original commission charged by the bank. American Express Bank provides these services on behalf of State Bank of Pakistan, so it charges a commission of 0.5% of the amount of Securities issued for providing these facilities. DEFENSE SAVING CERTIFICATES: Defense Saving Certificates are also one of the Govt. securities, which are dealt by the American Express Bank. The procedure for the issuance, profit payment, cancellation, and reinvestment of these certificates is exactly similar to that of Special Saving Certificates. The period for which these securities are issued is different from that of SSC’s. Defense Saving Certificates are issued for 10 years maturity. No profit is paid before this period. The lump sum rate of profit for DSC is very high i.e. 200% of original amount. The Defense Saving Certificates can be enchased before their maturity of 10 years. These Certificates can not be enchased before 30 days of its issuance. Profit on such certificates is calculated according after one year and onwards according to specified rates. Profit is only paid when Defense Saving Certificate is enchased. No separate payment of profit is made as it is done in the case of Special Saving Certificates. ISSUANCE OF SSC/DSC ENCASHMENT OF SSC PROFIT ON COUPONS US DOLLAR BONDS ISSUANCE/PROFIT/ENCASHMENT ISSUANCE Us Dollar bonds can be issued against Froze/Fresh FCY accounts/FEBC/FCBC/DBC. US Dollar bonds can only be issued for the face value of certificate and in the same denomination; profit of any certificate is paid in Pak Rupees. TYPES OF BONDS: There are 2 types of bonds. ® REGISTER ® Bearer. Register Bonds are issued in the name of account holder and can be sold to other party after proper endorsement on the bond. Bearer Bonds are issued without any name and can be sold to any one at any time. MATURITY OF US DOLLAR BONDS US Dollar bonds are issued for the maturity of 3 Years 5 years 7 years Profit is payable after every 6 months. INFORMATION REQUIRED FOR ISSUANCE OF SUBDB REGISTERED BEARER Form Authority Date of Issue Date of Issue Name of Stamp of bearer Stamp of registered Stamp of bearer Registration number Issuing Bank’s stamp Issuing Bank’s stamp * Lien can be marked * Lien can not be marked. • Marking of lien in case of US Dollar Bonds held by any bank as collateral. REPORTING TO SBP Various reports are submitted to State Bank of Pakistan for which SBP has provided different formats. FORMAT NUMBER PURPOSE OF REPORT TIME OF REPORT SUSDB-1 Daily Sale Before reporting time. SUBSD-5, Bearer & Register Daily Sale Sent to AEB Karachi SUBDB-18, IV & 5 SUSDB encashment SUSDB-14 SUSDB Profit PROFIT COUPONS Profit is payable every 6 months till the date of maturity and on maturity bond is encashed for the face value of bond. Profit Coupons are issued against each piece of SUSDB. Following information is required to pay the profit coupon. § Bonds number § Date of issue § Date of maturity. § Face value of bond. § Profit No. (i.e. 1st, 2nd etc § Name of recipient § Amount of profit. RATES Rate of return on SUSDB, LIBOR plus following SBP rates. YEARS OF MATURITY SBP RATE SUSDB ISSUED AFTER 3 SEPT.1991 3 2% 1% 5 3% 1.5% 7 4% 2% If SUSDB is enchased before maturity date the applicable rate of return is as follows. § 7 years SUSDB encashed before maturity, rate of 5 years SUSDB is applied. § 5 years SUSDB encashed before maturity, rate of 3 years SUSDB is applied. § 3 years SUSDB encashed before maturity, rate of 3 years SUSDB is applied ENCASHMENT SUSDB can only be enchased from the office of issue on the prevailing rate on the day before the date of encashment. Profit is paid after every 6 months and upon maturity face value of SUSDB is encased in US dollars. SUSDB are enchased on maturity and can be paid in Pak rupees or US Dollars. If payment is in, Pak Rupees, the rate of 1 day before the encashment date is applied. No encashment certificate is issued if SUSDB are matured and payment is made in US dollars. PRE MATUREMENT CASHMENT If SUSDB are enchased with in 1 year from the date of issuance, any profit claimed is recovered and payment is made in Pak Rupees. No US Dollars can be paid. The profit recovered has to be surrendered to SBP via Amex Karachi, who will pay to SBP within 3 days of encashment. Encashment certificate is also issued on pre mature encashment in favor of the bearer of the SUSDB. Rate of encashment is the date on which transaction is made. (SBP rate of frozen funds). REINVESTMENT SUSDB can be reinvested upon maturity for the same period (e.g. 3 years bond can only be reinvested for 3 years). “ISSUED AGAISNT RE-INVESTMENT” is to be stamped on the front of new issued bonds. WITHHOLDING TAX ON SUSDB With holding tax is only applicable on the following SUSDB. ü BEARER Bonds issued on or after 16 Dec. to Resident & NON-Residents. ü REGISTERED Bonds – Exempt. REIMBURSEMENT SBP reimburse funds within 72 hours from the date of submission of encashment case. All cases are submitted in SBP Karachi. All cases are sent to AMEX Karachi in pack mail. Insurance letter is faxed to ADAMJEE for the insurance cover of SUSDB. In case the SUSDB (Registered/Bearer) are lost in transit, ADAMJEE will pay to AMEX the amount equivalent to the face value of SUSDB lost). In case REGISTERED and/or BEARER PAID bonds are lost by the client or in mail to Karachi following documentation is required. • Copy of F.I.R. • Copy of advertisement in news paper. • Letter from the client informing the bank about the loss of SUSDB. • Indemnity bond from the client. • Copy of SUSDB 5 schedule (SUSDB sale reported). All these documents are to be submitted to SBP Karachi for the claim of lost SUSDB. PENALTY ☼ In case of delay in submitting cases of encashment more than 3 days penalty @ Paisa 6/- per Rs.100/- per day is charged. ☼ After 6 days SBP will our account against delayed case. ☼ Irregular sale or sales not following SBP rules penalty Rs. @ 10% on the value of SUSDB and SBP can also withdraw the permission of sale/ repayment of SUSDB from bank. CASH DEPARTMENT This is the most important department of a bank branch. Money is received and paid in this department. An intervene is not allowed to work in this dept. however, by interviewing the employees working over there and by getting some published data is got following information about it. The main function of cash dept. is i. Payment of cash. ii. Deposit of cash. iii. Income clearing. Definition of Cheque. v An unconditional order in writing drawn on a specified banker, signed by the drawer, requiring the banker to pay on demand a sum certain in money to, or to the order of a specified person or to the bearer, and which does not order any act to the done in addition to the payment of money (law of banking by Dr hart, p.327). Parties concerning a cheque The normal cheque is one in which there is 1. Drawer. 2. Drawee. 3. Payee. Drawer Ø The maker of a cheque is called the drawer. He must be an account holder in order to make the instrument. Ø A valid cheque the drawer must sign it exactly in accordance with the specimen signature. Drawee Ø The person directed to pay is called the “Drawee”. In case of a cheque it is always a banker with whom the drawer maintains an account so as to constitute so as to constitute him the customer. Payee ® Payee is the person named in the cheque to whom or to whose order the payment is to be made. There may be more than one payee on a cheque to whom it may be paid jointly or alternatively. Types of Cheques Bearer Order Crossed cheque Bearer Payable at the counter to the bearer or cash be deposited in any account. Order Cheque is always in the name of the individual, to whom payment is made against proper identification (i-e id card- passport-driver’s license) if he is our account holder then verify his signature. Crossed cheques a) Simple crossing b) Payee a/c only. Simple crossing cheque It can deposited in the account (can be transferred to third party by proper endorsement). Pay account only crossing. It can only be deposited in the beneficiary’s account (can’t be transferred to third party). AMEX branch can not make cash payments to Pvt Ltd and public Ltd companies at cash counters as per SBP regulations. Incoming Clearing Amex cheques deposited in other banks presented through NIFT to the branches, they have to check these things before payment the cheque. ® DATE (not to be stale or post dated). ® Amount in words and figures should be same. ® Presenting bank’s clearing and crossing stamps. ® Banks discharge stamps on the back of the cheque. ® Revenue stamps and payee’s endorsement (like packages and Siemens required). ® Debit the account. ® If balance is short in any account system will automatically generated the referral sheet. CHAPTER NO.6 CORPORATE CULTURE Being an ever-hungry organization for growth & development, American Express has developed a special culture inside the organization. This culture not only increases the productivity of the employees but it also makes the employees more presentable than they are before joining the organization. This culture helps the employees to retain confidence in them and creates an environment where anybody would be willing to work with his full devotion & sincerity. The salient features and traits of this culture are given below. Attendance & Punctuality The employees are expected to be punctual & regular whether they are permanent employees or they are on contract. They are, however, allowed to have thirty (30) holidays in one year. Apart from these thirty holidays, they are also given a Saturday off on alternate basis, i.e. if an employee has taken off the first Saturday of the month, then the third Saturday of the month will be his next off day. The regular employees are then given special increments at the year-end as compare to those who have taken some holidays. Dress & Demeanor Appearance seems to be the most special concern of the top management, as they have strictly implemented that in normal working days all employees are supposed to wear necktie with trouser & shirt in the summer and with coat in winter. The Muslim female employees are exempted from this compulsion. As far as the behavior of the people at AMEX is concern, it can be stated that they are highly formal, well-mannered and high context people. They give value to each and every word of not only their customers but also their employees. Clients’ Confidentiality It is the responsibility of all the employees not to lose the secrets of its clients to anybody in any case. The violation of this code of conduct may lead to a very severe action even to termination. The reason being, the client may not only withdraw his account from the bank in that case but it will also a big blow to its reputation and image in the market. Integrity & Business Ethics The employees are supposed to be sincere and ethical enough to abide by the rules and regulations made by the top management. They are not expected to lose ethics even if the deal is going to give a million-dollar profit to the bank. BENEFITS GRANTED TO EMPLOYEES The employees are well motivated due to an exceptionally well environment, benefit program and the reputation of the organization. The employee benefit program includes the following: Provident Fund The provident fund is given to each and every employee at the routine retirement of that employee according to the pension fund rules approved by the Government of USA. This probably is the biggest advantage that no other multinational might be doing. Overtime The overtime allowance is given to every employee who is putting some extra effort during the off hours. However, this does not apply on the lazy employees who could not complete their routine work during normal office hours. The overtime allowance is paid in accordance with the applicable US labor laws. Cash Allowance Salary at Amex is split to two main parts with the view to optimize the tax effectiveness. These parts are the normal salary and the cash allowances. It is only the basic salary, which is exposed to the direct taxes. Following are the various cash allowances. 1. House Rent Allowance House rent allowance is the part of salary of each and every employee and is given at the rate of 45%. The house rent is, however not given to those employees who are living in bank accommodation or in leased accommodation. 2. Transportation Allowance The transportation allowance is given to all the confirmed staff members at the rate of 10% of their basic salary. The employees using bank cars however, are deprived of this allowance. 3. Utility Allowance It is also given at the rate of 10% of the basic salary and is given to all the employees no matter what status they occupy in the bank. The confirmation of the staff is however the basic condition. Medical Benefit: This is something like an exceptional benefit given at the American Express Bank. It is divided into two parts, the staff health care and the group medical insurance. The group insurance provides the employees with the facility to use Rs. 30,000/- at most for any sort of illness after being admitted at any hospital in Pakistan. This amount of Rs. 30,000/- is in addition to those daily medical payments, which are paid when some employee or family member of that employee is admitted in the hospital. These daily payments are of Rs. 800/day for the maximum of 31 days. . The second part of the medical benefit, i.e. staff health care, is something in addition to the medical group insurance. The staff health care gives you the facility to draw upto Rs. 1,500/- on presentation of bills, for each family member if he or she is ill but not admitted to the hospital. The employee can draw up to Rs. 6,000/- for himself if he is ill on presentation of bills. Staff Programs In addition to the employee benefit programs and other motivation schemes, Amex provides a package of other benefit programs with the name of “Staff Programs”. These various programs include following facilities for the employees at the Amex. v Loan Program for Staff v Travel Benefits v Staff Social Committee v Educational Cash Award v Long Service Award v In-Country Relocation Policy MOTIVATION OF EMPLOYEES For purpose of motivating employees Amex Company has the following reward system. REWARD SYSTEM OF COMPANY Employees or their supervisor nominate them for getting award. Nominations are reviewed on quarterly basis by programmer’s regional selection committees worldwide. REGIONAL AWARDS There are two types of Regional awards. ® Great performer ® Honorable mention. GREAT PERFORMER AWARD The great performers programme recognizes and rewards employees who deliver outstanding service to external customers above and beyond their job responsibilities and who meet the programme’s selection criteria great performer must meet four or more of selection criteria. Winner in this category receives a congratulatory letter from selection committee and recognition from his Manager and colleagues. In addition we receives us $ 500 with a certificate and an engraved award. HONOURABLE MENTION The honorable mention category recognizes employees who provide exceptional assistance to a customer within parameters of their job responsibilities. He has receives a congratulatory letter and us $ 50 with a certificate. SELECTION CRITERIA FOR BOTH AWARDS Following is the selection criteria of committee: ® Customer need i.e. customer’s problem is such kind that it needs special service. ® Employee has job knowledge and ability of judgement. ® Did employee take ownership of problem. ® Ingenuity that is did employee demonstrate exceptional creativity or resourcefulness sacrifice. ® Quality improvement that is did employee’s performance result in setting higher standards of customer service. SELECTION COMMITTEES There are five regional selection committees. « Latin America « Canada « Europe « Africa « Japan/Asia GRAND AWARDS Only employees who are selected as great performance become eligible for annual grand awards. The worldwide governing committee meets annually in December in New York City to select grand award. Winners receive a four day all expenses paid trip for two persons to New York City and Company recognition. In addition he receives US # 2500 a platinum lapel pin and a certificate. ELIGIBILITY FOR REWARDS • All nominations must be signed by employees Manager, employees who work full time or part time for Amex Company are eligible for award. • Nominations must be received awards within one year of rendering service to customers. CHAPTER NUMBER 7 ANALYSIS During my internship in American Express Bank I analyzed the bank from organizational and marketing point of view. I did this analysis on the basis of personal observation and judgment. During six weeks of my internship I studied the organization in deep detail and thoroughly examined its various departments and their operations. Here I am giving my analysis in SWOT form. I tried to use my keen observation in order to find the strengths, weaknesses, opportunities and threats. As it is very difficult for an internee to discuss with the employees of any organization about its weaknesses, moreover they are also not so much open in telling their strengths and opportunities available to them, as they are afraid of competitors. In SWOT analysis here, I am mentioning the strengths, weaknesses, opportunities and threats of the department of marketing, which is my area of interest and at the same time of the whole bank, which I could observe during my internship, especially from the management perspective. STENGHTS. i. As it is an international and foreign bank so it is enjoying the popularity and credibility of its name. People especially businessmen who have their businesses expanded all over the world, feel it trustworthy due to be a foreign and international bank. ii. The most important facility, it is giving to its account holders, is evening banking. As all the public sector banks have public dealing time only in the morning, the American Express bank has the facility of depositing, withdrawing and all other banking facilities even to open an account up to 5’o clock. iii. One of important strengths of American Express bank is the “personalized dealing” and “individual attention” to clients. As in local banks the attitude of employees is not so good, here I found that each and every client even if he/ she comes without any reference, gets individual attention. iv. The packages of Amex, available for its clients are really attractive, some of these are v Umrah package v Allianz efu (insurance policy) for its account holders with attractive rates. v Travel packages Travel packages are for all over the world as well as with in the country, with discounted fares and lodgings. v. Then if you have ATM card of Amex you can get discounts at certain shopping stores and in certain hotels. Issuance of ATM is without any cost. vi. Free deliveries of pay orders and demand drafts at home/office, and free issuance, if the client maintains a minimum average balance of Rs.0.200M in their accounts. vii. Due to Telebanking, clients can know their balances and other information of their transactions and accounts on phone. viii. Due to online banking clients have the facility to operate their accounts from any of the branches all over the world, where there is the branch of American Express. For example, if the client has account in Karachi Amex, he can deposit and withdraw cash from Islamabad or Lahore or from anywhere in the world. ix. Another important strength of Amex is its worldwide accepted and renowned traveler’s cheques. x. Amex cash counter remains open during lunch hour, while other banks stop transactions during this time. It is only Amex that gives this facility to its account holders. xi. Unlike other private and public banks Amex has no charges of low balances in the accounts or for the reactivation of account. xii. Amex has very good reward and recognition system for motivating the employees. xiii. The attitude of seniors towards their staff is respectable. If some staff gives some good suggestion, it is well appreciated and the seniors try to act upon it. xiv. One of the primary strength of Amex in serving clients is the global network. In all type of banking, this approach allows them to concentrate on local business and financial institution helping them to take advantage of their global capabilities. xv. It is also interesting to note that Amex has brand loyal customers due to its world wide network of diversified services. The customers are brand loyal even though charges at Amex are higher than the other banks and despite the fact that it has very little number of products. xvi. The major strength of Amex is their attitude towards not only their customers but equally towards their employees, suppliers and manual staff. WEAKNESSES. i. The major weakness of Amex is that, it has a few branches; it is very difficult to operate the accounts especially for those people who have their places of work or residences away from the single branch in Lahore. ii. One weakness of Amex is that they do not do much effort to maintain their old accounts. They only look for new accounts to achieve their pre-set target of the month, and they do not pay attention to the complaints of old especially relatively small account holders. iii. As the issuance of Amex credit card facility has been assigned to Union bank, so it gives impression that Union bank is going to take over Amex, because union bank gives add of Amex credit card on television and media. iv. One of the major weaknesses of Amex is its very low degree of advertisement, there is hardly any ad of it in newspapers or at television, and even there is no single billboard of it on the roadsides, so a layman is not much familiar about its name. v. Moreover Amex is not providing other banking facilities, like debit cards, personal loans, or car financing like other banks. vi. Amex has restricted to open the accounts of government employees and politicians, so it is missing the opportunity to increase the number of its account holders by restricting these people vii. At consumer side Amex has not variety of products, the only new product that it is offering is KAMIYAB BUSINESS ACCOUNT, so the customers are not so attracted toward it. viii. This bank has not its own ATM machine due to its small number of branches, and there is always some kind of fault in the ATM machines at MCB, where the cad holder operates his/ her card. Many clients come to branch with their complaints regarding faulty machines. ix. In the personal marketing department I found the problem of space, the cabins of officers except that of manager are so small that whenever there is rush of clients, the department is overloaded and looks like a fish market, some clients have to stand and wait for a chair/ their turn. x. During the rainy days the Namaz room is filled with water, and it creates difficulty for employees as well as the entrance looks very chaotic and contaminated, as employees start to drain out the water after rain, which does not leave good impression on clients. xi. There is no good facility of lunch in the bank, and the lunchroom is also not so spacious, all the employees cannot be settled at the same time. xii. There is no separate Namaz or lunchroom for lady staff working over there. xiii. The most important Amex weakness is its highly centralized structure. This centralization of structure is the major hindrance in the way of rapid growth and innovation. xiv. The tall structure of Amex makes its communication weak from top to bottom. However the communication within each unit or branch is very brisk and effective. OPPORTUNITIES. i. As Amex is changing the direction of banking and moving towards the consumer side so it has great opportunity to expand in this direction, if it introduces its new products, it will be able to establish good name in consumer banking. ii. If Amex tries to solve the problem of low number of branches and does some expansion in the number of its branches it will surely be able to do good business than today. iii. Maintenance of old accounts along with opening of new accounts can increase its number of accounts as well as branch overall deposits. iv. With increase in advertisement and attractive billboards, Amex has the opportunity of escalating its business. v. Amex has the opportunity of expansion in consumer banking; if it introduces other facilities like car financing, debit cards and other attractive packages associated with opening of account THREATHS. i. The bank does seem to have a policy of advertising at a large scale, which may threaten its future business prospects. ii. The bank has closed its corporate sector operations and started consumer banking without much spadework, which may lessen the business and profits of the bank. iii. The small number of branches of the bank is again a big threat. iv. As card cards of Amex are issued by Union bank, the people are captivating the impression that Amex is closing down or Union bank is going to takeover it, so they do not seem inclined to establish a relationship with Amex. Chapter number 8 CONCLUSION AND RECOMMENDATIONS FINDINGS After completing six weeks of training at American Express Bank, I had a number of different experiences, after spending six full weeks at the bank; I am able to analyze almost all major areas of working of the bank During this period, I found that there are many areas, which requires serious attention and alteration in regard to overall productivity and operations of the bank on the whole. Since today’s an age of extremely high and throat cutting competition in every field of life. Banks especially those that are dealing in consumer banking are not out from this cutthroat competition. All the banks are struggling to maximize their revenue generation and they constantly try to excel in the services, which they provide to their ultimate consumers so that they can achieve better customer loyalty and more perspective of growth. Same is the situation in Pakistan where recently a number of foreign banks have flooded the market and they are constantly striving to surpass the other competitors. All of them are trying to attract the customers by offering new improved and innovated products with better interest rates and enhanced service facilities. In the same scenario these financial institution are very conscious about their financial position. Because more the clients they have more they earn on the money, which is invested by clients. So all the competition oriented activities of all the banks are focused on the same very objective of improving the financial condition of the bank through attracting more and more clients. But after having a detailed analysis of American Express Bank, I have noticed that the bank is not performing well. As I mentioned in swot analysis that bank is not interested in giving any kind of advertisement on all types of media, then how can a layman get introduction to this bank. All its major financial indicators are showing a downward trend. Not a single requisite of finance is improving. Moreover the small number of branches of Amex is creating difficulties for its clients as well as for the bank also in regard of attracting those clients that have their offices or residents far away than branch. The small number of its product is also a hindrance in its expansion toward consumer banking as the bank is offering no leasing policies for car, no personal finance schemes, no debit cards even its credit cards department is allied to Union Bank. Then the ATM cardholders of Amex are also forced to use the faulty machines of MCB, as Amex has not its own ATM machines. The marketing staff of Amex has no clear-cut set of marketing activities; higher staff in regard of marketing tricks is not training them. The higher staff only gives them a pre-set target of the month that they have to open the new accounts up to this figure, but they do not guide them in adopting any marketing strategy, the staff only tried to achieve this target, in this effort they either use their personal relations or insist on their relatives to open account with them so that they can able to carry on their job. But one good thing, which I found in marketing section, is this pay system. Amex is giving the pay to customer sales person in this way that it becomes an incentive for them. The pay of CSP’s consists of three portions that are: v Fixed salary v Bonus on number of accounts that one CSP has opened in one month v If the large deposit account of Rs. 5MM that is opened by CSP is remained maintained up to six month than he gets 0.5% increment. So due to this pay system employees try to work as efficiently as possible. The other qualities that this bank has, are its evening banking, Telebanking and on line banking. Clients feel more convenient due to these facilities. This bank has very good recreation facilities and friendly atmosphere for their employees. As there is a mango party in summer and arrangements of high tea or other small function for recreation of the employees from time to time. The bank also arranges nice farewell parties for leaving employees in these parties bank and other departments also bestow gifts to leaving employee. RECOMMENDATIONS On the view of all the aspects, which I cover in this report, I have the following suggestions Since this bank I a branch of world wide famous network of AMERICAN EXPRESS COMPANY which is performing very well in all the related aspects in which it deals, as well as the performance of American Express in other foreign countries is satisfactory. But Pakistan branches of Amex is not up to that standard, so in order to save and restore the original name associated with this organization, it is necessary to do important changes in all the departments of bank. These changes must involve complete turnover in all the major areas of the bank such as: Operations Consumer banking The changes under taken for this purpose should be strictly based on the need of improving the financial condition of the organization. Here I am giving my suggestions in the following points i. Introduction of new and improved facilities for clients in the consumer banking operations can improve the situation. ii. Opening of more branches at convenient location can prove effective for the growth of bank business iii. With opening of new braches, the bank should also introduce its own ATM machines. And up to that time, the bank should try to eradicate the complaints of clients regarding ATM machines of MCB by taking serious notice of it and discussing this matter solemnly with the administration of MCB. iv. The American Express Bank should take over the issuance and marketing of its world famous credit cards and should perform this function from its own branches. As these cards are well known around the world so they can help bank in building more clientele through attracting more customers. v. There is a need of some training programs, and seminars must be conducted in order to keep the employees more informed about the latest ways of banking. vi. The marketing unit must have some kind of strategies and guidelines to work on, as I found they have no concept of marketing mix or of other promotional strategies. So there is a need of educating them in this regard. vii. The bank must do at least some advertisement of its services through media; there is a great need of advertising this bank. I will suggest the administration of bank to give ads of bank’s services and products on newspapers at least once in a week, give ads on television during prime time that is between 7’0 clock to 9’0 at least twice in a week. viii. There must be attractive billboards of Bank at sides of main roads, so that customers get attracted and become familiar about bank. ix. The bank must also consider the proposal of offering the debit cards solemnly x. There must be some personal finance schemes of bank. xi. The bank should also take it serious to begin car-financing schemes like other foreign and local banks in order to remain in competition. xii. Just for gratifying and happiness of clients: things like bank diaries, ballpoints, and calendars must be offered to clients. LIST OF PERSONS INTERVIEWED NAME OF ORGNIZATION DESIGNATION NAME OF PERSON NAME OF SECTION AMERICAN EXPRESS BANK LIMIED (LAHORE BRANCH) Relationship manager M. Osman Tassadaq Personal Marketing Sales Consultant Samrah Shahzad Personal Marketing Customer Sales Person Sheryar Mian Personal Marketing Customer Sales Person Gulraz Rana Personal Marketing Customer Sales Person Osman Saeed Personal Marketing Manager Tahira Ali Client services Assistant Manager Hassan Ali Client services Assistant Manager Irfan Butt Client Services (lockers) Senior Assistant Manager Adnan Hashmi Exports/Loans Assistant Saeeda Exports/ Loans Assistant Manager Kh. Amir Shabbir Cash Manager Shamim Ahmad Remittances Executive Summary The Banking Companies control Act was promulgated in 1949 and this empowered State Bank of Pakistan to control operations of banking in Pakistan. State Bank of Pakistan decided to restrict foreign banks to major cities only where trade activities were carried out with foreign countries the local banks were encouraged to cover branch network in the Country. That was why, Pakistan had never been the heaven for the foreign investors especially for the foreign financial institutions, and however an interesting-finding is the growing trend of local and foreign investors towards financial institution development in Pakistan. The best example would include local banks like prime, union, Alfalah, Faysal etc and foreign banks like bank of Tokyo, ABN Amro, Citi, standard Charter etc. This change of trend is due to the change in policy of Govt. and State Bank regarding investment mainly in the early eighties. Since then the banking industry has been growing in Pakistan at relatively faster rate. I also choose a foreign bank for doing internship and that is American Express Bank, which was established in Pakistan in 1949 at Karachi. Actually this bank is a part of American Express Company, which is a word-wide and renowned travel company. Now-a-days American Express Bank has been conducted its operations through the branches, which are one in Lahore, one in Islamabad and one is in Karachi. Its Head Office is also in Karachi. I studied the bank from the marketing perspective. As I spent the six weeks of my internship in personal marketing department. In addition to the understanding of the work of this Unit, I also gained much knowledge about the work of other retail departments especially the departments which I covered are clients services, remittances and Govt. securities, cash and export department. I learned the work and procedures going on in these departments through interviewing the staff working in these departments and by gathering any written information which I got and taking notes of that material. I found so many good and bad things in the culture of this bank. Their blue box values impressed me so much, it really represent the business ethics of Amex. But this bank has restricted so many Islamic Countries, as in Amex before establishing any relationship it is necessary to observe the United States sanctions. The clients of Amex are basically financial service institutions and wealthy individual, for example most of “packages” and “lums” employees have their account opened with Amex. But as bank is changing the direction of its operation from corporate section to consumer side, so now in its new offering that is kamiyab Business Account there is no compulsion to open the account with certain minimum -high balance. The hierarchal structure of Amex shows that it is following a functional departmentalization sort of structure. Functional Departmentalization means a method for organizing activities in to separate units. However the basic structure of Amex can be regarded as “Tall structure” In Amex there are two types of accounts current and savings account. The duties of personal marketing department as its name shows is to attract and bring or in other words to persuade more and more clients to open their accounts with Amex. Approving loan advice for clients is also the duty of this unit. Client services department has a direct link with personal marketing department, as to complete the documents and prepare KYC is the duty of personal marketing and to check the documentation and give the account number is the function of client services. Moreover all other account related functions for example to close an account, issuance of cheques books, regular issuance of statements, stop payment notification, issuance of loose cheques, signature verification and general ledger maintenance, all these functions are of client service department. Remittances and Govt. securities deals with all the inward and outward transfers of payments for example demand drafts, pay orders, preparation and telex transfers are the duties of this department, it also issues, encashes and pays profit on the SSC’s and DCS’s export department prepares Letter of Credit advice and deals with all issues related to LC. American Express Bank has very good reward system for its employees. In addition to this so many benefits are granted by bank to motivate the employees, so that they can become efficient workers. Some of these benefits are provident fund overtime, different types of allowances, medical facilities, loan programme, travel benefits and many more like these. During my internship I analyzed the strengths, weaknesses, opportunities and threats to this bank. Its major strengths are having a global network, evening banking, Telebanking, online banking, personalized services and loyal customers. Its basic weaknesses are small number of branches low advertisements less number of products and centralized structure of organization. So in the end I concluded that bank can expand much in consumer side if it succeeds in opening new branches at suitable locations. Through properly advertising its name bank can also attract much more clients and by offering new products and facilities like car financing personal loans, debit cards the business of bank can be improved much. But overall environment of the bank is quite impressive and most of the employees of bank are efficient and hard-worker. Internal Advisor’s Internship Evaluation Form: This is to certify that I have read this report, which is about the American Express Bank and it is up to required standard. Other comment:- Signature of Examiner: Name; LIST OF ACRONYMNS Amex American Express AEBL American Express Bank Limited CSP Customer Sales Person CIB Credit Information Bureau DSC Defence Savings Certificate FTO Foreign Terrorist Organization LIBOR London Iulli Bank Borrowing rate N.I.C National Identity Card RM Relationship Manager SSC Special Savings Certificate SBP State Bank of Pakistan SDN Specially Designated National SDT Specially designated Terrorist SDNT Specially designated narcotics trafficker USDB United State Dollar Bond TABLE OF CONTENTS Chapter-I INTRODUCTION OF REPORT. 1.1. Background of study 1 1.2. Purpose of study 3 1.3. Scope of work 3 1.4. Methodology of research 3 1.5. Difficulties in getting date. 4 Chapter-2 INDRODUCTION OF AMERICAN EXPRESS 2.1 History of Amex 5 2.2. Establishment as travelers Company 5 2.3. Establishment of Bank. 7 2.4 Establishment of Bank in Pakistan. 8 2.5 Sanctions of United States 9 2.6 Amex Blue Box values 10 2.7. Clients of Amex. 11 Chapter-3 Organization Charts. 3.1 hierarchical structure 12 3.2 chain of command 12 Chapter-4 Review of literature 4.1 Vision and mission statements 16. 4.2. Management policies. 17 4.3 Infrastructure 20 4.4. Celebration of important events. 22 Chapter-5 Major Departments of Amex (Lahore) 23 5.1. Personal marketing 24 5.2. Types of account 24 5.3. Rates of interest on saving accounts. 26 5.4. Account Opening 27 5.5. Preparation of Kyc. 31 5.6. Approving credit for clients. 32 5.7. ATM card facility 34 5.8. Client services 35 5.9 Cheque book issuance 37 5.10 Closing of Account 38 5.11. Dormant Accounts 40 5.12. Maintenance of General Ledger. 42 5.13 Issuance of loose cheque. 43 5.14 Issuance of statements of accounts. 45 5.15 Remittances and Govt. Securities. 47 5.16 Issue of Drafts 48 5.17 Special Savings certificate. 51 5.18 Defence Savings certificate. 52 5.19 US dollar bonds. 56 5.20 Cash Department 61 5.21 Types of cheques. 62 5.22 Income Clearing 63 Chapter-6 CORPORATE CULTURE 6.1. Corporate Culture 64 6.2 Benefits granted to employees 65 6.3. Reward system 68 Chapter-7 Analysis 7.1. Strengths 70 7.2 Weaknesses 73 7.3. Opportunities 74 7.4 Threats 75 Chapter-8 Findings and recommendations 8.1. Findings 76 8.2 Recommendations 78 List of Tables i. Normal account rate for deposit up to Rs.10,000,000/- 26 ii. Rupees plus account rates. 26 iii. Names of cities having ATM machines. 34 iv. Information required for issuance of SUSDB. 57 v. Reporting to SBP formats. 57 vi. Rates of return on SUSDB. 58 . List of Charts. i. Hierarchical setup of Amex Operation section. 13 ii. Hierarchical setup of Lahore Branch. 14 iii. Hierarchical set up personal marketing department. 15 iv. Issuance of SSC/DSC. 53 v. SSC/DSC encashment 54 vi. Encashment of SSC profit coupons 55 ACKNOWLEDGEMENT I am very thankful to Allah almighty the most beneficent and merciful who make me able to complete my internship and to make this report. This report has been written as a part of my academic course which is assigned to each student by faculty of administration sciences of Quaid-i-Azam University Islamabad. So that they can gain practical experience by doing internship and spending their time in some organization helped much in enhancing their practical abilities of work. This internship and report writing is very difficult without the assistance of teachers. So I want to thanks my teachers who make me able to do this work. I also thankful to whole the staff of American Express Bank, who cooperates with me during my internship there, especially Mr. Osman Tassadaq and Miss Samrah Shahzad who guided me how to learn the work of bank and helped me to prepare this report. As they spared their personal time in providing their personal experience and valuable information related to their field in pleasant manner, I place on record my special gratitude to both of them.