UCBL Intern Report

8/9/2019 UCBL Intern Report

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UNITED COMMERCIAL BANK LIMITED AT A

GLANCE:

United Commercial Bank Limited (UCBL) started its operation in the mid 1983 with an

Authorized Capital of k! 1""" #illion and $aid up Capital of k! 1"" #illion (raised to

k! %99 #illion in %""9)& sponsored ' some dnamic and reputed entrepreneurs from

arious fields of economic actiities such as shippin*+ oil+ finance+ *arments+ te,tiles and

insurance etc and eminent industrialist from the countr and also participated ' the

-oernment! .t is a full licensed scheduled Commercial Bank set up in the priate sector

in pursuance of the polic of the -oernment to li'eralize Bankin* / 0inancial serices

it has 'een a'le to esta'lish one of the lar*est networks of 1" 'ranches as on 31!1%!%"1"

amon* the first *eneration 'anks in the priate sector!

he Chairman of the Board of 2irector #r! ahan*ir Alam is a renowned 'usinessman

'esides 'ein* an eminent personalit of the countr!

he Bank has in its #ana*ement a com'ination of hi*hl skilled and eminent 'ankers of

the countr of aried e,perience and e,pertise successfull led ' #! 4hah5ahan

Bhuian+ a dnamic 'anker+ as its #ana*in* 2irector and well educated ener*etic and

dedicated officers workin* with missionar zeal for the *rowth and pro*ress of the

institution!

6ith its firm commitment to the economic deelopment of the countr+ the Bank has

alread made a distinct mark in the realm of $riate 4ector Bankin* throu*h personalized

serice+ innoatie practices+ dnamic approach and efficient #ana*ement! he Bank+

aimin* to pla a leadin* role in the economic actiities of the countr+ is firml en*a*ed

in the deelopment of trade+ commerce and industr thorou*h a creatie credit polic!

1 7 $ a * e



4trate*ies+ -oals and '5ecties of UCBL

Strategies:

4nchronized and stead *rowth of the 'ank!

Utilize all aaila'le resources to deelop arious plans+ policies and procedures in

each of the o'5ectie and *oal areas!

.mplement plan policies and procedures

Utilize a team of professional emploees

4earch for a total customized solution of .! for the purpose of full automation

step!

Goals:

2eelop a realistic deposit mo'ilization plan!

2eelop appropriate lendin* risk assessment sstem!

2eelop capital plan

2eelop a sstem to make a *ood adance

2eelop a recruitment+ compensation+ trainin* and orientation plan!

2eelopin* a plan for offerin* 'etter customer serices!

2eelop appropriate mana*ement structure+ sstems+ procedures and approaches!

% 7 $ a * e



2eelop scientific #ana*ement .nformation 4stem to monitor 'ank:s actiities!

Objectives:

United Commercial Bank Limited aims at e,cellence and is committed to e,plore a newhorizon of 'ankin* and proide a wide ran*e of ;ualit product ad serice!

.t is a 'ank for common people includin* 'usinessmen and professionals! .t intends to

sere with ;ualit at a price competitie to anone in the financial market! .t would

constantl keep on e,plorin* the needs of the clients!

4o the United Commercial Bank Limited shall also deelop a outhful& and e,u'erant

mana*ement team<technolo*icall sound and rich in e,perience! he would work handwith zeal and enthusiasm to achiee the o'5ecties of the 'ank in the new millennium!

.ts 'usiness o'5ecties are

Build up a low cost fund 'ase

#ake sound loan and inestment

#ake capital ade;uac recruitment at all the time

=nsure 1""> recoer of all adances

=nsure a satisfied work force

0ocus on fee 'ased income

Adopt a appropriate mana*ement technolo*

.nstall a scientific #.4 to monitor 'ank actiities!

Current $osition

3 7 $ a * e



Capital:

2urin* the ear %""9 authorized capital of the 'ank remained unchan*ed at ?! 1"""

millions and the paid up capital stood at around ?! %99 million! n the other hand the

resere fund of the 'ank increased ' 1@!33 percent to ?! %+19 million in the ear %""9

as a*ainst ?! 1+889 million in the preious ear!

Number of Branches:

$resentl the num'er of 'ranches stands 1" coerin* almost all the important places of

the countr! he num'ers of authorized dealer 'ranches are %!

Investment:

At the close of %""9+ total inestment of the 'ank stood at ?! 9+3@ million as a*ainst

?! +%"1 million at the ear %""8! oweer+ diidend amountin* to ?! 8 million has

'een receied from different companies institutions a*ainst inestment in shares durin*

the ear %""9!

2iision of UCBL

All polic formulation and su'se;uent e,ecution are done in the ead office! .t

comprises of nine ma5or diisions namel Credit diision+ .nternational 2iision+ Central

Account 2iision+ uman Desource 2iision+ .nformation echnolo* 2iision+ rainin*

2iision+ Desearch and 2eelopment 2iision+ Audit and Compliance 2iision!

$D2UC4 / 4=DE.C=4

UCB #ulti #illionaire

UCB #one #a,imizer

UCB =arnin* $lus

UCB 2$4 $lus

6estern Union #one ransfer

4#4 Bankin* 4erice

7 $ a * e

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nline 4erice

Credit Card

ne 4top 4erice

ime 2eposit 4cheme

#onthl 4ain*s 4cheme

2eposit .nsurance 4cheme

.nward / utward Demittances

raelers Che;ues

.mport 0inance

=,port 0inance

6orkin* Capital 0inance

Loan 4ndication

Underwritin* and Brid*e 0inancin*rade 0inance

.ndustrial 0inance

0orei*n Currenc 2eposit AC

F0C2 ( Fon Desident 0orei*n Currenc 2eposit Account )

D0C2 ( Desident 0orei*n Currenc 2eposit Account )

Consumer Credit 4cheme

Locker 4erice

0inancial 4tatement Analsis usin* ratios

Liquidit !atios

1 2004 2005 2006 2007 2008 2009

Cash PositionIndicator

0.074 0.076 0.073 0.082 0.073 0.077

G 7 $ a * e

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2004 2005 2006 2007 2008 2009

0.065

0.070

0.075

0.080

0.085

Cash Position Indicator

Cash Position

Indicator

.n %"" the cash positionindicator ratio was !>+ which means for each B2 1"" of total asset the 'ank hadB2 ! as a cash and deposit due form depositar institutions! he cash flow was almoststead in all the ears for UCBL+ with a hi*her pick of cash flow in %""!

2 2004 2005 2006 2007 2008 2009

Liquid SecurityIndicator

0.116 0.096 0.156 0.098 0.095 0.087

2004 2005 2006 2007 2008 2009

0.000

0.050

0.100

0.150

0.200

Liquid Security Indicator

Liquid Security

Indicator

he trend showsthe fluctuatin* affect of the most marketa'le securities UCBL is holdin*+ with the oerall

size of the asset portfolio! .n %"" li;uid securit indicator ratio was 11!@ > whichmeans for each B2 1"" the 'ank is holdin* B2 11!@ *oernment securities! Betweenup and down it ends up in stead downfall in %""9 ' keepin* 8!> of *oernmentsecurities!

3 2004 2005 2006 2007 2008 2009

Capacity atio 0.583 0.572 0.550 0.770 0.686 0.682

@ 7 $ a * e



2004 2005 2006 2007 2008 2009

0.000

0.200

0.400

0.6000.800

1.000

Capacity atio

Caacity !atio

Capacit ratio+ whichis 'asicall a ne*atie li;uidit indicator! he trend shows a fluctuatin* trend+initiall *oin* down and a sharp rise and down a*ain! .n %"" UCBL:sCapacit ratio was G8!3>+ which means for each B2 1"" Cit Bank made B2 G8!3 asa loan+ which is er much illi;uid! #oreoer in %"" the capacit ratio increaseddrasticall to > and lowerin* in later ears 'ut still was er hi*h!

4 2004 2005 2006 2007 2008 2009

Cost !epositatio

0.430 0.440 0.516 0.527 0.580 0.610

200420052006200720082009

0.000

0.200

0.400

0.600

0.800

Cost !eposit atio

Cost "eosit !atio

he trend shows anincreasin* core deposits for the 'ank+ which is a *ood si*n for the 'ank! .n %"" thecore deposit ratio was 3>+ which means for each B2 1"" of asset UCB had

B2 3 as core deposit! he hi*her this ratio is the 'etter the li;uidit position has! hetrend shows the hi*h upward moement!

5 2004 2005 2006 2007 2008 2009

!epositCo"positionatio

1.000 0.939 0.659 0.601 0.449 0.408

7 $ a * e



200420052006200720082009

0.000

0.200

0.400

0.6000.800

1.000

1.200

!eposit Co"position atio

"eosit

Co#osition !atio

his ratio measures howsta'le fundin* 'ases the 'ank posses! he demand deposits are su'5ect to immediatewithdrawal while time deposits hae fi,ed maturities with penalties for earlwithdrawal! herefore+ a decline in this ratio su**ests hi*her li;uidit! he trend shows adown ward slope of UCBL of deposit composition ratio+ which is a er *ood si*n for

the 'ankas we know a decline su**ests *reater deposit sta'ilit and a lesser need for li;uidit!

6 2004 2005 2006 2007 2008 2009

#ot $oney atio 1.963 1.978 2.295 2.303 2.763 2.687

2004 2005 2006 2007 2008 2009

0.000

0.500

1.000

1.500

2.000

2.500

3.000

#ot $oney atio

$ot %oney !atio

ot mone

ratio su**ests the coera*e of olatile lia'ilities ' short<term assets! .n %"" thehot mone ratio was 1!9@3 times! he hi*her this ratio is the lower risk and hi*her theLi;uidit position has! .n %""G+ its hot mone ratio sli*htl increased to 1!98times and continues its trends to reach to %!@3 times in %""8+ 'ut sli*htldecreased to %!@8 times in %""9! erall+ the hot mone ratio of UCBL increased oer the ears!

7 2004 2005 2006 2007 2008 2009

8 7 $ a * e



"angible Net #orth$lus "erm

Liabilities% Net &i'ed

(ssets

41.673

51.889

76.320

70.005

42.009

46.641

200420052006200720082009

0.000

20.000

40.000

60.000

80.000

100.000

*orth P(us %er" Lia'i(ities+ )et

&an'i()e *et +orth

P)us &er# Lia(i)ities,

*et -ied /ssets

his ratio shows thee,tent to which the net fi,ed assets are financed ' the owned funds and the term

lia'ilities! he trend shows a fluctuatin* trend+ initiall *oin* up from %"" to %""@and then fall down until %""8! .n %"" UCBL:s capacit ratio was 1!@>+ which meansUCBL financed B2 1!@ ' the each B2 1"" of owned funds and term lia'ilities! .n%""@ the ratio reached top to @!3%>!

8 2004 2005 2006 2007 2008 2009

Liquid (ssets to "otal)eposits

1.033 0.980 0.947 0.901 0.872 0.808

2004 2005 2006 2007 2008 2009

0.000

0.200

0.400

0.600

0.800

1.000

1.200Liquid .ssets to %ota( !eposits

Liquid /ssets to &ota)

"eosits

he ratio asdepicted in the a'oe illustration has a declinin* trend! .n the ear %"" the ratio reached

its peak mainl 'ecause a hi*h proportion of deposits were loaned out and for$reentie reasons the 'ank had to keep hi*her leels of li;uidit! After ear %""+ theratio went down 'ecause an amount loaned out in proportion to the deposits were wentdown and needed less li;uidit! erall+ from %"" to %""9+ this ratio is fall down!

9 2004 2005 2006 2007 2008 2009

9 7 $ a * e



Loan commitmentratio

0.420 0.395 0.396 0.482 0.279 0.244

2004 2005 2006 2007 2008 2009

0.000

0.100

0.200

0.300

0.400

0.5000.600

Loan co""it"ent ratio

Loan co##it#ent

ratio

Loancommitment ratio is another tpes of li;uidit indicator which measures theolume of promises a lender has made to its customers to proide credit up to a prescri'ed amount oer a *ien period! i*her this ratio implies that *reater future

li;uidit needs! 4o+ for UCBL this is declined till %""@ 'ut it *row up in %"" and a*ainfell down till %""9! erall+ this ratio decreased which is 'etter for the 'ank!

Leverage !atios

1 2004 2005 2006 2007 2008 2009

"otal )ebt "o "otal

(sset

0.950 0.940 0.940 0.937 0.932 0.937

2004 2005 2006 2007 2008 2009

0.920

0.925

0.930

0.935

0.940

0.945

0.950

0.955

%ota( !e't %o %ota( .sset

&ota) "e(t &o &ota)

/sset

he trend ofUCBL is sli*htl moin* downward! .n %"" the de't to total assets ratio was 9G >which means for B2 1"" of total asset the 'ank holdin* B2 9G as de't!

2 2004 2005 2006 2007 2008 2009

)ebt *quit 19.162

15.608

15.600

14.995

13.779

14.859

1" 7 $ a * e



!atio

2004 2005 2006 2007 2008 2009

0.000

5.000

10.000

15.000

20.000

25.000

!e't /quity atio

"e(t quity !atio

he trend forUCBL is decreasin* steadil! .n %"" the de't to e;uit ratio was 19!1@ > which meansUCBL held 19!1@ times of total e;uit as a lon* term loan! .n followin* ears itdecreased and ends up in %""9 ' 1!8G9 times!

3 2004 2005 2006 2007 2008 2009

Interest Coverage!atio

1.882 1.964 1.755 1.740 1.655 1.719

2004 2005 2006 2007 2008 2009

1.500

1.600

1.700

1.800

1.900

2.000

Interest Co0era&e atio

Interest Coera'e

!atio

he trendshows a *radual down ward fall of interest coera*e ratio of UCBL! .n %"" theratio was 1!88% times+ which means UCBL could coer their interest e,penses '1!88% times with their current leel of =B.!

(ctivit +*fficienc, !atio

1 2004 2005 2006 2007 2008 2009

11 7 $ a * e



Operating *fficienc!atio

0.458 0.422 0.442 0.393 0.404 0.398

2004 2005 2006 2007 2008 2009

0.360

0.380

0.400

0.420

0.440

0.4600.480

1peratin& /2ciency atio

eratin' ciency

!atio

he trendshows sli*ht fluctuatin* in the 'e*innin* 'ut stead trend in last 3 ears! .n %"" theratio was G!8> which for each B21"" the 'ank incur B2 G!8 as an e,pense!

#oreoer in the followin* ears Bank did sli*htl stron* e,panse mana*ement+therefore in %""9 it had operatin* efficienc 39!8>!

2 2004 2005 2006 2007 2008 2009

*mploee

$roductivit!atio

841558.667

1022380.235

1167262.327

1596769.834

1792950.279

2070197.215

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

0.000

500000.000

1000000.000

1500000.000

2000000.000

2500000.000

/"p(oyee Producti0ity atio

#)oyee Productiity

!atio

he trend showsan increasin* line for emploee productiit ratio for UCBL+ which is a er*ood si*n for the 'ank! .n %"" each emploee *enerated operatin* income of ?!

81GG8!@@ on aera*e! he ratio increased 'ecause the emploee productiitincreased durin* the ear operatin* income almost dou'led whereas num'er ofemploee didn:t increase in such proportion!

3 2004 2005 2006 2007 2008 2009

"a' managementefficienc

0.196 0.362 0.441 0.422 0.312 0.299

1% 7 $ a * e



2004 2005 2006 2007 2008 2009

0.000

0.100

0.200

0.300

0.400

0.500

%a- "ana&e"ent e2ciency

&a #ana'e#enteciency

he *raphshows a *radual increase and decreasin* trend! .n %""+ UCBL pre ta, income is "!19@times hi*her than after ta, income! ill %""@ the 'ank had *ood trend and fall *raduallin later ears!

4 2004 2005 2006 2007 2008 2009

*'pense management

efficienc

0.029 0.029 0.027 0.026 0.026 0.023

2004 2005 2006 2007 2008 2009

0.000

0.010

0.020

0.030

0.040

/-pense "ana&e"ent e2ciency

ense

#ana'e#ent

eciency

he trendshows a downward line+ which is er *ood for mana*ement showin* as mana*in* thee,penses smartl! Bank has mana*ed its e,penses er nicel oer times! .nitiallin %"" it had %!9> of operatin* e,penses oer total assets! oweer at the end of %""9

the smartl declined that ratio into %!3>!

5 2004 2005 2006 2007 2008 2009

(sset management

efficienc

0.063 0.069 0.061 0.066 0.063 0.057

13 7 $ a * e



2004 2005 2006 2007 2008 2009

0.000

0.010

0.020

0.030

0.040

0.0500.060

0.070

0.080

.sset "ana&e"ent e2ciency

/sset #ana'e#enteciency

.n %"" 'ankmana*ed @!3> operatin* reenue oer its total asset! heir performance had 'een almoststa'le in followin* ears! here for it had G!> asset mana*ement ratio in %""9!

6 2004 2005 2006 2007 2008 2009

&unds managementefficienc

20.162 16.608 16.600 15.995 14.779 15.859

2004 2005 2006 2007 2008 2009

0.000

5.000

10.000

15.000

20.00025.000

,unds "ana&e"ent e2ciency

-unds #ana'e#ent

eciency

.n %"" 'ankhad total asset %"!1@% times hi*her than total e;uit! hat means+ at that time 'ank hadhu*e de't! oweer in followin* ear it decreased and came into 1G!8G9 times in%""9!

7 2004 2005 2006 2007 2008 2009

!ate $aid on

&unds

0.053 0.052 0.054 0.063 0.072 0.061

1 7 $ a * e



2004 2005 2006 2007 2008 2009

0.000

0.020

0.040

0.060

0.080

ate Paid on ,unds

!ate Paid on -unds

his ratioincreases from %"" to %""8 and then it decreased in %""9! hus it can 'e said thatthou*h total interest e,pense in relation to earnin* assets has increased till %""8 'ut it decreased in %""9+ thus it can 'e concluded that in %""9 UCBL was more efficientthan in other ears!

8 2004 2005 2006 2007 2008 2009

*fficienc

!atio

0.450 0.372 0.402 0.358 0.372 0.360

2004 2005 2006 2007 2008 2009

0.000

0.100

0.200

0.300

0.400

0.500

/ciency atio

ciency !atio

.t has 'een

found that this ratio has decreased from G> in %"" to 3@> in %""9! hus it can 'econcluded that when this ratio was lower+ chan*e in the total noninterest e,pense has 'een proportionatel hi*her when in compared to the net interest and non interest income+thus it can 'e said that with the passa*e of time this 'ank 'ecame inefficient and thus wasa'le to raise their non interest e,pense!

$rofitabilit !atios

1G 7 $ a * e



1 2004 2005 2006 2007 2008 2009

!eturn on *quit

+!O*,

13.545 24.040 25.053 27.130 17.443 16.35

1

2004 2005 2006 2007 2008 2009

0.000

5.000

10.000

15.000

20.000

25.000

30.000

eturn on /quity 31/4

!eturn on quity

!

.n %"" theshare holder:s of UCBL has earned B2 13!G per B2 1"" worth of their inestments!.n %"" shareholder earnin* was the hi*hest amon* these si, ears of analsiswhich is %!13! his ratio increased till ear %"" 'ut after ear %"" it declineddrasticall!

2 2004 2005 2006 2007 2008 2009

!eturn on (ssets

+!O(,

0.672 1.448 1.509 1.696 1.180 1.031

2004 2005 2006 2007 2008 2009

0.000

0.500

1.000

1.500

2.000

eturn on .ssets 31.4

!eturn on /ssets

!/

.n %"" UCBLhas made a net profit of B2 "!@% ' utilizin* B2 1"" worth of Assets! .n %""G returnon asset was increased till ear %"" due to increases in net income after ta,! After ear%"" return on asset was sharpl decreased! But oerall+ this ratio increased!

3 2004 2005 2006 2007 2008 2009

1@ 7 $ a * e



Net Interest -argin+NI-,

2.992 3.848 3.339 3.244 3.100 2.892

2004 2005 2006 2007 2008 2009

0.000

1.000

2.000

3.000

4.000

5.000

)et Interest $ar&in 3)I$4

*et Interest %ar'in

*I%

.t can 'e saidthat in %"" the 'ank made a net interest income of B2 %!99% ' utilizin* B2 1""worth of Assets! his ratio has shown a stead decrease e,cept in %""G and 'ecame%!89%> in %""9! hus it can 'e said that with the passa*e of time the 'ank has earned ahi*her net interest income which is actuall 'ad for the 'ank!

4 2004 2005 2006 2007 2008 2009

Net Non interest

-argin

0.374 0.124 0.071 0.800 0.681 0.562

2004 2005 2006 2007 2008 2009

0.000

0.200

0.400

0.600

0.800

1.000

)et )on interest $ar&in

*et *on interest

%ar'in

.nitiall UCBLhad net interest mar*in of "!3 times of its total asset! Afterward+ this ratio decreased tillear %""@ and then increased which is hi*hest in si, ears! But a*ain it declined till ear%""9!

5 2004 2005 2006 2007 2008 2009

Net Operating

-argin

3.421 4.000 3.426 4.021 3.781 3.454

1 7 $ a * e



2004 2005 2006 2007 2008 2009

3.000

3.500

4.000

4.500

)et 1peratin& $ar&in

*et eratin'

%ar'in

.n %"" UCBLmade a net operatin* profit of B2 3!% ' utilizin* B2 1"" worth of assets! er theear UCBL this ratio was fluctuatin* and it remained same to B2 3!% 'utilizin* B2 1"" worth of assets in %""9!

6 2004 2005 2006 2007 2008 2009

*arnings per Share

+*$S,

73.15 181.22 252.76 272.43 255.59 311.7

9

2004 2005 2006 2007 2008 2009

0.00

100.00

200.00

300.00

400.00

/arnin&s per Share 3/PS4

arnin's er Share

PS

.n %"" thecommon stockholder earnin* per share was B2 3!1G! .n %""G the common

stockholder earnin* per share was B2 181!%%! .n %""@+ %"" and %""8 =$4 was B2%G%!@+ B2 %%!3 and B2 %GG!G9 respectiel! he =$4 has increased 'ecause netincome after ta, increased and also the num'er of common stock outstandin*increased si*nificantl! .n %""9 earnin*s per share rose sharpl due to increase in netincome after ta, and =$4 was B2 311!9!

7 2004 2005 2006 2007 2008 2009

18 7 $ a * e



*arningsSpread

0.04 0.04 0.02 0.01 0.01 0.02

2004 2005 2006 2007 2008 2009

0.00

0.01

0.02

0.03

0.040.05

/arnin&s Spread

arnin's Sread

.t has 'eenfound that with the passa*e of time this ratio has declined in trends where it wasfound that this ratio has decreased till %""8 and it %"" it 'ecame least and reached 1>and then it increased and 'ecame %> in %""9! 4o+ it can 'e said that total interest

income in relation to total earnin* asset has decreased in a hi*her rate than totalinterest e,pense in relation to total interest 'earin* lia'ilit+ which is not a *oodscenario for this 'ank!

8 2004 2005 2006 2007 2008 2009

Net $rofit

-argin

0.11 0.21 0.25 0.26 0.19 0.18

2004 2005 2006 2007 2008 2009

0.00

0.05

0.10

0.15

0.20

0.25

0.30

)et Prot $ar&in

*et Prot %ar'in

UCBL has 'eena'le to keep an increasin* net<profit mar*in oer the ear! he profit mar*in reachedits peak on the ear %"" which is %@>! he lowest profit mar*in was on the ear%""+ which is 'ecause of the increase in non<operatin* e,penses as mentioned earlier!But the 'anks successfull raised its mar*in in the followin* ear and reachin* as hi*h as18> on the ear %""9! his su**ests the 'ank mana*ement has 'een fruitfull controlledthe e,penses of the 'ank!

19 7 $ a * e



9 2004 2005 2006 2007 2008 2009

Overhead

-argin0.03 0.03 0.03 0.03 0.03 0.02

2004 2005 2006 2007 2008 2009

0.00

0.01

0.02

0.03

0.04

erhead $ar&in

erhead %ar'in

0rom here it can 'esaid that with the passa*e of time this ratio has remained almost same for this 'ank+

which was 3> in %"" and it 'ecame %> in %""9! hus it can 'e said that totalnoninterest e,pense in relation to the total asset has remained almost constant thus it can 'e presumed that noninterest e,pense for this 'ank has not chan*ed a lot with the passa*eof time!

-ar.et $osition !atios

1 2004 2005 2006 2007 2

$rice earnings ratio + $%*

ratios,

18.230 6.291 5.862 17.314 12

15.223 15.817 5.372 13.369 1

200420052006200720082009

0.000

5.000

10.000

15.000

20.000

Price earnin&s ratio 3 P+/ ratios4

Price earnin's ratio

P, ratios

.n %"" the price ofthe share was B2 18!%3 for eer B2 1 it *enerates! .n %""G the ratio was almost sameand was B2 @!%9 per share 'ut in %""@ and %"" the ratio declined rose respectiel 'ecause price per share first increased and then decrease at a hi*her proportioncompare to increase in =$4! But in %""8 the ratio declined 'ecause price per share

%" 7 $ a * e



decrease at a hi*her proportion compare to decrease in =$4 and %""9 the ratio alsodeclined 'ecause the increase in =$4 at a hi*her proportion compare to the increase in price per share!

2 2004 2005 2006 2007 2008 20

-ar.et boo.ratios

2.469 1.512 1.469 4.697 2.177 0.5

3.138 2.906 0.966 2.661 1.233 1.0

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

0.000

1.000

2.000

3.000

4.000

5.000

$aret 'oo ratios

%aret (oo

ratios

.n %"" the inestors are willin* pa B2 %!@ for B2 1 'ook alue of share! .n %""G and %""@ the ratio decrease asmarket share price decreased compare to 'ook alue of the share decreases! .n %"" theratio increase as market share price increased at a hi*her proportion where as the 'ookalue of the share decreased! he ratio was found inconsistent! .n %""9 it was B2"!G@ for B2 1 'ook alue of share!

3 2004 2005 2006 2007 2008

)ividend perShare

30.002 50.003 39.999 47.885 20.000

30.001 16.665 38.821 32.001 35.003

200420052006200720082009

0.000

10.00020.000

30.000

40.000

50.000

60.000

!i0idend per Share

"iidend er Share

.n %"" and %""Gthe shareholder:s *ot B2 3" as diidend a*ainst each share the hold! .n %""G theratio increased to B2 G" a*ainst each share the hold! But in %"" and %""8 the ratiowas B2 8 / %""8 the ratio was B2 %" a*ainst each share the hold! he ratio

%1 7 $ a * e



decreased mainl 'ecause the diidend paid increased compare to the total e;uitshare outstandin*! .n %""9 it was B2 3" as diidend a*ainst each share the hold!

4 2004 2005 2006 2007 2008 2009

)ividend

/ield

2.250 4.386 2.699 1.015 0.627 2.796

4.528 2.975 12.103 5.582 11.007 10.510

2004 2005 2006 2007 2008 2009

0.000

1.000

2.000

3.000

4.000

5.000

!iidend ie(d

"iidend ie)d

he diidend

ield ratio shows the return that the share holder *ets a*ainst each taka of inestment! .t:sa comparison of diidend and market share price! 6e find that UCBL diidendield was not consistent durin* these si, ears of analsis! .n %""G diidend ield ofUCBL was hi*her than rest of the fie ears! erall this 'ank:s diidend ield decreasedfrom ear %"" to ear %""9! .t is er important ratio for the inestor! 4o this decreasediscoura*e share holder to inest and cause the share price down!

46 Analsis

Strength

1! =ffectie manpower

%! =sta'lished Customer Base

3! =,tensie Branch Fetwork

! Business -rowth

G! erseas Fetwork

@! ealth Li;uidit

! 4tron* Capital Base8! Cooperatie 4r! #*t!

9! 4tren*th / 4upport of the Board

1"!$roactie Branches

11!Continued 4ta'ilit

1%!Loal Client Delationship 2eeloped ' Br! #*r!

%% 7 $ a * e



13!4tron* 4#= Client Base

1!2edicated 6orkforce

1G!4tead *rowth

1@!i*h share alue

1!Accepta'ilit of chan*e18!Competitie compensation packa*e

19!=mploee 4atisfaction

#ea.ness

1! Fon<holdin* of A-#s

%! Lack of wn =sta'lishment

3! Lack of rained #anpower

! Lack of 'ack office support for #arketin*

G! Lack of effectie #.4

@! Lack of Few echnolo* implementation

! Lack of diersified products

8! Lack of specialized e,pertise

9! Lack of . knowled*e

1"!Lack of positie pu'licit

11!A'sence of A# Fetwork

1%!Lack of #arketin* / Desearch

13!Lack of 0=H e,pertise

1! .nade;uate Branch 2ecoration

1G!Lack of Back<office support for reasur

1@!Lack of market / financial data'ase

1!Lack of o' rotation

18!Lack of succession plan

19!Lack of performance m*t!

%"!Lack of proper process to improe turn<around time

%1!A'sence of oerseas Branches

%3 7 $ a * e



%%!A*in* #anpower

Opportunities

1! =nter into *eo*raphic market to increase market share!

%! =,pandin* the Bank:s product line to meet a 'roader ran*e of customers

needs!

3! 2eelopin* e,istin* personnel skills to proide faster serice!

! 2eelopin* technolo*ical know<how to proide faster serice!

G! Usin* the .nternet / =<commerce technolo*ies to proide most modern

Bankin* serice!

@! =,pandin* the Bankin* serice in a'road!

! Ac;uisition of rial financial institution with attractie technolo*ical

e,pert!

8! =,tend the Bank:s IBrand .ma*eJ to new *eo*raphic area!

"hreats

1! Unhealth competition in 'ankin* sector

%! Fe*atie tendenc of the 'orrowers re*ardin* repament of loans /

adances

3! =,istin* amount of classified loans / adances

! 4low recoer rate of classified loans / adances

G! Aderse shift in forei*n e,chan*e rates and trade policies of forei*n

*oernment

@! $olitical unrest / insta'ilit in the countr

! 4udden chan*es in *oernment policies related to trade / commerce

8! 4ome e,istin* loosin* 'ranches

% 7 $ a * e



Bac.ground of the stud

his report was done as a part of the re;uirement for successful completion of the

internship pro*ram! =,posure to the 'usiness world and ac;uirin* practical knowled*e

was the primar o'5ectie of this assi*nment! . was attached with United Commercial

Bank ltd! for m internship! he topic of this report is titled I0orei*n =,chan*e

peration and Disk mana*ement ' United Commercial Bank Ltd!J

OB0*C"I1*S

• 0ind out the 0orei*n =,chan*e scenario of Ban*ladesh!

• 0ind out the 0orei*n =,chan*e 'usiness mechanisms (e,port+ import and

remittance)!

• -o throu*h the performance of 0orei*n =,chan*e 'usiness of UCBL+ i!e! income+

e,port import trend etc!

%G 7 $ a * e



• 0ind out what UCBL do for the measurement of 0orei*n =,chan*e risk

• o o'sere and analze the forei*n e,chan*e risk mana*ement from front office

dealin* room to 'ack office!

!*S*(!C2 -*"2O)OLOG/

his stud will 'e mainl 'ased on descriptie issues! 0or the description part K0ace to

face interiews: with the ke personnel of United Commercial Bank will sere the

primar data for the stud! he secondar data for the analsis part will 'e collected from

the annual reports of United Commercial Bank Ltd! aaila'le at the 2haka 4tock

=,chan*e Li'rar! Ban*ladesh Bank Li'rar will also 'e used for collectin* necessar

monthl and annual reiews+ statistical 'ulletin+ economic trends+ 5ournals+ circulars+*uidelines on 0orei*n =,chan*e actiities of 'anks!

he secondar data will also collected from

• Delated literatures and 'ooks

• $u'lications of Ban*ladesh

• .nternet pu'lications!

Data Analysis Procedure:n the descriptie part of the report data was mainl analzed on the 'asis of the

Ban*ladesh Bank pu'lished standard on that re*ard to o'sere the trend of import+ e,port

and remittance+ time series analsis has 'een done! n performance analsis section of

this report+ data were analzed usin* the software 4tatistical $acka*e for 4ocial 4cience

(4$44) ersion 1%!"!

Limitation of the Stud:

Bankin* is+ in fact+ a hu*e operation and it is ;uite impossi'le to cope up all the

actiities durin* internship period! And for that reason+ limitations preail while

conductin* the stud! he 'asic limitations faced in preparin* the report were

%@ 7 $ a * e



0inancial statement onl depicts the fi*uresnum'ers and their 'reak down 'ut

do not clarifies the rationale in most of the time! .nteriewin* the officials on

specific disclosure items sometimes was not fruitful 'ecause of *eneralized

answers!

Fum'er of ear taken as a sample is limited to come to an specific conclusion

out of this stud!

ime constraint led to *et narrower outcomes!

Foreign Exchange

0orei*n =,chan*e means e,chan*e forei*n currenc 'etween two countries! 0orei*n

trade can 'e easil defined as a 'usiness actiit+ which transcends national 'oundaries!

his trade amon* arious countries causes for close linka*e 'etween the parties dealin*

in trade! he 'ank which proides such transactions is referred to as renderin*

international 'ankin* operations! .nternational trade demands a flow of *oods from seller

to 'uer and of pament from 'uer to seller! And this flow of *oods and pament are

done throu*h letter of credit (LC)!Currenc is the most important term in 0orei*n

=,chan*e 'usiness in toda:s modern world econom!

he term I0orei*n =,chan*eJ has three principal meanin*s! 0irstl+ it is term used

referrin* to the currencies if other countries in terms of an sin*le one currenc! o a

Ban*ladeshi+ 2ollar+ $ound sterlin* etc! are forei*n currencies and as such forei*n

% 7 $ a * e



e,chan*e! 4econdl+ the term also commonl refer to some instruments used in

international trade+ such as 'ill of e,chan*e+ 2rafts+ rael Che;ue and other means of

international remittance! hirdl+ the terms 0orei*n =,chan*e is also ;uite often referred

to the 'alance in forei*n currencies held ' a countr!

0orei*n e,chan*e 'usiness comprises three areas e,port+ import and remittance! !=!

=itt defined I0orei*n =,chan*eJ as the means and methods ' which ri*hts to wealth

e,pressed in terms of the currenc of one countr are conerted into ri*hts to wealth in

terms of the currenc of another countr! 0orei*n =,chan*e 2epartment is international

department of the 'ank! .t deals with *lo'all and facilitates international trade throu*h

its arious modes of serices! .t 'rid*es 'etween importers and e,porters! Ban*ladesh

Bank issues license to scheduled 'anks to deal with forei*n e,chan*e! hese 'anks are

known as Authorized 2ealers! .f the 'ranch is authorized dealer in forei*n e,chan*e

market+ it can remit forei*n e,chan*e from local countr to forei*n countr! his

department mainl deals with forei*n currenc! his is wh this department is called

forei*n e,chan*e department!

Operations o Foreign Exchange Depart!ent:

*'ports :3

$re<shipment adance+

$urchase of forei*n 'ills!

Fe*otiatin* of forei*n 'ills!

=,port *uarantees!

Adisin*Confirmin* letters<letter of

credit!

Adance for deferred pament e,ports!

Adance a*ainst 'ills for collection

Import :3

penin* of Letter of Credit(LC )

Adance Bill

Bill for collection

.mport loan / -uarantees

%8 7 $ a * e



!emittances:

.ssue of 22+ #+ etc!

$ament of 22+ #+ etc!

.ssue and enhancement of traeler:s

che;ue!

4ale and enhancement of forei*n

currenc notes!

Fon<resident accounts!

"he most commonl used documents

in foreign *'change:

2ocumentar Letter of credit!

Bill of e,chan*e!

Bill of Ladin*!

Commercial .noice!

Certificate of ori*in of *oods!

.nspection certificate!

$ackin* List!

.nsurance $olic!

$ro<forma .noice.ndent!

#aster receipt!

-4$ Certificate

Loca" Reg#"ations or oreign exchange:

0orei*n e,chan*e transactions are 'ein* controlled ' the followin* rules / re*ulations

0orei*n =,chan*e re*ulation act 19!

Ban*ladesh Bank issues forei*n e,chan*e circular from time to time to control the

e,port+ import / remittance 'usiness!

#inistries of commerce issues e,port / import polic *iin* 'asic formalities for

import / e,port 'usiness!

4ometime CC./= issues pu'lic notice for an kind of chan*e in forei*n e,chan*e

transaction! Ban*ladesh 'ank pu'lished two olumes in 199@! his is compilation of

the instructions to 'e followed ' the authorized dealers in transitions related to

forei*n e,chan*e!

%9 7 $ a * e



Foreign Exchange Mar$et:

0orei*n =,chan*e #arket allows currencies to 'e e,chan*ed to facilitate international

trade and financial transactions! =olution of the market in Ban*ladesh is closel linked

with the e,chan*e rate re*ime of the countr! .t had irtuall no forei*n e,chan*e market

up to 1993 Ban*ladesh Bank+ as a*ent of the *oernment+ was the sole pureor of

forei*n currenc amon* users! .t tried to e;uili'rate the demand for and suppl of forei*n

e,chan*e at an officiall determined e,chan*e rate+ which+ howeer+ ceased to e,ist with

introduction of current account conerti'ilit! .mmediatel after li'eration+ the

Ban*ladesh currenc taka was pe**ed with pound sterlin* 'ut was 'rou*ht at par with the

.ndian rupee! 6ithin a short time+ the alue of taka e,perienced a rapid decline a*ainst

forei*n currencies and in #a 19G+ it was su'stantiall dealued! .n 19@+ Ban*ladesh

adopted a re*ime of mana*ed float+ which continued up to Au*ust 199+ when a

currenc<wei*hted 'asket method of e,chan*e rate was introduced! he e,chan*e rate

mana*ement polic was a*ain replaced in 1983 ' the trade<wei*hted 'asket method and

U4 the dollar was chosen as interention currenc! B this time a secondar e,chan*e

market (4=#) was allowed to *row parallel to the official e,chan*e rate! his *ae riseto a ker' market!

Up to 199"+ multiple e,chan*e rates were allowed under different names of e,port

'enefit schemes such as+ =,port Bonus 4cheme+ H$L+ H$B+ =0A4+ .=C4+ and ome

Demittances 4cheme! his led to a wide dier*ence 'etween the official rate and the

4=# rate! he situation also *raduall *ae rise to a num'er of conflictin* re*ulations+

poor risk mana*ement+ and arious tpes of implicit or e,plicit *oernment *uarantees to

the users of forei*n e,chan*e! his resulted in a num'er of macro<economic im'alances

promptin* the *oernment to ad5ust the official rate in phases and to li;uidate its

difference with the rate at 4=#! he two rates were finall unified in anuar 199%! he

first step towards currenc conerti'ilit was taken on 1 ul 1993 and this marked the

'e*innin* of a relatiel open forei*n e,chan*e market in the countr! 0rom #a 31+

%""3+ the Ban*ladesh aka e,chan*e rate was declared floatin* and the 'and of the

3" 7 $ a * e



central 'ank:s U4 2ollar 'uin* sellin* rate were withdrawn! here are 3% scheduled

'anks operatin* as authorized dealers in the inter<'ank forei*n e,chan*e market are not

permitted to run a position 'eond certain limits! .n the eent of speculation on an

appreciation of the alue+ an authorized dealer ma 'u more forei*n currencies than it

needs+ 'ut at the end of the da it must maintain its limit ' sellin* e,cess currencies

either in the inter<'ank market or to customers! Authorized dealers maintain clearin*

accounts with the Ban*ladesh Bank in dollar+ pound sterlin*+ mark and en to settle their

mutual claims! .f there an e,cess forei*n e,chan*e holdin*s e,ist after these

transactions+ it is o'li*ator for them to sell it to the Ban*ladesh Bank! .n case of shortfall

of the limit+ authorized dealers hae to coer it either throu*h purchase from the market

or from the Ban*ladesh Bank!

he aera*e monthl transactions of forei*n e,chan*e in the inter<'ank market accounted

for M%3!@ million in 1991<9% and crossed the M1 'illion mark in 1998<99! he aera*e

monthl turnoer for the si, months 'etween ul and 2ecem'er %""" was M1!G 'illion!

he phenomenal *rowth of inter<'ank transactions was due mainl to rela,ation of

e,chan*e control re*ulations and e,pansion of the actiities of the Ban*ladesh 0orei*n

=,chan*e 2ealers Association (BA0=2A) formed on 1% Au*ust 1993!

A%!inistration o Foreign Exchange Operation &'

Unite% Co!!ercia" Ban$:

After the rela,ation of economic 'arrier at 9":s+ firms 'ecome interested to do 'usiness

*lo'all and 'anks pla a ke role in this aspect! 0or doin* forei*n e,chan*e 'usiness in

faor of firm+ 'ank follows some administratie framework and this chapter descri'es the

administration of forei*n e,chan*e 'usiness of United Commercial Bank Ltd! and the

role of Ban*ladesh Bank in forei*n e,chan*e 'usiness! United Commercial Bank has 8

Branches of which 19 are authorized ' Ban*ladesh Bank throu*h which 'ank can do

0orei*n rade 'usiness!

Foreign Exchange B#siness o UCBL

31 7 $ a * e



Export Import Remittance

D= Annual report+ %""9 to %"1"

.n the a'le it is o'sered that the forei*n e,chan*e 'usiness of UCBL has 'een

increasin* with the passa*e of time and import is the dominant sector of forei*n e,chan*e

'usiness!

Foreign Correspon%ents o UCBL:

United Commercial Bank Ltd! has a wide ran*e or link whole oer the world for the

purpose of doin* their forei*n =,chan*e Business! he Bank at present+ total num'er of

correspondents is 398!

UCBL has some tremendous A*reement with some world most important countr like

1 U!4!A!

% Canada

3 .ndia

apan

G Brazil

@ Australia

United ?in*dom

8 U!A!=!

3% 7 $ a * e



9 China

1" #alasia

4ome world reco*nized Bank also support UCBL for doin* their dail operational

actiities with some world reputed 'ank<

1 4BC

% Citi 'ank

3 4tanderd Charterd Bank Limited

anit Bank Ltd

G American =,press Bank

@ Fational Bank of $akistan

Bank of .ndia

8 .slami Bank f Bahrain

9 #uslim Commercial Bank Ltd!

he forei*n correspondents of the 'ank pla an important role for the maintainin* the

currenc collection of the 'ank / the also *ie a hu*e contri'ution on the remittance for

our countr also!

&O!*IGN *4C2(NG* B5SIN*SS -*C2(NIS-

0orei*n e,chan*e 'usiness comprises three areas e,port+ import and remittance! .n order

to start a 'usiness with the 'ank inolin* forei*n e,chan*e+ a prospectie client has to

fulfill the followin* re;uirements

$rimar requirement

6hen a compan wants to *o for an e,port or import throu*h a 'ank+ he has to fulfill

some common criteria! Let us first consider the issue of import! 0or importin* *oods

throu*h a 'ank+ the importer has to meet the followin* criteria

• e has to 'e a customer of the 'ank& that means+ he has to hae a C2 Account

with the 'ank!

• .n case of import+ he must hae an .DC (.mport De*istration Certificates)!

33 7 $ a * e



• e has to hae e,perience of importin* the same *oods throu*h the 'ank! .f he

has no such e,perience+ the *oods that he wants to import hae to 'e approed '

the .mport polic!

• he item of import has to hae marketa'ilit!

• e has to fi, a ri*ht price for the *oods to 'e imported!

.f these re;uirements are fulfilled ' the customer+ the 'anker ma proceed to prepare the

proposal for the customer! .f the 'oard approes the proposal+ the authorized 'anker can

open LC in faor of the customer ' takin* $ro<forma .noice or .ndent! .n cases of

e,port+ the customer has to fulfill the followin* re;uirements

• he e,porter has to 'e a customer of the 'ank& that means+ he has to hae a C2

Account with the 'ank!

• he e,porter has to *ie an =,port LC or Contact a*ainst which he can open LC!

• he *oods to 'e e,ported must 'e approed ' the =,port $olic!

.f the customer fulfills these criteria+ the authorized 'anker can *o for 'usiness with him!

.mport 4ection

he .mport 4ection helps 'usiness and other people to import *oods! .n international

enironment+ 'uers and sellers are+ in most of the cases+ unknown to each other! 4o a

seller alwas seeks *uarantee for the pament for his e,ported *oods! .t is the 'ank that

*uarantees the seller the pament for the *oods on 'ehalf of the 'uer! his *uarantee is

called Letter of Credit! hus the contract 'etween the importer and the e,porter is *ien a

le*al shape ' the 'anker ' its KLetter of Credit:!

Legislations for Import:

.mports are forei*n *oods and serices purchased ' consumers+ firms / -oernment

a*encies in Ban*ladesh! o import+ a person should 'e competent to 'e an Kimporter:!

3 7 $ a * e



(pplicant6s approach to the ban.

(pplication for letter of credit limit

N=4

!ejection"a.ing necessar documents from the applicant

Lodgment

Accordin* to .mport and =,port Control Act+ 19G"+ the office of the Chief Controller of

.mports and =,ports (CC. / =) proides the re*istration (.DC) to the importer! .mport of

*oods in Ban*ladesh is re*ulated ' the

#inistr of Commerce in terms of the .mport and =,port Control Act+ 19G"&

.mport $olic rder and the $u'lic Fotice issued ' the ffice of the Chief

Controller of .mports and =,ports (CC./=)

At present it is re*ulated ' the .mport $olic rder (199<%""%)+ which came

into effect on une1+ 1998! he duration of the .mport $olic rder was

e,tended up to une %""3 ' an amendment! his polic directs certain import

procedures and administers the whole actiit!

&acilities provided b import section

penin* of Letter of Credit

0acilitatin* paments to the e,porter on 'ehalf of the importer

$roidin* funded and non<funded credit facilit

.ssuin* 'ank *uarantee in forei*n currenc on 'ehalf of forei*n companies!

.mport #echanism

Letter of Credits can 'e opened with an of the Branch authorized to deal in forei*n

e,chan*e! Bank issuin* LCs has to perform the followin* functions that are to 'e done in

the different sta*es

&igure 37

Import mechanism

If primary requirements

fulfilled

F

3G 7 $ a * e



i8 (pplicant6s approach to the ban.

he applicant of Letter of Credit must 'e a known customer to the 'ank! e has to

approach the 'ank to open a Letter of Credit for import of *oods throu*h an application

in the letterhead pad!

ii8 (pplication for letter of credit limit

Before openin* Letter of Credit+ importer applies for Letter of Credit limit! o hae an

import Letter of Credit limit+ an importer su'mits an application to the import diision of

United Commercial Bank furnishin* the followin* information

• $articulars of account maintained with the 'ank

• Fature of 'usiness

• De;uired amount of limit

• $ament terms and conditions

• -oods to 'e imported

• 4ecurit offered

• Depament schedule

A credit officer scrutinizes this application and accordin*l prepares a credit limit

proposal (CL$) and forwards it to the ead ffice Credit Committee (CC)! he

committee+ if satisfied+ sanctions the limit and returns it to the 'ranch! hus the importer

3@ 7 $ a * e



is entitled to an approed credit limit! nce a part succeeds in openin* an LC throu*h

United Commercial Bank Ltd+ *enerall it re;uires no fresh credit limit on su'se;uent

occasions& howeer+ further approal of the ead ffice is re;uired onl if it proposes to

increase its credit limit!

iii8 "a.ing necessar documents from the applicant

A 'ank takes the followin* documents with the application from the applicant while

openin* a Letter of Credit

• Application for Letter of Credit dul si*ned ' the importer

• Letter of Credit Authorization 0orm (LCA0)

• .mport $ermit 0orm (.#$)

• Ealid .mport De*istration Certificate (.DC)

• .ndent or $ro<forma .noice

• Ealid #em'ership Certificate

• 2ocuments eidencin* pament of fee for current ear for .mport De*istration

Certificate (.DC)

• 2eclaration ' the importer that he has paid income ta, and su'mitted returns to the

.ncome ta, authorit for the last three ears

• .nsurance Coer Fote and 4tamped a, .nsurance $olic

Fote 0or import of capital machiner and initial spares to set up a new industr+ a Letter

of Credit can 'e opened without .mport De*istration Certificate (.DC)! Fo waier form

the Chief Controller of .mports and =,ports is necessar for this purpose!

iv8 Lodgment

After the scrutin+ the followin* steps are taken to process for lod*ment of import

documents receied form the ne*otiatin* 'ank! Lod*ment means retirement of funds!

Usuall pament is made within seen das after the documents hae 'een receied! .f

the pament is deferred+ the ne*otiatin* 'ank ma claim interest for makin* dela!

3 7 $ a * e



oweer+ after receiin* the documents+ the #oti5heel Branch authorit collects the

documents ' contactin* the importer!

Lodgment Constitutes the &ollo9ings:

Conersion of forei*n currenc amount of the 'ill and the char*es of the forei*n

'ank into aka is done separatel ' applin* Bills Collection (B!C!) sellin* rate

rulin* on the date of lod*ment! .f the forward e,chan*e was 'ooked+ the 'ooked rate is

applied! $ament a*ainst 2ocuments ($A2) is made ' de'itin* $A2 account and

creditin* ead ffice account! 0ull particulars of the documents are entered in the

prescri'ed $A2 re*ister allottin* a consecutie serial num'er!

• 2ocuments are endorsed under seal and si*nature!

• I.nter<Brach credit adiceJ (.BCA) is sent to the ead ffice alon* with a prescri'ed

statement to proide them credit for the pament from their oerseas account throu*h

$rime Bank Limited -eneral Account!

• ead ffice (.nternational 2iision) in receipt of the .BCA and the statement will

respond the entr ' de'it to 'ranch account (throu*h United Commercial Bank

Limited -eneral Account) and contra credit to F4D Account of the ne*otiatin*

'ank a'road! o arran*e necessar fund for pament+ a re;uisition is sent to the

.nternational 2epartment!

• As the ! / !2 rates are paid to the .2+ the differences 'etween these two rates

remain as e,chan*e *ain for the Branch!

• As soon as the a'oe formalities are completed the importers are sered with $A2

'ill intimations for retirement of concerned import document! A letter of intimation

($!A!2! intimation) re*ardin* receipt of the documents should 'e sent to the applicant

with a re;uest to take delier of the documents on settlement of all dues a*ainst it and

mentionin* the maturit date of $!A!2!

he .mport mechanism is completed with the lod*ment 'ecause most of the import

operates ' the United Commercial Bank Ltd! is cash letter of credit!

38 7 $ a * e



=,port 4ection

Ban*ladesh e,ports a lar*e ;uantit of *oods and serices to forei*n households!

Creation of wealth in an countr depends on the e,pansion of production in the e,portsector in international trade! #ost of the e,porters who e,port throu*h United

Commercial Bank are readmade *arment e,porters! he open e,port Letters of Credit

here to e,port their *oods+ which the open a*ainst the import Letters of Credit opened

' their forei*n importers!

*'port $olic

=,port policies formulated ' the #inistr of Commerce+ -B proide the oerall

*uideline and incenties for promotion of e,ports in Ban*ladesh! =,port policies also set

out commodit<wise annual tar*et! .t has 'een decided to formulate these policies to

coer a fie<ear period to make them contemporaneous with the fie<ear plans and to

proide the polic re*ime! he e,port<oriented priate sectors+ throu*h their

representatie 'odies and cham'ers+ are consulted in the formulation of e,port policies

and are also represented in the arious e,port promotion 'odies set up ' the

*oernment! oweer+ =,ports forms Ban*ladesh are re*ulated ' the followin* Acts+

-uidelines and authorities

Ban*ladesh Bank ' issuin* *uidelines and circulars in compliance with 0orei*n

=,chan*e De*ulation Act<19 under the authorit *ien to it ' the aforesaid

Act! .t controls phsical and pament aspects of e,ports!

#inistr of Commerce ' issuin* =,port $olic rder under the authorit *ien

to it ' =,port .mport Act+ 19G"& .t outlines the -oernment:s e,port

deelopment strate*ies and las down the packa*e of incenties to promote

e,ports! .t also proides the list of items+ which are either 'anned for e,port or

whose e,port is su'5ect to fulfillment of certain conditions!

39 7 $ a * e



Obtaining e'port registration certificate +*!C,

Securing the order

(dvising of L%C to the e'porter

!ealiation of advising%conformation charges

1erification about the genuineness of the letter of credit

!eceiving the letter of credit

Signing of the contract

Obtaining *4$

(pplication for Opening Bac. to Bac. L%C

Shipment of goods

$rocuring the materials

*'amination of document

$resentation of e'port documents for negotiation

B"B L%C Issue

Bill for acceptance

$ament made b the importer +Client of ban. )

=,porter can import raw materials to complete the e,port order ' L

B"BL%C

-*CS-

o Controller of =,port and .mport

o =,port $romotion Bureau

o Fational Board of Deenue (De*ardin* duties and customs issues)

o #inistr of 0inance ' proidin* 0inancial Assistance (like cash

incenties+ fi,ation of lower interest rate of e,port credit etc!)

=,port #echanism

he mechanism of letter of credit under e,port has 'een shown in 0i*ure in the ne,t

pa*e! he description of the mechanism is stated after the fi*ure!

*'port -echanism

&igure 3;

" 7 $ a * e



?

i8 Obtaining e'port registration certificate +*!C,

Fo e,porter is allowed to e,port an commodit from Ban*ladesh unless he is re*istered

with the Chief Controller of .mports and =,ports (CC. / =) and holds a alid =,port

De*istration Certificate (=DC)! After applin* to the CC./= in the prescri'ed from alon*

with the necessar papers+ concerned offices of the Chief Controller of .mports and

=,ports issues =DC! nce re*istered+ e,porters are to *et the =DC renewed eer ear!

0or re*istration the followin* documents are re;uired

1 7 $ a * e



Fationalit and Assets Certificate&

#emorandum and Article of Association and Certificate of .ncorporation in case

of Limited Compan&

Bank Certificate&

.ncome a, Certificate&

rade License etc!

ii8 Securing the order

After *ettin* =DC+ the e,porter ma proceed to secure the e,port order! e can do this '

contractin* the 'uers directl throu*h correspondence! .n this purpose+ e,porters can *et

help form Liaison fficer of forei*n companies+ 'uer:s local a*ent+ 'uin* house+ D$B+

Ban*ladesh #ission A'road+ Cham'er of Commerce and other rade Associations like

B-#=A+ Cham'er of Commerce of the 0orei*n Courtiers+ rade fair+ searchin*

internetwe'sites! After communicatin* with 'uer+ e,porter has to *et contracted for

e,porta'le item(s) form Ban*ladesh dealin* commodit+ ;uantit+ price+ shipment+

insurance and marks+ inspections / ar'itration!

iii8 Obtaining *4$

After hain* the re*istration+ the e,porter applies to the Bank with the trade license+ =DC

and the Certificate from the concerned -oernment r*anization to *et =H$! .f the 'ank

is satisfied+ an =H$ is issued to the e,porter!

iv8 Signing of the contract

After communicatin* with 'uer+ the e,porter has to *et contract for e,portin* e,porta'leitems from Ban*ladesh detailin* commodit+ ;uantit+ price+ shipment+ insurance and

mark+ inspection+ ar'itration etc!

v8 !eceiving the letter of credit

% 7 $ a * e



After *ettin* contract for sale+ e,porter should ask the 'uer for Letter of Credit clearl

statin* terms and conditions of e,port and pament! he e,port is normall+ e,ecuted

a*ainst letter of credit opened ' 'uers! 4ometimes+ e,ports are made on CA2+ 2$+ and

2A on Consi*nment 4ale 'asis without coer of letter of credit! n receipt of Letter of

Credit+ it is checked thorou*hl ' adisin* 'ank!

vi8 1erification about the genuineness of the letter of credit

.n case of receipt of LC other than form the issuin* 'ank+ the adisin* 'ank must

confirm the *enuineness of the LC !.n all the cases+ the 'ank must ascertain the

authenticit of the Letter of Credit receied 'efore actin* upon that!

vii8 (dvising of L%C to the e'porter

ain* ascertained the *enuineness of the Letter of Credit+ the Adisin* 'ank takes the

followin* steps

• he concerned 'ranch of the 'ank communicates with the 'eneficiar and adices

him a'out the Letter of Credit receied!

• he Branch enters full particulars of the Letter of Credit in the Letter Credit

Adisin* De*ister ($erformance De*ister) allottin* separate serial num'er for

each Letter of Credit

• $articulars of all amendments (if an) are also to 'e recorded in the same De*ister

'efore adisin* the same to the 'eneficiar!

• .f the LC contains an re;uest ' the openin* 'ank+ it has to 'e complied with

under intimation to the 'eneficiar& the approal of ead ffice re;uired for this!

• An amendment to a Letter of Credit receied form .ssuin* Bank should 'e

adised to the 'eneficiar promptl! nl re;uest of the .ssuin* 'ank for an

amendment should 'e accepted!

• A suita'le clause should 'e incorporated at the 'ottom of the LC statin* that the

LC is su'5ect to the proision of UC$2C< .CC $u'lication Fo! G"""!

3 7 $ a * e



viii8 !ealiation of advising%conformation charges

0or adisin* Letter of Credit to the 'eneficiar+ the 'ranch records Letter of Credit

adisin* commission at the prescri'ed rate from the 'eneficiar! .f the 'eneficiar is the

'ank:s client the char*e is de'ited to his count under adice to him! .f the 'eneficiar is

not the 'ank:s client& the Letter of Credit is deliered to him a*ainst cash pament! Letter

of Credit conformin* char*es should 'e recoered either form the 'eneficiar or the

openin* 'ank dependin* on the terms of the Letter of Credit

i'8 $rocuring the materials

Before the e,port forms are lod*ed ' the e,porters with the customspostal authorities+

the should *et all the copies endorsed ' United Commercial Bank! Before shipment+

e,porter su'mits e,port form (=H$) with commercial inoice! hen Bank officer checks

it properl+ if satisfied+ certifies the e,port form! 6ithout it e,porter cannot make

shipment! he customer must declare all e,ports *oods on the =H$ issued ' the

authorized dealers!

'8 Shipment of goods

After certification of =H$ forms issued ' the A2+ the ne,t steps for the e,porter to make

necessar arran*ements for shipment of *oods!

'i8 $resentation of e'port documents for negotiation

After shipment+ e,porter su'mits the followin* documents to UCBL for Fe*otiation!

• Beneficiar:s declaration a'out the shipment of *oods as per Letter of

• Credit Contract erms

• Bill of =,chan*e or 2raft

•

Bill of Ladin*• Certificate of ori*in

• Consular .noice

• 0rei*ht Certificates in case of 0B contract

• -!4!$! certificate (if re;uired)

7 $ a * e



Bac.3to3bac. L%C mechanism

i8 (pplication for Opening Bac. to Bac. L%CAt first the e,porter applies for openin* BB LC a*ainst the =,port LC! e has to write

an application to the Branch #ana*er statin* the amount of the LC alon* with a LC

form and $ro<forma .noice!

ii8 B"B L%C Issue

he authorized officer issues the LC if the document is ? and sends the LC to the

'ank of the 'eneficiar!

iii8 Bill sent b the beneficiar6s ban. for acceptance

6hen the e,porter *ets an LC he sends his *oods to the importer and the 'ill for the

e,port sends to the importer 'ank! .f there is no discrepanc in the document then the

openin* 'ank *ie acceptance and fi, the due date of pament accordin* to the tenor!

iv8 $ament made b the Importer

6hen the 'ill is due+ the 'ank pas it with the mone that the importer receies from the

e,port! he proceeds are *ien to the e,porter (importer for BB LC)! his is his profit!

he Back<to<Back LC #echanism is completed here!

Demittance section

ur econom depends hi*hl on forei*n remittance! he people who are workin* a'road

send currenc throu*h the help of 'ank! United Commercial Bank Ltd! follows three

was to collect forei*n remittance! he mechanism is presented in 0i*ure<

@ 7 $ a * e



-echanism of remittance collection

United Commercial Bank Ltd! follows three was for collectin* remittance! hese are

e,chan*e houses with which 'ank has a*reement+ direct telephonic transfer and the

e,chan*e house with which 'ank has no a*reement!

i8 *'change 2ouse 9ith 9hich 5CBL has agreement

.n this wa the remittance can come for anone! e can 'e an AC holder can 'e not! .f

the receier is an AC holder the remittance directl deposited to his account! .f he is not

an AC holder then the procedure is different! he sender:s 'ank will *ie a pin code that

the sender has to inform the receier! he receier than tell the pin code+ his name and

other information to the authorized officer! he officer will check and if eerthin* is

alri*ht+ the officer will *ie the cash to the receier! he followin* are the name of some

of the =,chan*e ouses that UCBL has a*reement with

• LAD. =,chan*e Co!

• C.N .FL =,chan*e Co!

• #ustafa<4ultan =,chan*e Co!

• 6estern Union

ii8 "elephonic "ransfer

he 'ank proides this serice onl to its AC holders! 6hen the remittances come it is

directl deposited to receier:s account!

iii8 *'change house having no agreement 9ith 5CBL

his is another wa that the 'ank follows! his serice is also limited to its AC holders!

.f a remittance is sent throu*h an e,chan*e house hain* no a*reement with UCBL+ it

comes to the 'ank that has an a*reement with the e,chan*e house! After *ettin* the

remittance+ the 'ank issues a pa order in faor of UCBL! hen UCBL collects the cash

throu*h clearin* house and deposits it to receier:s account!

8 7 $ a * e



his is the administration of forei*n e,chan*e 'usiness! .n this process the forei*n

e,chan*e department accomplishes its responsi'ilities!

4u'mission of Deturn to Ban*ladesh Bank

he Authorized 2ealer (A2) must maintain ade;uate and proper records of all 0orei*n

=,chan*e transactions includin* transaction on non<resident taka AC! in their 'ooks and

furnish such particulars in the prescri'ed form of Deturn to Ban*ladesh Bank! he

purpose of su'mission of return to the Ban*ladesh Bank is to keep sstematic and proper

records of all dealin* in forei*n e,chan*e transaction!

)ate of submission of statements to Bangladesh Ban.:

7, Operations on private non =

resident "a.a accounts of non3

ban. clients8

>uarterl 9ith 7;th da of follo9ing

month8

;, -onthl statement of outstanding

pament commitments abroad

B 7?th of the follo9ing month

<, Commodit 9ise statement of

import L%C s outstanding as on

each month end8

7@th of the follo9ing month

A, -onthl statement of outstanding

*'ports bills as of each month

end

7?th of the follo9ing month8

Currenc wise dail position statements should 'e kept read for immediate su'mission

to Ban*ladesh Bank as and when called for!

0orei*n =,chan*e 4cenario of Ban*ladesh

9 7 $ a * e



he need for forei*n e,chan*e is hi*h in Ban*ladesh8 Cause we had to import a lot more

than we e,port! ther than e,port+ the remittance ' non<resident Ban*ladeshi:s and

forei*n aid is another source of forei*n currenc! .n preious ears we hae seen fre;uent

'outs of dealuation of our currenc i!e! taka! his is mainl done to keep our e,porters

in 'usiness+ althou*h there are other reasons also!

a'le<1 Annual Deiew of .mport $aments

(Taka in Crore)

-ode of financing

;@@3;@7@ ;@@D3;@@Chan*es

(1)<(3)

(mount$ercentage

of total(mount

$ercentage

of total

1 2 3 4 5

Cash 147762.8 90.0 139995.3 90.4 7767.5

(+5.5)

LoansCredits 320.3 0.2 574.0 0.4 -253.7

-rants 56.1 0.0 4.0 0.0 52.1

.2B loan (short<term) 5764.9 3.5 4782.2 3.1 982.7

ther unclassified imports 564.4 0.3 509.7 0.3 54.7

(8 Sub3total 154468.5 94.0 145865.2 94.2 8603.3

B8 Imports of *$E 9774.9 6.0 8956.0 5.8 818.9

"otal Import: +(FB, 164243.4 100.0 154821.2 100.0 9422.2

(+6.1)

Fote 0i*ures in parentheses indicate percenta*e of chan*e!Source 4tatistics 2epartment+ Ban*ladesh Bank!

2 0 0 9

2 0 1

0

2 0 0 8

2 0 0

9

80000

100000

120000

140000

160000

180000

200000

%ota( I"port %aa in Crore

&ota) I#ort

&aa in Crore

0i*ure<@ .mport of Ban*ladesh in %""8<%"1"

G" 7 $ a * e



a'le<% Annual Deiew of =,port Deceipts

-ode of financing

;@@3;@7@ ;@@D3;@@

(mount (mount

1 %

Cash 8%@9!1 8%3!8

=,ports of =$P 189!1 13"!3

"otal 7@;7AD8; AD87

(Chan*es in >)

Source 4tatistics 2epartment+ Ban*ladesh Bank!

20092010 20082009

80000

85000

90000

95000

100000

105000

110000

%ota( /-port 3%a6a in Crores4

&ota) ort &aa

in Crores

0i*ure< =,port of Ban*ladesh in %""8<%"1"

G1 7 $ a * e



Foreign Exchange B#siness o UCBL:

he performance of forei*n e,chan*e 'usiness of UCBL can 'e isualized from the

followin* data in a'le! ere+ fie ears data of forei*n e,chan*e 'usiness are presented!

hese are off<'alance sheet items and showed as contin*ent lia'ilit!

"able3<: &oreign e'change business

+In millions ta.a,

/ear *'port L%C Import L%C !emittance "otal Business

;@@? %8+88% "+3"3 1+%G% "+3

;@@H 1+8"1 G%+@39 3+"@3 9+G"3

;@@ %+%3" @"+3%9 %+1" 89+@99

;@@D 3@+G"" @"+""9 3+@88 1""+19

;@@ 38+G19 G8+8G 1G+"G" 11%+%@

D=0 Based on Annual Deport of %""G<"9

I!port (ection Ana"'sis:

.mport is the most dominatin* sector of UCBL forei*n e,chan*e! .mport is another

influential tool in forei*n e,chan*e 'usiness! Eariation in import 'usiness ma cause a

lar*e chan*e in the total forei*n e,chan*e 'usiness as well as the 'ank:s 'usiness as a

whole!

G% 7 $ a * e



Import +;@@?3;@@ figure in millions,

2005 2006 2007 2008 2009

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

40,303

52,63960,329 60,009 58,857

1

2

3 4 5

1

2

3 4 5

Ti!e series Ana"'sis o I!port Tra%e:

"he model of "ime series analsis is

Calculation for import trend

/ear +n, Import +/,+mill, "ime +t, /t t;

;@@? "+3"3 <% <8"+@"@

;@@H G%+@39 <1 <G%+@39 1

;@@ @"+3%9 " " "

;@@D @"+""9 1 @"+""9 1

;@@ G8+8G % 11+1

n Q ? J/ K ;;7< Jt K @ J/t K AAAD Jt; K 7@

4o the e;uation for import 'usiness is

G3 7 $ a * e

2erea K Constant

bK Slope

/K )ependent variable

t K "ime

/ K a F bt

b Q J/t % Jt;

a K J/% n



) * +,-,./0,1 2 ,-,,/03 t

ere+ N Q .mport 'usiness of UCBL

his e;uation indicates that the import 'usiness of this 'ank will 'e increased '

k!+ !8 million per ear and the trend is presented in the 0i*ure<

Import trend

2005 2006 2007 2008 2009

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

/ear

Export (ection Ana"'sis:

G 7 $ a * e



=,port is an influential tool for forei*n e,chan*e 'usiness! An decrease in e,port cancause a hu*e decrease in forei*n e,chan*e income as well as profit! he trend of e,port 'usiness for last fie ears is presented here

Export 4.11+5.116- 7g#re in !i""ions8

2005 2006 2007 2008 2009

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

28,882

41,801

27,230

36,500 38,519

1

2

3

4 5

1

2

3

4 5

Ti!e series Ana"'sis o Export Tra%e:

/ear +n, *'port +/,+mill, "ime +t, /t t;

;@@? %8+88% <% <G@

;@@H 1+8"1 <1 <18"1 1

;@@ %+%3" " " "

;@@D 3@+G"" 1 3@G"" 1

;@@ 38+G19 % "38

n Q ? J/ K 7;<; Jt K @ J/t K 7<< Jt; K 7@

B usin* the model of time series method we can find the e,port trend of UCBL! 4o the

e;uation for =,port Business is

ere+ N Q =,port 'usiness of UCBL!his e;uation indicates the e,port 'usiness of UCBL will 'e increased ' k!1+ 39!3"million per ear and the trend is presented in 0i*ure 'elowR

Export Tren% o UCBL

GG 7 $ a * e

) * 9,-+30, 2



UCBL:s e,port 'usiness is dominated ' *arments sector! As the *arments industr is

en5oin* a positie *rowth+ this has also a conse;uence in the e,port 'usiness of UCBL!

Re!ittance Tren% Ana"'sis:

Like e,port and import+ remittance has also a stron* influence on forei*n e,chan*e

'usiness as well as 'ank:s total 'usiness! ere is the time series analsis of remittance!

!emittance +;@@?3;@@ figure in millions,

2005 2006 2007 2008 2009

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

1,2523,063 2,140

3,688

15,050

1

23

4

5

1

23

4

5

ere+ this is a clear o'seration that there is a er fast moement in the remittance

collection of the UCBL in especiall in 0N%""9!

Ti!e series Ana"'sis o Re!ittance Tra%e:

G@ 7 $ a * e



/ear +n, !emittance+/, "ime +t, /t t;

;@@? 1+%G% <% <%+G"

;@@H 3+"@3 <1 <3+"@3 1

;@@ %+1" " " "

;@@D 3+@88 1 3+@88 1

;@@ 1G+"G" % 3"+1""

n Q ? J/ K ;?7< Jt K @ J/t K ;D;;7 Jt; K 7@

4o the e;uation for remittance 'usiness is

ere+ N Q Demittance 'usiness of UCBL

his e;uation indicates the remittance 'usiness of the 'ank will 'e increased ' k!%+ 8%%

million per ear and the trend is shown in the 0i*ure<

2005 2006 2007 2008 2009

0

2,000

4,000

6,0008,000

10,000

12,000

14,000

16,000

!emittance "rend

/ear

!emittance

G 7 $ a * e

) * +-19301 2



he reason 'ehind the increasin* trend of remittance is the satisfactor performance of

the 'ank is that UCBL has a*reement with man mone e,chan*e situated in different

countries! 4o+ it is conenient for the people to send currenc in time! 0or this the 'ank is

en5oin* a *rowth in remittance 'usiness!

Foreign Exchange Inco!e o UCBL:

0orei*n e,chan*e income is a *reat source of reenue for the 'ank! his reenue comes

in two forms commission and e,chan*e *ain! ere+ fie ears data of forei*n e,chan*e

income is presented in a'le!

"able A: &oreign e'change income

k! in millions

Commission

/ear L%C *'por

t Bill

Bill

$urchase

d

(ccepte

d Bill

OBC

IBC

$O))

"" "C

*'chang

e

Gain

"otal

&4

Incom

e

;@@? 1"9!3

9

%!"% "!83 !@@ 1!3 9!@G 1@!1% 3"!"1

;@@H 13%!%

!9 "!9@ 9!3G %!"9 9!3G %%!9% 31!3

;@@ 1G!G

1

@!1 1!%8 1"!1" %!3 8!8 31@!"% G%"!%"

;@@D %"1!@

9

!3 1!8% 19!%" 3!%@ 1"!@1 "!8 @8!8G

;@@ %@3!G

"

1"!1 %!@ 1!"3 3!@8 11!3G G@3! 8%!11

4ource Bank data'ase

G8 7 $ a * e



Operating income &' income

"1"""

%"""

3"""

"""

%""G %""@ %"" %""8 %""9

/ear

( m o u n t

0H .ncome

peratin*

.ncome

he forei*n e,chan*e income+ operatin* income and profit after ta, for fie ears is

presented in a'le! he forei*n e,chan*e income has a contri'ution to operatin* income

as well as to 'ank:s profit!

&oreign e'change income operating income profit

+k! .n million)

/ear "otal &4

Income

Operating

Income

$rofit !atio of &4

Income to

$rofit

;@@? 3"!"1 119@!%" 18 %G!1>

;@@H 31!3 1G9%!%1 3G %!1">

;@@ G%"!%" 19"!3 @1% %@!">

;@@D @8!8G %"@!3 G@8 %@!9@>

;@@ 8%!11 3%3G!% 1"G% %@!9@>&igure: Operating Income &oreign e'change income

.n the a'oe a'le+ it is shown that alon* with the increasin* trend in forei*n e,chan*e

income the operatin* income is also increasin*! 4o+ forei*n e,chan*e income has a

positie effect on operatin* income as well as profit!

a'les a'oe focus on the important information of forei*n e,chan*e 'usiness of United

Commercial Bank Ltd! Fow+ these data will 'e analzed to measure the performance of

the 'ank! 0or performance analsis different tools of statistics and ratio hae 'een used

here!

Ti!e series Ana"'sis or the Inco!e o UCBL:

@" 7 $ a * e



he income from the forei*n e,chan*e 'usiness includes two tpe of income! ne is

commission and the other is e,chan*e *ain! ere is the ime series analsis of forei*n

e,chan*e income!

Calculation for foreign e'change income trend

/ear +n, &4 Income +/,+mill, "ime +t, /t t;

;@@? 3"!"1 <% <@"8!"%

;@@H 31!3 <1 <31!3 1

;@@ G%"!%" " " "

;@@D @8!8G 1 @8!8G 1;@@ 8%!11 % 1+!%%

n Q ? J/ K ; Jt K @ J/t K 7<?<8H; Jt; K 7@

4o+ the e;uation for forei*n e,chan*e income is

ere+ N Q 0orei*n e,chan*e income of UCBL

his e;uation indicates the forei*n e,chan*e income of the 'ank increased ' k!13G!3@%

million per ear! As the forei*n e,chan*e 'usiness is increasin* ear ' ear+ forei*n

e,chan*e income is also en5oin* a positie trend that is focused in 0i*ure

&oreign e'change income trend

@1 7 $ a * e

) * +++09. 2



2005 2006 2007 2008 2009

0

100

200

300

400

500600

700

800

900

1000

&4 Income "rend

/ear

&4 Income

0rom the ime series analsis it is found that UCBL is en5oin* a positie *rowth inforei*n e,chan*e 'usiness! 2efinitel this is a positie si*n for the 'ank and this *rowth

will help the 'ank in achiein* its tar*et!

0orei*n =,chan*e Disk #ana*ement B United Commercial Bank

0orei*n e,chan*e risk is defined as the potential chan*e in earnin*s arisin* due to

unfaora'le chan*e in e,chan*e rates! =,chan*e rate fluctuation ma reduce the

profita'ilit of United Commercial Bank Limited 'ecause it funds forei*n trade

commitments from arious sources of forei*n e,chan*e like e,port proceeds and

incomin* remittances!

United Commercial Bank started its operation of 0orei*n =,chan*e at the er 'e*innin*

of its esta'lishment! hat time their transaction olume was low 'ut *raduall the

esta'lished their stron* position in the field of 0orei*n =,chan*e and now it is considered

as a er important source of UCBLs peratin* .ncome! .n eer aspect UCBL follow

the *uidelines *ien ' Ban*ladesh Bank and BA4=L<. and also preparin* for BA4=L<

..! UCBL has deeloped its own polic manual for administerin* the actiities of 2ealin*

Doom! 4eparate reports are prepared ' front office dealin* room and 'ack office dealin*

room as per the *uideline of Ban*ladesh Bank and se*re*ated later! hese two

@% 7 $ a * e



departments prepare their reports independentl to ensure 'etter control of risk e,posure!

ead of the department continuousl reiew this manual to make it more effectie!

Desponsi'ilities of all the mem'ers of the treasur department+ front as well as 'ack

office is clearl defined!

0or the measurement of forei*n e,chan*e risk and mana*e it effectiel UCBL 2oes the

followin* analsis

• -aturit $rofile n this re*ard an analsis of future forei*n currenc as well as

local currenc 2emand and 4uppl is made! An e,ample is shown in the

Anne,ure!

• G($ analsis 0or the sake of -A$ analsis .nflow and utflow from 0orei*n

=,chan*e is reiewed on a monthl 'asis! An e,ample is attached in the

Anne,ure!

• Net $osition (nalsis =,chan*e rate risk arises from e,chan*e rate moements+

which ma affect the earnin* of the 'ank from its forei*n e,chan*e open position

taken from time to time! his risk is mainl mana*ed ' settin*

o 2etermined limits on open forei*n e,chan*e position

o #onitorin* of open position a*ainst these limits /

o 4ettin* and monitorin* of stop loss mechanism!

o UCBL:s forei*n e,chan*e risk remains at minimum leel as all of its

forei*n trade / remittance transactions are carried out on 'ehalf of the

customers!

o All F4D accounts are reconciled on monthl 'asis and outstandin*

entries are escalated to concerned departments and reported to hi*her

mana*ement for immediate settlement!

his analsis is done on a dail as well as monthl 'asis! .t is considered as the most

important part for Disk analsis!

@3 7 $ a * e



2ue to the rela,ation of IDed OuoteJ and allowin* floatin* rate all the 'anks risk

e,posure hae decreased su'stantiall as Ban*ladesh Bank stron*l monitors whether its

*uidelines are followed or not!

he open position limit of different 'ank is decided ' the Ban*ladesh Bank accordin* to

the 'anks total capital! UCBL has a limit of G million U42+ positie or ne*atie! .f the

'ank is 'eond that limit Ban*ladesh Bank will impose restrictions on that specific 'ank!

UCBL did not conduct an forward forei*n e,chan*e dealin* durin* the ear! .ncase of

4pot dealin* the alwas keep in mind their open position and there is no specified limit

e,ercised for that!

UCBL does not re*ularl do an EAD analsis on a paper 'asis or as a report+ 'ut the

reasur department authorit alwas keeps it in mind and takes decision accordin*l!

n the Annual Deport the 'ank shows a fund named I=,chan*e =;ualization 0undJ+

which was prepared in accordance with the *uideline of Ban*ladesh Bank! his 0und was

re;uired for dealin* in 0H prior to %""3! After the imposition of floatin* rate Banks does

not need to carr an 0und the 'alance of the fund created on %""3 is 'rou*ht forward

and if there is an forei*n e,chan*e loss the 'ank can ad5ust that loss with this fund!

UCBL takes U42 and A?A as the 'ase currenc in determinin* the Disk e,posure!

6hen asked to the officer with which currenc the face more risk+ the answer was N=F!

4o the are more reluctant to deal with this currenc! n the other hand U42 has a stron*

position as for the last couple of ears it has 'een within a accepta'le limit!

0or the forei*n e,chan*e risk mana*ement the Bank follows the followin* points

cautiousl

• All the transactions are carried out on 'ehalf of the customers a*ainst LC

commitments and other remittance re;uirements! Fo speculatie dealin* on

BankSs account was conducted durin* the ear!

• As per Ban*ladesh BankSs *uidelines+ the reasur 2epartment was operationall

and phsicall diided into front office and 'ack office to miti*ate the risk!

reasur front office conducts deal for commercial purpose and 'ack office of

@ 7 $ a * e



treasur keeps record and pass entries in 'ooks of account! he main risks in

treasur and forei*n e,chan*e 'usiness are e,chan*e rates risk+ fund mana*ement

and li;uidit risk!

• reasur department is ested with the responsi'ilit to measure and minimize

the risk associated with 'ank:s assets and lia'ilities+ which includes forei*n

e,chan*e risk! reasur continuousl monitors price moements of forei*n

e,chan*e and uses arious hed*in* techni;ues to mana*e its open position in such

a wa that minimizes risk and ma,imizes return!

• As per the Ban*ladesh Bank+ I2ealin* roomJ are placed in the treasur

department !4eparate telephone and fa, lines were installed at the dealin* room to

meet Ban*ladesh BankSs *uidelines!

• he 'ank has formed a mana*ement committee (#AFC#) to reiew the proper

implementation and re*ular monitorin* of the core areas!

• 0orei*n currenc transactions are conerted into e;uialent aka currenc at the

rulin* e,chan*e rates on the respectie dates of such transactions!

• Interest !is. and Liquidit !is. are also properl mana*ed! Bank inests its

idle currenc and keeps it in other 'ank account when the .nterest rate is *reater

than its cost of capital! .n mana*in* Li;uidit Disk the 'ank has its own Fostro

account limit!

• 2ifferences arisin* throu*h 'uin* and sellin* transactions of forei*n currencies

on different dates of the ear hae 'een ad5usted ' de'itin* creditin* e,chan*e

*ain or loss account!

a'le<1 UCBL 0orei*n =,chan*e *ain

;@@ ;@@H ;@@? ;@@A

*'change

*arning +general,

<<D7AA

;;<<A7<HD ;<;?<AH;A ;@D7@;<

*'change

*arning +dealing

room,

3 3 3 <H77<

Less: ;<;?<AH;A ;@7;H<?@

@G 7 $ a * e



arise from the open positions will not su'stantiall diminish total earnin*s and that the

capital cushion of the institution will not 'e undermined! Anne,ure<B proides a

numerical illustration of a financial institutionSs e,posure to forei*n currenc risk arisin*

from its positions in a ariet of currencies the .ndian rupee+ the U4 dollar+ the apanese

en+ the =uro+ the Canadian dollar+ the Australian dollar+ the 4wiss franc and the British

pound! .f reportin* were done ' the financial institution eer da+ the net short term

position for the da (shown in column 3) would coer forei*n currenc assets and

lia'ilities aaila'le in cash or maturin* durin* the da! he net lon* term position (shown

in column ) would reflect forei*n currenc assets and lia'ilities that mature in time

periods 'eond one da! he illustration has translated all currencies into aka! he e,act

same analsis would appl if all currencies were conerted to U4 dollars (at the close<of<

da e,chan*e rate) or an other conerti'le currenc! .n the e,ample+ the sum of the net

short term positions in the different currencies results in a ne*atie net lia'ilit position

of k! 11%+@@@+1@+ or 3G> of total capital (shown in column )! his 4D<=D#

e,posure e,ceeds the 1%!G> limit and could create a loss for the institution if the aka

were to dealue (i!e!+ more aka needed per unit of forei*n currenc)! 4uch a short term

e,posure would 'e dan*erous for the financial institution as aderse e,chan*e rate

moement(s) could occur immediatel and result in su'stantial losses! he net LF-

=D# positions sum to a positie net lon* term position (k! 13+GG3+89)! he net

LF- =D# position offsets the ne*atie net 4D =D# position! he E=DALL

net positions for each currenc are estimated in column 8 and sum to k! @"+88+@3!

heir a'solute alues relatie to total capital appear in column 9! he E=DALL

percenta*e comes to 18!%>+ a relatie amount a'oe the 1%!G> limit! hus+ estimations

that take account of all currencies+ 'oth er short<term and lon*er<term+ indicate that the

institution is in imminent dan*er of loss in the short run+ as well as the lon*er run! he

'ankin* compan should note that an e,treme e,posure occurs in the short term as there

is an e,cessiel lar*e (ne*atie) net open position in U4 dollars (Anne,ure C)!

5CBLs M 1(! analsis:

@ 7 $ a * e



Correlation is calculated for the EAD analsis! Correlations ran*e from T1 to <1! A T1

correlation indicates that two currencies moe identicall to each other a*ainst the U4

dollar! A <1 correlation indicates that two currencies moe in diametricall opposite

directions to each other a*ainst the U4 dollar! A zero correlation means there is no

relationship 'etween the was the currencies moe! 0or e,ample+ studies reeal that there

is positie correlation 'etween =uro and 4wiss 0ranc+ which indicates that a lon* =uro

position is hed*ed ' the short C0 position! he -ross EAD calculated on each position

can therefore 'e reduced proportionatel! ust as the loss is limited+ so is the profit

potential in =UDC0 position is limited!

he followin* ta'le shows how positie and ne*atie correlations 'etween currencies

affect Fet EAD calculation

$osition A

(An currenc)

$osition B

(An currenc) Correlation

Correlation term

si*n

(=ffect on Fet EAD)

4hort (T) 4hort (T) Fe*atie (<) Fe*atie (<)

Lon* (<) Lon* (<) Fe*atie (<) Fe*atie (<)

4hort (T) Lon* (<) $ositie (T) $ositie (T)Lon* (<) 4hort (T) $ositie (T) $ositie (T)

4hort (T) 4hort (T) $ositie (T) $ositie (T)

he correlation term si*n indicates whether the portfolio effect will 'e added or

su'tracted in the net ariation calculations! =en random moements 'etween currenc

rates ma to some e,tent reduce risk!

@8 7 $ a * e



A 4ummar of UCBLs I2ealin* DoomJ manual to reduce forei*n e,chan*e risk

e,posure:

2ealin* Doom operation in United Commercial Bank Ltd! and its support actiities

follow the market principles and conentions for smooth operation! Apart from that

-eneral *uidelines for 2ealin* Doom operations actiities are stated hereinafter!

All financial actiities inole a certain de*ree of risk& the scope of this *uideline is to

put proper attention to eer details of the 0orei*n =,chan*e transaction eolin* around

2ealin* Doom! All transaction should in line with the I-uidelines for 0orei*n =,chan*e

ransactions<199@J ' Ban*ladesh Bank and releant BD$2+ 0=+ 2B2 and other

re*ulator authorit:s Circular(s) instructions! 2ealers must follow the code of conduct

prescri'ed ' BA0=2A and other re*ulator authorit!

he purpose of this *uideline is to minimize operational+ market+ and settlement risk

arisin* out of 0orei*n =,chan*e transaction!

$olic 4tatement for 2ealin* Doom peration (=,)

• Currenc pair for position takin*

Currenc positions ma onl 'e held in U42B2 currenc pair to facilitate handlin*

of normal commercial and financial transactions+ which includes minimum workin*

'alances in Fostro Accounts in forei*n currencies!

• Limit and su'<limit in U42

All forei*n =,chan*e e,posure limits and also currenc<wise su'<limits are to 'e

e,pressed in terms of U4M!

@9 7 $ a * e



• Destriction on forward positionin*

nl spot positions ma 'e held+ no mis<matched andor un<matched forward

positions are allowed to 'e held! .t follows+ therefore+ that while forward deals ma

'e undertaken for customers such deals+ are immediatel coered ' matchin* deals

in the market+ with no *aps in amounts and periods!

• Destriction on proprietar position takin*

2ealin* room is not authorized to enter into forei*n e,chan*e open position on their

own account!

• 4eparation of dealin* room and 'ack office

0orei*n =,chan*e operation should 'e so or*anized that there will 'e clear and

distinct separation of the 2ealin* Doom and Back office!

• Destriction on un<matched forward e,chan*e

Un<matched mis<matched forward e,chan*e deals which would cause open position

are not permitted! he onl forward e,chan*e deals permitted are those for

customers!

• 2ail realuation of 0CN asset / lia'ilit

Dealuation of 0orei*n Currenc Assets and lia'ilities will 'e on dail 'asis! 0orward

positions will 'e realued onl at the time of li;uidation!

• 0orward And 4wap As $er -uideline f Central Bank

All forward deals and swaps must follow the *uidelines and restrictions *ien ' the

central 'ank!

• Counter part limit 'ooks

2ealin* Doom will maintain counter part limit 'ooks which will include records of

all da to da customer transactions and inter<'ank transactions!

• 2ealin* room staffin*

here should 'e ade;uate num'er of officers with technical skills and knowled*e!

• Liaison with forei*n e,chan*e and mone market

=ffectie 0CN transactions inolin* B2 should 'e instantl and effectiel

communicated to mone #arket se*ment of dealin* room!

" 7 $ a * e



G#i%e"ine or Foreign Exchange Dea"ing Roo!

-uideline for 2ealin*s Doom operation coers 4ale<purchase#erchant transaction of

United Commercial Bank Ltd! i!e! for an 2ealin* Doom operation an underlin*

customer transaction has to 'e there! .n case of proprietar tradin* onl U42B2

currenc pair is allowed! Apart from that no 0orei*n Currenc tradin* should 'e in

speculatie nature! All dealin* transactions must 'e supported ' approal of the

competent authorit!

• 0orei*n Currenc sale a*ainst B2<Detail

0orei*n Currenc sale to retail customer for 0+ 022 and C should 'e *uided '

/ 2 rate of rate sheet! $oint of sales ma 'e allowed to take BC rate and the

difference 'etween BC and 2 rate ma 'e refurnished from treasur ac to

particular 'ranch:s account!

• 0orei*n Currenc sale a*ainst 0orei*n Currenc<Detail

0D=.-F currenc sale to retail customer for 0+ 022 and C should 'e *uided

' mid rate of the respectie currenc! .n case of conersion of forei*n currenc to

another forei*n currenc the preailin* rate in international market is to 'e applied!

• 0orei*n Currenc sale a*ainst B2<.mport

0orei*n Currenc sale to importer should 'e *uided ' BC rate of Date sheet! .n

addition to that rate can 'e ne*otia'le for corporate customers! An hi*her rate of

sellin* applied to customers other than the dealt rate ' the corporate units thedifference ma 'e credited to the respectie corporate units from treasur! .n case of

application of lower<rate to customers the difference should 'e credited to treasur:s

account from the respectie corporate'ranch unit!

• 0orei*n currenc sale a*ainst 0orei*n Currenc<.mport

1 7 $ a * e



.mport pament made out of 0C mar*in ac retention ;uota ac and special pament

facilit (import pament out of e,port proceeds within 1 month) can 'e made in

respectie currenc:s mid rate! .n case of conersion of forei*n currenc to another

forei*n the preailin* rate in international market is to 'e applied!

• 0orei*n Currenc purchase a*ainst B2<Detail!

0orei*n Currenc purchase from retail customer for inward 0 should 'e *uided '

Clean rate of rate sheet! 0orei*n Currenc purchase from retail customer for 022

should 'e *uided ' 2oc rate of rate sheet! .n case of corporate customers

customize rate can 'e applied!

• 0orei*n Currenc purchase a*ainst 0orei*n Currenc<Detail

0orei*n Currenc purchase from retail customer for 0+ 022 should 'e *uided '

mid rate of the respectie currenc! .n case of conersion of forei*n currenc to


• 0orei*n currenc $urchase a*ainst B2<=,port

0orei*n Currenc purchase from e,porters should 'e *uided ' clean rate of Date

sheet for pament a*ainst clean 'ills for collection!

• 0orei*n currenc purchase a*ainst 0orei*n currenc<=,port

0or creditin* e,port proceeds into 0C mar*in ac retention Ouota ac & respectie

currenc:s mid rate is to 'e applied! .n case of conersion of forei*n currenc to


• 0orward 0orei*n Currenc purchase a*ainst B2

0orward 0orei*n Currenc can 'e purchased from e,porters! .n that case the ;uoted

currenc should 'e a*ainst B2 and the rates incorporated in the rate sheet for the

structured time frame (11#onth+ 3#onth / @#onth) can 'e applied! 0orward

transaction must follow the *uidelines issued ' the Central Bank!

• 0orward 0orei*n Currenc $urchase a*ainst 0orei*n Currenc

% 7 $ a * e



0orward forei*n Currenc can 'e purchased from an e,porter for conersion out of

their 0C mar*in and Detention Ouota ac for the desired Currenc pair other than

B2!

• =ncashment$urchase of 0orei*n Currenc

An encashment of 0orei*n Currenc into B2 can 'e done from customers 0C Ac

' applin* Clean doc rate ' e,aminin* the nature of transaction!

)ealing In Inter Ban. -ar.et

2ealin* in inter 'ank 4port market for U42B2 currenc pair is allowed su'5ect to

er'ou*ht ersold limit of =,chan*e $osition approed ' Ban*ladesh Bank! he

applica'le rate for inter 'ank transaction should 'e on market! ff market rate

transaction is not allowed! .n this connection ar'itra*e function for other currenc

pair is allowed! .n case of an position takin* speculation in an currenc pair is no

allowed! 0or an 0orward and 4wap transaction rates should within the market

dnamics (.nterest rate e,chan*e rate annualization of tenor)! .nter 'ank 4port+

0orward and 4wap transaction must follow the Central Bank:s *uidelines issued from

time to time!

• Date sheet production

=er da UCBL 2ealin* Doom has to produce rate sheet with the followin* features

a! Date for .mport 'ill pament!

'! Date for e,port 'ill ne*otiation for si*ht usance!

c! Date for inward and outward remittance!

d! Date for C and Cash note!

e! .ndicatie rate for internal transaction

his rate sheet is produced in those currencies for which UCBL maintains Fostro ac! i!e!

U42+ =UD! -B$+ $N+ U42B2 rate is to calculate on the 'asis of preailin* free

floatin* rate in the inter< 'ank! n the other hand cross rate of other (four) currencies is

to o'tained from Deuters #one %""" and pu'lished in the rate sheet after maintainin*

3 7 $ a * e



sufficient mar*in! hrou*h this rate sheet treasur maintains dail profita'ilit with our

'ranches and su'se;uent customers there on! 0or Corporate Customers treasur ma

customize this rate 'ut keepin* in iew the profita'ilit of the 'ank! Apart from e,chan*e

rates the followin* forei*n currenc interest rate is to 'e incorporated!

a! L.ABD for U4 2ollar in different tenor!

'! 0C2D0C2 rates for U42 deposit!

&und management and liquidit management

0or li;uidit of the forei*n currenc+ our =,chan*e $osition has permitted up to

U421!G million in 'oth shortlon* position! .n this connection the followin* method

is applied for li;uidit measurement !

Suppl of &oreign Currenc

Closin* Balance of all Fostro ac!

$lus =,port 'ills realization

$lus .nward Demittance

Plus Encashment of FC

otal 4uppl of 0C

Demand of Foreign Currency

.mport 'ills pament

Plus Outward remittance

otal 2emand of 0C

7 $ a * e



(otal 4uppl of 0C<otal 2emand of 0C)Q

Fet li;uid position of 0orei*n Currenc

After decidin* 'ank:s li;uidit either in shortlon* position the 2ealers ma s;uare up '

participatin* in inter<'ank dealin* market!

5CBL follo9s the follo9ing guide in the process for the independent verification of $rices:

+&ollo9ing Bangladesh Ban. guideline,

Instrument Source &requenc of 5pdate Note

4pot 0H Deuters

Fational Fewspapers

nce 2ail $a*es

A0HQ+ 0HHP+B2(09)

0orward0H 4waps

Deuters nce 2ail$a*es A0HQ+ 0HHP+B2(09)+ L.BD"1+-B$0Q+ =UD0Q+$N0Q+C00Q etc!

.n a'sence of aninter<'ank U42B2 forwardmarket+ 'anksshould usespreadsheets todetermine tenorwiseforward

premiums thatshould 'e used for the erification of

G 7 $ a * e



Fin%ings

Banks hae a ke role to deelop the forei*n e,chan*e 'usiness in our countr!

Commercial 'anks proide forei*n e,chan*e serices to their customers! hou*h

forei*n e,chan*e 'usiness is challen*in*+ it offers an e,cellent opportunit to

accelerate the *rowth of the 'ank:s own 'usiness United Commercial 'ank ltd! is one

of the ma5or plaer in the forei*n e,chan*e 'usiness! .t has 'een en5oin* an

escalatin* *rowth in forei*n e,chan*e 'usiness! .ncome from the forei*n e,chan*e

'usiness has a lar*e contri'ution to UCBL:s oerall profit! he ke 0indin*s are

0orei*n e,chan*e 'usiness has 'ecome one of the ma5or sources of

reenue for the 'ank! 0rom the description of the 0orei*n e,chan*e actiities of UCBL we see

that it complies with most of the *uidelines *ien ' Ban*ladesh 'ank!

he time series analsis *ies a positie trend in forei*n e,chan*e

'usiness coerin* e,port+ import and remittance! 0orei*n e,chan*e income

also en5os an increasin* trend and this is a positie si*n for UCBL! he

forei*n e,chan*e serices proided ' the 'ank are reall *ood! he

officials of the forei*n e,chan*e department are efficient+ cordial and

hi*hl dedicated to their work! he customers of the 'ank are satisfied!

he rate of shiftin* ' the customer is low!

.mport is the most profita'le part for the UCBL forei*n e,chan*e!

he income of 0orei*n =,chan*e is come from two wa< Commission

/=,chan*e *ain!

.n the 0orei*n e,chan*e risk mana*ement part we found that UCBL is

er cautious a'out its risk e,posure related with forei*n e,chan*e and on

this re*ard its treasur department has desi*ned its own manual for proper

risk mana*ement! .n its manual it has defined specific responsi'ilities of

all the mem'ers authorized for this work! .t continuousl do paper work

and different tpes of analsis so that it can reduce its risk si*nificantl!

@ 7 $ a * e



his continuous monitorin* allowed it to hae a risin* trend on its 0orei*n

e,chan*e earnin*s!

he ma5or limitation of UCBL is lack of modern communication

e;uipment!

Applications of modern technolo* such as computerization are not

sufficient!

$oor condition of 'alance of pament of UCBL!

Lack of enthusiastic scheme for e,porter and importer!

Less attractie remuneration packa*e and motiation for the emploees!

As more and more 'anks are comin* in the 'usiness+ the market is

'ecomin* su'stantiall competitie! UCBL is facin* threat with the new

technolo*ies+ new serices+ oun* ener*etic manpower used ' emer*in*

'anks+ as customers now want fast transactions and innoations to make

'ankin* easier!

UCBL does not hae an 'ranch a'road which is creatin* pro'lem in

remittance transfer!

7 $ a * e



Reco!!en%ations:

hrou*h conductin* this stud . hae ac;uired some practical knowled*e a'out e,port

import 'usiness in Ban*ladesh and other releant matters! ere . am trin* to *ie some

recommendation which . think mi*ht 'e helpful to promote the e,port import 'usiness of

United Commercial Bank Ltd! As per earnest o'seration the su**estions are *ien

'elow<

0or attractin* more clients it should take some new marketin* strate* which will

increase its total olume of e,port import transaction!

Attractie incentie packa*e for the e,porter will help to increase the e,port and

accordin*l it will diminish the 'alance of pament *ap of UCBL!

0or the forei*n e,chan*e officials lon* term trainin* is er essential and ma help to

*ain more efficienc at work!

UCBL should *et out of its old+ traditional track 'ankin* sstem and introduce its clients

with new serices+ technolo* which will attract more customers!

Bank can proide forei*n market reports which will ena'le the e,porter to ealuate the

demand for their products in forei*n countries

=ffectie and efficient initiatie is necessar to recoer the default loans!

8 7 $ a * e



Conc"#sion:

After the rela,ation of economic 'arrier at 9":s+ the area of 'usiness has e,panded

*lo'all for firms! At this situation firm:s interest of doin* forei*n e,chan*e 'usiness was

rationalized with the support of different theoretical 'ack*rounds! .n Ban*ladesh the most

popular wa of doin* forei*n e,chan*e 'usiness is international trade that means direct

e,port and import! B inolin* in forei*n e,chan*e 'usiness+ man firms of Ban*ladesh

are en5oin* a lar*e profit and size than preious! 0irms are now improin* themseles in

this lu'ricant area of 'usiness! his improement is reflected in the current positie

*rowth of Ban*ladesh in the forei*n e,chan*e 'usiness! .n recent ears United

Commercial Bank has shown a 'etter performance comparin* with other first *eneration

commercial 'anks!

6e e,pect this 'ank to reiew its pro'lems toward forei*n e,chan*e 'usiness and

contri'ute a ital role in socio<economic perspectie! 0orei*n e,chan*e is alwas a

prominent site of 'usiness for all commercial 'anks! Countr:s economic *rowth lar*el

depends on this sector! Ban*ladesh is also economicall dependent on forei*n e,chan*e

'usiness! here are some rules and re*ulation and other factors (political+ economical+

demo*raphic) that influences this sector! -oernment should identif the lackin* and take

preentie steps to smooth this lucratie path of 'usiness

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"en cases at 5CB

1! he account openin* confirmation was sent in the wron* residential address and

was accepted ' an unknown person! 6hen the emploee realized his mistake+ he

tried to *et the letter 'ack 'ut couldn:t find the person! he matter *ot worse when

the account holder stated receiin* threat calls from the stran*er and ultimatel for

the securit of account holder the 'ank mana*er decided to close that account!

%! .n UCB+ after su'mittin* the che;ue re;uisition slip+ after three workin* das the

che;ue 'ook is *ien to the customer ' 5ust askin* the Kname: and Kaccount

num'er:! hat da a person came and claimed a che;ue 'ook and was *ien awa!

A da later another person came and asked for the same che;ue 'ook! At that

moment the emploee found out that the che;ue 'ook was *ien to the wron*

person! herefore all the transaction from that che;ue 'ook was immediatel

stopped!

3! .t was the second week of m internship when a theft occurred! hin*s were *oin*

fine and smooth+ a'out an hour 'efore the closin* a man came runnin* to the 'ranch

head and said that k! % lac *ot stolen from this 'a* when he came to deposit

mone! 6hen CC camera was plaed we all were shocked to see that+ when the

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ictim was writin* his deposit slip+ three man came and surrounded his 'a* where

he kept mone and one of them took out a 'lade and made a hole in the 'a* and

took the mone and *ot awa!

! A'out a month a*o UCB recruited few cashier! =er thin* was *oin* fine and

smooth! hat da a customer came to deposit some k! G"+"""+ findin* the cashier

new he asked him to put the receied seal 'efore handin* oer the cash and so the

emploee did and the customer took the mone and the slip and *ot awa+ as he was

a er old customer+ he knew all the emploees: face so he took the adanta*e! At

the end of the 'ankin* hours when the slips were tallied it was fi*ured out that the

customer didn:t deposited the mone and 'ecause of the emploees: carelessness

'ank made a loss of k! G"+"""

G! .n UCB+ the new account openers hae to make some initial deposit+ most of the

customers ask the 'ank emploees to fill the deposit slip and the account openin*

form! .n trin* to make the work faster the account openin* officer ' mistakenl

added an e,tra zero to the initial deposit which made the fi*ure in lac+ and also

entered the wron* fi*ure in the computer too! he aware customer immediatel

took out the e,tra mone and neer returned!

@! UCB had a er old client+ who had a er *ood relation ship with the credit

department as he use to pa all his installments on time! his client use to 'rin* his

accountant with him as a result almost all the 'ank emploee use to know him! ne

afternoon the client asked his accountant to *et che;ue from our 'ank! he

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accountant took the che;ue and deposited the che;ue in another 'ank where he+ in

the past opened a fraud account with same name as his compan:s where he worked

and throu*h online he withdrew all the mone from different 'ranches and left the

countr!

! hat da a client came and opened an LC to import shoes+ as all this papers+ past

performance and e,port compan(i!e! from the compan the product is 'ein*

imported) was up to the mark+ the 'ank didn:t hesitate to open the LC! 6hen his

product came to the dock he refused to take the product as there was onl one shoe

instead of a pair in each 'o,+ thus the customer didn:t pa the mone for the LC and

the shoe was later on auctioned! herefore the 'ank made a hu*e loss!

8! As UCB proides home loan+ a client came and asked for home loan+ he was asked

to su'mit the house mort*a*e! he client su'mitted all the le*al papers and the loan

was *ien awa! After a month the time came to repa the loan the client neer

showed up! 6hen the last date of the repament *ot oer the 'ank decided to file a

case and it was found that the mort*a*e was stolen and didn:t 'elon* to the loan

defaulter!

9! 0ew das a*o a client asked for a 'i* amount of forei*n currenc for which he paid

a da 'efore 'ut he asked the 'ank to delier the mone to his office ' one of the

'ank:s emploee and asked to come from a route which is more secured! 6hen the

'ank:s emploees were *oin* throu*h that route+ few men came in 'ike and ro''ed

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them! 6hen the 'ank informed the client a'out this incident+ the client did not onl

asked for a refund 'ut also filed a case on the emploees who were carrin* the

mone! As a result the emploees lost their 5o's!

1"! 6hen . was in 0orei*n =,chan*e department . witnessed an incident! A man came

to open an LC+ he wanted to import medicine+ for some reasons he was in a *reat

hurr! As he was a er reputed person+ the emploee at once a*reed to open the LC

for him+ as he was dealin* with the proceedin*s+ he felt somethin* wron* and made

an e,cuse to the client to come after a da or two! At first the client murmured 'ut

later a*reed! After he left+ the emploee decided to make a search on the import

polic of that medicine and he was shocked to find out that+ the medicine was

ille*al to import! As a result the LC proceedin* was immediatel stopped!

83 7 $ a * e



Anne,ure<A

8G 7 $ a * e



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Anne,ure<B

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Ouestionnaire

8 7 $ a * e



>uestionnaire as.ed to 2ead of International )ivision and 2ead of "reasur

)epartment:

Dear Sir

As student of !!A program in "ni#ersity of Dha$a an internship is %eing conducted on & Foreign E'change acti#ities and Foreign E'change (is$ )anagement * %y

studying "nited Commercial !an$ +td, , In the process of o%ser#ing it is li$ed to as$

you some questions answer of which will help preparing the foundation of the

mentioned report, A set of pro%a%le questions is forwarded here for your prior

ac$nowledgement, -hese questions will %e supplemented %y few complementary

questions, -he information will %e used only for the purpose of study,

1) 6hen UCBL started 0orei*n =,chan*e peration

%) 2oes UCBL follow an $olic-uideline for 0orei*n =,chan*e Disk

#ana*ement

3) .f UCBL hae deeloped an polic *uideline manual considerin* the risk

raised from 0orei*n =,chan*e

) .nstruments UCBL use for forei*n =,chan*e Disk #ana*ement

G) 6hether UCBLs Disk e,posure in 0H has increased or decreased after

Ban*ladesh Banks rela,ation on forei*n e,chan*e rate+ allowin* floatin* rate

@) .f UCBL calculate an Disk limit commensurate with Bank actiities

) 6hat is UCBLs open position limit 6hat percenta*e of its total capital is to 'e kept as limit ow the calculate their open position

8) 4pot and 0orward position of UCBL

9) 2oes UCBL do an -A$ analsis for its 0orei*n e,chan*e risk mana*ement

purpose

1") 2oes UCBL do an EAD analsis for Disk mana*ement

11) .f UCBL keep an fund for 0H operation

1%) 6hat 'ase currenc UCBL use to calculate 0H risk

13) .f an report pu'lished on these re*ard

1) 0H *ain or loss of UCBL

1G)6hich of the currenc has more risk e,posure+ more olatile and needs

special attention of the reasur fficer continuousl

1@) $ro'lems faced ' reasur 2epartment for Disk mana*ement purpose

88 7 $ a * e

UCBL Intern Report

Documents

Transcript of UCBL Intern Report