Project SCB

8/9/2019 Project SCB

http://slidepdf.com/reader/full/project-scb 1/33

Standard Chartered bank A project of

“Commercial Bank Management”

5/27/2010

Muhammad Abu-Bakr Siddique

22-SE/MS-IBF2/FO9

INTERNATIONAL ISLAMIC UNIVERSITY ISLAMABAD



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The contents of report

A brief history of standard chartered

Expansion in Africa and Asia

Standard chartered in the 1990s

Recent alliances and developments

Mission statement & brand values

Total offices at national and international level

Other departments of standard chartered bank

Products & services

Main services

Awards and achievements

Swot analysis

Financial results, graphs and explanation

Risk management in standard chartered bank

Recommendations

Bibliography



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A brief history of Standard Chartered

Standard Chartered is one of the world’s leading banks headquartered in London. Its businesses

however, have always been overwhelmingly international. The main events in the history of

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

section.

The early years

Standard Chartered is named after two banks, which merged in 1969. They were originally

known as the Standard Bank of British South Africa and the Chartered Bank of India, Australia

and China. Of the two banks, the Chartered Bank is the older having been founded in 1853following the grant of a Royal Charter from Queen Victoria. The moving force behind the

Chartered Bank was a Scot, James Wilson, who made his fortune in London making hats. James

Wilson went on to start The Economist, still one of the world's pre-eminent publications. Nine

years later, in 1862, the Standard Bank was founded by a group of businessmen led by another

Scot, John Paterson, who had immigrated to the Cape Province in South Africa and had become

a successful merchant. Both banks were keen to capitalize on the huge expansion of trade

between Europe, Asia and Africa and to reap the handsome profits to be made from financing

that trade. The Chartered Bank opened its first branches in 1858 in Chennai and Mumbai. A

branch opened in Shanghai that summer beginning Standard Chartered's unbroken presence in

China. The following year the Chartered Bank opened a branch in Hong Kong and an agency

was opened in Singapore. In 1861 the Singapore agency was upgraded to a branch, which helped

provide finance for the rapidly developing rubber and tin industries in Malaysia. In 1862 the

Chartered Bank was authorized to issue bank notes in Hong Kong. Subsequently it was also

authorized to issue bank notes in Singapore, a privilege it continued to exercise up until the end

of the 19th Century. Over the following decades both the Standard Bank and the Chartered Bank

printed bank notes in a variety of countries including China, South Africa, Zimbabwe, Malaysia

and even during the siege of Makeking in South Africa. Today Standard Chartered is still one of

the three banks which prints Hong Kong's bank notes.



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Expansion in Africa and Asia

The Standard Bank opened for business in Port Elizabeth, South Africa, in 1863. It pursued a

policy of expansion and soon amalgamated with several other banks including the Commercial

Bank of Port Elizabeth, the Colesberg Bank, the British Kaffarian Bank and the Fauresmith

Bank. The Standard Bank was prominent in the financing and development of the diamond fieldsof Kimberly in 1867 and later extended its network further north to the new town of

Johannesburg when gold was discovered there in 1885. Over time, half the output of the second

largest gold field in the world passed through the Standard Bank on its way to London.

Standard Bank opened for business

• In 1892 the in Zimbabwe,

• Mozambique in 1894,

• Botswana in 1897,

• Malawi in 1901

• Zambia in 1906

• Kenya, Zanzibar and the Democratic Republic of Congo (D.R.C.), in 1911.Of these new

businesses, Botswana, Zanzibar and the D.R.C. proved the most difficult and the

branches soon closed. A branch in Botswana opened again in 1934 but lasted for only a

year and it was not until 1950 that the Bank re-opened for business in Botswana.

In Asia the Chartered Bank expanded opening offices in,

• Myanmar in 1862

• Pakistan and Indonesia in 1863,

• the Philippines in 1872,

• Malaysia in 1875,

• Japan in 1880

• Thailand in 1894.

Some 34 years after the Chartered Bank appointed an agent in Sri Lanka it opened a branch in

1892 to take advantage of business from the tea and rubber industries. During 1904 a branch

opened in Vietnam. Both the Chartered and the Standard Bank opened offices in New York and

Hamburg in the early 1900s. The Chartered Bank gaining the first branch license to be issued to

a foreign bank in New York.



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opened offices in Argentina, Canada, Colombia, the Falkland Islands, Panama and Nepal. In the

USA a number of offices were opened and three banks were acquired. These included the Union

Bank of California that gave Standard Chartered a presence in Brazil and Venezuela. The

opening of a branch in Istanbul in 1986 was overshadowed by a far more dramatic event when

Lloyds Bank of the UK made a hostile take-over bid for Standard Chartered. Standard Chartered

won its right to remain independent but entered into a period of considerable change.

By the late 1980s Standard Chartered already had considerable exposure to third world debt. To

this were added provisions against loans to corporations and entrepreneurs who could not meet

their commitments. Standard Chartered reviewed its operations and decided to focus on its core

strengths of Consumer Banking, Corporate & Institutional Banking and Treasury in its well-

established operations in Asia, Africa and the Middle East. This led to a series of divestmentsnotably in Europe, the United States and Africa. During this time staff numbers were reduced;

businesses not considered core were sold or closed; associate holdings disposed of; unprofitable

branches closed and back office functions consolidated. In addition expensive buildings were

sold with the proceeds reinvested in the business, and the senior management team was radically

changed and strengthened.

Standard Chartered in the 1990s

Even within this period of apparent retrenchment Standard Chartered expanded its network, re-

opening in Vietnam in 1990, Cambodia and Iran in 1992, Tanzania in 1993 and Myanmar in

1995. With the opening of branches in Macau and Taiwan in 1983 and 1985 plus a representative

office in Laos (1996), Standard Chartered now has an office in every country in the Asia Pacific

Region with the exception of North Korea. In 1998 Standard Chartered concluded the purchase

of a controlling interest in Banco Exterior de Los Andes (Extebandes), an Andean Region bank

involved primarily in trade finance. With this purchase Standard Chartered now offers full

banking services in Colombia, Peru and Venezuela. In 1999, Standard Chartered acquired the

global trade finance business of Union Bank of Switzerland. This acquisition makes Standard

Chartered one of the leading clearers of dollar payments in the USA. Standard Chartered also

opened a new subsidiary, Standard Chartered Nigeria Limited in Lagos, acquired 75 per cent of

the equity of Nakornthon Bank, Thailand; and agreed terms to acquire 89 per cent of the share

capital of Metropolitan Bank of the Lebanon.



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Recent alliances and developments

In 2000, Standard Chartered acquired Grindlays Bank from ANZ Bank, increasing its presence

in private banking and further expanding its operations in India and Pakistan. Standard Chartered

retained Grindlays' private banking operations in London and Luxembourg and the subsidiary in

Jersey, all of which it integrated into its own private bank. This now serves high net worth

customers in Hong Kong, Dubai, and Johannesburg under the name Standard Chartered

Grindlays Offshore Financial Services. In India, Standard Chartered integrated most of

Grindlays' operations, making Standard Chartered the largest foreign bank in the country.

On 15 April 2005, the bank acquired K orea First Bank, beating HSBC in the bid. Since then the

bank has rebranded the branches as SC First Bank.

Standard Chartered completed the integration of its Bangkok branch and Standard Chartered

Nakornthon Bank in October, renaming the new entity Standard Chartered Bank (Thailand).

Standard Chartered also formed strategic alliances with Fleming Family & Partners to expand

private wealth management in Asia and the Middle East, and acquired stakes in ACB Vietnam,

Travelex, American Express Bank in Bangladesh and Bohai Bank in China.

http://en.wikipedia.org/wiki/Grindlays_Bank

http://en.wikipedia.org/wiki/ANZ_Bank

http://en.wikipedia.org/wiki/Luxembourg

http://en.wikipedia.org/wiki/Jersey

http://en.wikipedia.org/wiki/Dubai

http://en.wikipedia.org/wiki/Johannesburg

http://en.wikipedia.org/wiki/Korea_First_Bank

http://en.wikipedia.org/wiki/HSBC

http://en.wikipedia.org/wiki/Bangkok

http://en.wikipedia.org/wiki/Standard_Chartered_Bank_%28Thailand%29

http://en.wikipedia.org/wiki/Asia_Commercial_Bank

http://en.wikipedia.org/w/index.php?title=Travelex&action=edit&redlink=1

http://en.wikipedia.org/wiki/American_Express_Bank

http://en.wikipedia.org/wiki/Bangladesh

http://en.wikipedia.org/wiki/Bohai_Bank

http://en.wikipedia.org/wiki/Bohai_Bank

http://en.wikipedia.org/wiki/Bangladesh

http://en.wikipedia.org/wiki/American_Express_Bank

http://en.wikipedia.org/w/index.php?title=Travelex&action=edit&redlink=1

http://en.wikipedia.org/wiki/Asia_Commercial_Bank

http://en.wikipedia.org/wiki/Standard_Chartered_Bank_%28Thailand%29

http://en.wikipedia.org/wiki/Bangkok

http://en.wikipedia.org/wiki/HSBC

http://en.wikipedia.org/wiki/Korea_First_Bank

http://en.wikipedia.org/wiki/Johannesburg

http://en.wikipedia.org/wiki/Dubai

http://en.wikipedia.org/wiki/Jersey

http://en.wikipedia.org/wiki/Luxembourg

http://en.wikipedia.org/wiki/ANZ_Bank

http://en.wikipedia.org/wiki/Grindlays_Bank



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Mission Statement & Brand Values

Mission Statement:

“To offer outstanding value to our customers by providing knowledgeable, efficient and

reliable services in a personal, helpful and responsive manner.”

Over the 150 years of quality services that SCB has provided to its customers, the Bank has had

various mission Statements. However this is the one that is currently being followed by the

organization.

Brand Values:

From the above mentioned mission statement the bank has developed some very deep-rooted

brand values. These values are mainly designed with the intention of communicating with the

customers. However they also serve the purpose of showing each employee exactly what a

customer expects when he walks into Standard Chartered. The employees are constantlyreminded of the customer expectations and have to continuously evaluate how their behavior is

conformant with what the customers have in mind. This is why it is common practice to displaythese values in almost each department and on all the notice boards.

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

the opportunity to communicate these values to them.

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

Courageous A commitment to being there for you, in good times and bad. We help you achieve your

aspirations by guiding you towards the right choice, not just the easy one.

International We understand the balance between global and local. You trust us to be established and

internationally networked, while at the same time sensitive to your individual needs. Our

strong network across culture helps us build stronger relationships based on ideas, not

formulae.

Creative

Creative thinkers are not limited by convention. They allow their minds to soar beyond predictable solutions. That's how we approach each challenge posed to us, which is why

we base our products and services on ideas that are innovative, perceptive and instinctive.

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



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TOTAL OFFICES AT NATIONAL AND INTERNATIONAL LEVEL:

Standard chartered is operating more than 150 branches in about 25 cities of Pakistan. Standard

Chartered has a history of over 150 years in banking and operates in many of the world's fastest

growing markets with an extensive global network of over 1,400 branches (including

subsidiaries, associates and joint ventures) in over 50 countries in the Asia Pacific Region, South

Asia, the Middle East, Africa, the United Kingdom and the Americas. As one of the world's most

international banks, Standard Chartered employs 60,000 people, representing over 90

nationalities, worldwide. This diversity lies at the heart of the Bank's values and supports the

Bank's growth as the world increasingly becomes one market.

MAIN OBJECTIVES:

Standard Chartered Bank is an international bank, focused on the established and emerging

markets of Asia, Africa, the Middle East and Latin America with an extensive global network of

more than 600 offices in over 50 countries. The three principal business groups are Treasury,Consumer Banking and Corporate and Institutional Banking. Their main objective is to offer

outstanding value to their customers by providing knowledgeable, efficient and reliable service

in a personal, helpful and responsive manner. Central to this service philosophy is the

professional consultative approach they take with each customer. By getting to know the

customer better, they can identify the customer's needs and match them with quality products

which suit their best.

INFORMATION SYSTEM IN STANDARD CHARTERED:

As standard chartered started their business in Pakistan in 2006 so as such there is no Pre-IS era

of standard chartered bank in Pakistan. They are using IT since the start of their business in

Pakistan. IT creates an evolution in whole world in every business and so in banking system.

Now in standard chartered with the help of IS the daily transactions are recorded in branch

computers and these branch computers are then connected to the main head office server so in

this way they keep their daily process update on daily basis. As Time is money, and due to IS

standard chartered bank make thousands of transactions per day. In fact, IS makes whole process

much more quick, simple and reliable. Due to IS employees can easily connect with other

branches, customer service gets improved, online banking emerged and lot of others benefits.

Standard Chartered Online is an innovative Online Banking service that you can tailor to suit

your precise banking needs. It gives you convenient, round-the-clock banking services ranging

from day-to-day account transfer transactions to real-time valuable financial information. Now

you can manage your finances anytime, anywhere.



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10

Other Departments of Standard Chartered Bank

There are various departments in this bank due to the wide range of services that it offers to its

clients. Each dept. serves a very important role in making the difference between a satisfied and

a dissatisfied customer. The major departments that I was able to learn about are:

IT Department:

Even though this department works at the back end and customers are never aware of

whether IT people exist in SCB or not. IT has a very important role to play. As it is this

dept. that comes up with all the latest upgrades to the system to make it more efficient

and effective. It is they who clear out the “bugs” in the BPS system that generates

Account Statements. IT also ensures that the inter branch connection of this bank is

maintained continuously through properly functioning PABX, Fax machines, systems etc.

Personal Financial Services Department:

This department basically consists of 4 Personal Financial Consultants (PFC’s) who have

the task giving all sorts of financial services to the client. They can be asked for

information about any product of the bank or any advice to help in reaching the best

decision by the customer. It is basically there job to assist the customer in any way

possible. Their task also includes opening all types of accounts and letting customers

know of the best-suited option for them.

Corporate Department:

This department mainly dealt with all matters related to corporate accounts. By corporate

accounts I refer to all the companies that have opened accounts of their entire staff with

SCB. Management of these accounts is done in this separate dept. of SCB. Other than

management this department also has to achieve a certain target of getting a certain

number of corporate arrangements to make this banks corporate customer base stronger.

SCB has corporate accounts of US Embassy, Australian High Commission etc.

Cash Management and Remittances:

This department is mainly concerned with the most critical and nerve wracking work inthe entire bank. This department includes the management of all cash related activities

and therefore also includes the tellers and all activities related to withdrawals or deposits

by customers. The management of funds and the transfer of money within the bank is

also managed by this dept. and the additional services that this dept. performs are money

transfers, issuing new check books, making drafts etc.



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Credit Card Department:

This dept. is basically concerned with all functions related to the credit cards of SCB.

There is a Visa card and a Gold card that is being offered by SCB. Getting customers to

buy these cards and also satisfying customers who have previously got this card is the

major function of this dept. however the dept also manages its own collections of baddebts or people who pay late. So it is a relatively self-sufficient dept that covers an entire

product of SCB.

Priority Banking:

This dept basically exists for those customers who can open a minimum current account

for RS. 1 million or who open accounts of at least 2 million rupees in case of savings

account. Priority banking solely deals with customers who fit the above-mentioned

criteria and not with the regular customers. A separate teller that is only for Priority

Customers deals with matters of such clients. Apart from this, finding such clients andmaking them open accounts with SCB is also the task of this department’s staff.

Telemarketing:

This department as the name implies deals mainly with all telemarketing activity of SCB

within Islamabad. They provide information regarding the banks products. They also

serve clients by telling them their account balances or credit card limits that are

outstanding. This department provides further facilitation by helping get clients for Creditcards, Personal loans and Auto Loans. Customer complaints are also made to this

department if they are via telephone.

Auto Loans:

This dept. basically deals with all SCB Car financing loans. This dept. also has a fully

equipped sales team like the Personal loan dept. and it is their job to get customers to

finance their cars through SCB.



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Products & Services

-Finance Lease

-Operating Lease

-Auto Leasing

-Bemisaal Investment Certificates

Standard Chartered Leasing Limited- Product Offering

Finance Lease:

At Standard Chartered Leasing, we tailor lease financing facilities to suit customer's individualneeds. Lease periods vary from 3 years to 5 years and rentals can be structured according to

cash flow forecasts of customers.

Operating Lease:

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

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

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

Auto lease:

Standard Chartered Leasing Auto Lease offers flexible product range personalized to suit the

specific requirements and financial needs of individual customers. We at SCLL make sure that

our product is in compliance with the cash flow requirements and the changing individualneeds of our customers.

Our dedicated professional executives ensure that we not only respond quickly to our

customers requirements but also provide customized innovation.

Bemisaal Investment Certificates:

Standard Chartered Leasing offers a perfect investment opportunity- Bemisaal Investment

Certificates are the perfect choice for investment that offers security, amazing returns as well

as liquidity to both individual and corporate customers.



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MAIN SERVICES:

Consumer Banking:

Standard Chartered provide Mortgages, Credit Cards, Personal Loans, Auto Loans, IslamicBanking, and Wealth Management products. In order to maximize customer convenience, theyoffer 24-hour Phone Banking, eStatements, SMS Banking, ATM Cards and VISA Debit Cards,

as well as Online Banking and state of the art branches.

Wholesale Banking:

Wholesale banking provides Transactional banking, Debt Capital Markets, Corporate Finance,

Derivatives & Fx Options, Commodity Finance and deposit products.

Islamic Banking:

Standard Chartered Saadiq's dedicated Islamic Banking team provides comprehensive

International banking services and a wide range of Shariah compliant financial products that are

based on Islamic values.



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Awards and achievements

Private Banker International Awards 2008

Outstanding Private Bank in Asia Pacific

2008 Euromoney Awards For Excellence

Global Finance Stars of China Awards 2008

Best SME Lending, Foreign Bank in China

Asia Interactive Awards 2008

For best microsite (SWAT - Secure Web Action Team)

CNBC Financial Advisors Award 2008

Best Financial Advisors Award amongst Banks in India



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Wholesale Banking awards

The Asset Triple A Asian Awards 2008

• Best Transaction Bank in Korea - SC First Bank

• Best Cash Management Bank in South Asia

• Best Trade Finance Bank in Korea

• Best Sub-Custodian in Korea

• Best Domestic Custodian in Korea

EMEA Finance Middle East Banking Awards 2008

Euromoney Awards for Excellence 2008

• Best Cash Management Bank in the Middle East

• Best Debt House in United Arab Emirates

• Best Debt House in Kuwait

• Best Debt House in Thailand

• Best Global Private Bank

• Best Foreign Exchange Bank in Africa



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FinanceAsia Country Awards 2008

Best Foreign Commercial Bank in Pakistan

ICFA Global Awards 2008

Custodian of the Year, Asia and Australia

Custodian of the Year, Middle East and Africa

Profit Digital FX Awards 2008

Best Emerging Markets Platform Award

Trade Finance Awards for Excellence 2008

• Best Trade Finance Bank in Sub-Saharan Africa - Global

• Best Trade Finance Bank in Middle East and North Africa - Global (with HSBC)

• Best Soft Commodity Finance Bank - Global• Best Trade Finance Bank in Singapore

• Best International Trade Finance Bank in India



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The Banker CSR Awards 2008

Best Overall Bank

Best Corporate Finance

Banking the Unbanked

Asian Investor Achievement Awards 2008

Best Fund Administrator, Islamic Products

Seatrade Middle East & Indian Subcontinent Awards 2008

The Ship Finance Award

The Banker Awards 2008

Bank of the Year in Emerging Markets

Bank of the Year in Gambia

Asia Risk Awards 2008

Commodity/Energy Derivatives House of the Year



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CFO World

Best International Business

Best Supply Chain Finance Provider in Asia

Best Offshore Business

Leaders in Innovation i Award Winner 2008

Most Innovative Securities Service Provider Asia

tmi Awards for Innovation and Excellence in Treasury Management 2008

Best Bank Financial Supply Chain - Asia

Best Bank Risk Management - Asia

GTR Leaders in Trade Awards 2008

Best Trade Finance Bank in Asia-Pacific

PFI Awards

Middle East and Africa Bank of the Year



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SWOT Analysis

A thorough study of the Personal Loans department has resulted in the compilation of the SWOT

analysis. This analysis is also important because the Department under consideration is amarketing/ sales department and a SWOT analysis is always useful in assessing departments of

this nature.

Strength:

There are various strengths of this department. These are:

The department firstly has the name of a very prestigious bank attached with it. The bank that

this department represents has a good image of providing quality services to customers who are

looking for the best. The BDE’s themselves say that once they show their card and people

recognize that they are from SCB, customers immediately give them more attention and respect.

The major strength of the Department is the team members of the 2 teams that currently exist.

These members are mostly made up of the best sales people working for this particular product.

Most of the members have enjoyed positions of sales man of the month in Credit cards or

Personal loans at various other banks such as Citibank, Union Bank etc. This has resulted in each

of the sales people having an already well established network through which they can achieve

relatively higher targets and still have a considerable number of leads in the pipeline for each

month.

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

in the competitive analysis.

The repute of the bank in areas apart from Personal loans is also very positive. Therefore

customers of other products of SCB are also sometimes willing to enjoy another product

of this bank. This results in the department getting customers without the hassle of making sales calls and proper presentation. These bonus customers also make a

contribution to the total applications and in some months, they contribute to more than a

few loans.



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Weakness:

The major weakness is that Standard Chartered is at present facing more than a few dissatisfied

customers of credit cards as more banks are offering lower rates and fees. These customers are

having a slight impact on the banks image as word of mouth circulates their dissatisfaction. This

then has a direct impact on personal loan sales and other products of the Bank.

The department at present is facing the problem of continuous hiring and firing. This isresulting in greater difficulty of coordination and the synergy that may exist in a stable

environment. During the course of my internship of 6 weeks I saw at least 3 people who

left their job, 2 who were fired and approximately 7 employees who were hired.

Apart form this there is also the problem that time has to be taken out to train and induct

the new employees. There is however no designated trainer and therefore the BDE’s haveto carry out the training. This results in improper training and extra burden on the BDE’s

who already have a very stressful job.

The management environment of this department promotes fear and the adopted

leadership approach is to treat employees as Theory X workers. This is resulting in acertain extent of dissatisfaction and also promoting a greater sense of insecurity amongst

the BDE’s. The result is loss of productivity that exists due to the difference between

complete commitment of the employees and the approach of “just surviving” that theyhave adopted at present.

The limited numbers of companies that are on the approved list of companies and therestriction of self employed professionals not being eligible for personal loan are also

limiting the department from making major inroads into the Islamabad market.

Opportunities:

The major opportunity lies in the surfacing of new organizations that are getting approved andadded to the Personal Loans Approved list of companies. “Box farm signatories” as they are

called, are polling in and opening new avenues for the sales team, creating new customers and

providing the BDE’s with new leads.

Another opportunity is the rate of conversion of already approved loans into enhancements and

top up cases. As more people are utilizing this service it is really an area that all BDE’s arelooking forward to cash in.



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Threats:

The major threat that this department has is the stress levels that are running high due to certain

employees not being able to meet their targets. This is having a negative impact on the figures

for the entire department and causing increasing tensions. This may result in declining

applications if this situation is not resolved in an appropriate manner.

Another threat is the entry of new banks into this area of personal cash financing. As more banksare starting to offer this facility this industry is becoming increasingly competitive and the

already saturated target market is not showing great potential for growth. We can see this from

the loan that Citibank is currently offering with 0% interest these days.

The State Bank has limited the credit limit on credit cards to RS. 4999999. This is 1 rupee less

than the maximum loan amount of SCB. So people who wish to have this sort of money areshifting from financing their needs through personal loans to instead utilizing the limit on their

credit cards.

From the above analysis we can see that the Personal loan Dept. at present is evenly balanced.

But the future holds many threats both foreseen and unforeseen and how the management andthe sales team take these threats is what is going to set whether this department excels or starts

facing declining applications as time goes by. The BDE’s are eagerly looking forward to

harnessing the potential of the

opportunities that have been presented here. And their energy and enthusiasm along with the

hard work hours that they put into the job will most probably tip the scales in favor of SCB.



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Financial results

(Five years)

Amounts are in Millions

2005 2006 2007 2008 2009

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

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

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

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

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

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

EARNING RATIO

Return on Assets (%) 3.9 3.2 1.23 0.27 0.25

Return on Deposits (%) 5.39 3.64 1.56 0.36 0.32

Return on Equity (%) 53 30 17.79 3.75 3.49

DEBT MANAGEMENT RATIO

Debt to equity 12.28 5.12 4.93 5.19 5.55

Debt to asset 0.92 0.84 0.83 0.S4 0.83

SOLVENCY RATIO

Equity to assets (%) 7.53 16.33 16.85 16.16 15.26

Equity to deposits (%) 10.049 25.644 24.309 24.495 23.070

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



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Graphs

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EARNING RATIO

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SOLVENCY RATIO

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Explanation of Data and Graphs

During FY09, the revenues after tax for SCB have shown an improvement. The revenues grew

from a level of Rs 630 million in FY08 to Rs 669 million in FY09. However, they are still muchless than the revenues of Rs 5,709 million in FY06 and Rs 2,767 million in FY07. The net mark-

up income of the bank has remained almost consistent during the last three years. It was at Rs

16,192 million in FY07, then it increased to Rs 16,419 million in FY08 and declined a bit to

reach a level of Rs 16,284 million in FY09. However the non-mark-up income of the bank has

shown a growth over the last 5 years. It stood at Rs 3,687 million in FY06, then it increased to

Rs 6,147 in FY07, Rs 6,566 million in FY08 and Rs 6,883 million in FY09, showing a growth of

4.8%----in----FY09.

During FY09 the net interest income of the bank has remained almost consistent. With the

interest earned, there has been an increase in the interest earned on loans and advances to

customers. It increased from Rs 17,737 million in FY08 to Rs 18,688 million in FY09. Another

major increase was seen in the interest earned on investments that were classified as available for

sale securities. The interest earned on these increased from Rs 3,503 million in FY08 to Rs 7,124

million----in--FY09.

Within interest earnings, a decline was seen in the interest earned on loans and advances to the

financial institutions. The interest earned on it declined from Rs 358 million in FY08 to Rs 141

million in FY09. Within mark-up interest expensed, expense has increased on deposits. The

expense has increased from Rs 5,752 million in FY08 to Rs 9,148 million in FY09. Also, theexpense on securities sold under repurchase agreements has increased from Rs 239 million to Rs

471 million in FY09. Also, interest expense on borrowings from SBP under ERF schemes has

increased from Rs 252 million in FY08 to Rs 501 million in FY09. Despite the bank s

conservative stance towards high yield consumer lending, the bank s gross interest income grew

by 14% from Rs 23,307 million in FY08 to 26,653 million in FY09.

This can be attributed to the healthy growth of 37% in wholesale bank interest-based revenues in

line with the growth of 17% in corporate advances from Rs 86 billion to Rs 101 billion, and

growth in investments which more than doubled from Rs 30 billion to Rs 84 billion. However,

overall net interest income is marginally down by 1% owing to the rise in cost of deposits, whichcan be mainly attributed to a minimum rate requirement of 5% on savings deposits stipulated by

the State Bank of Pakistan in June 2008. Non-interest income continues to make a healthy

contribution to the overall revenue of the Bank with a 4% growth over last year.



27

During the year FY09, the non-interest income of SCB increased from Rs 113,714 million in

FY08 to Rs 13,749 million in FY09. The increase was seen in the fee, commission and brokerage

income; which increased only slightly from Rs 3767 million in FY08 to Rs 3,913 million in

FY09. Sharp decline was seen in the dividend income, which decreased from Rs 14 million in

FY08 to Rs 7.8 million in FY09. Also there was a gain on sale of federal government securities

of Rs 467 million in FY09 as compared to a loss of Rs 335 million on sale of federal government

securities---in---FY08.

On the earnings side, the different earnings ratios have shown a declining trend over the last 5

years. The major reason for this has been the declining profits after tax of the bank. The RoE

declined from levels of 53% in FY05 to 17.8% in FY07 and then further declined to 3.5% in

FY09. Also the return on deposits has declined from 5.39% in FY05 to 0.32% in FY09. Similar

trend has been seen in the ROA for the bank. It has declined from 3.9% in FY05 to 0.25% in

FY09.

The asset base of Standard Chartered Bank has increased over the last 5 years. The total assets of

the bank stood at Rs 111,668 million in FY05 at have increased to Rs 312,874 million by FY09.

However the proportion of different components in the overall asset mix has been fluctuating.

During FY09 the proportion of investments increased as compared to that of the previous 4

years. The total investments of the bank stood at Rs 83,785 million in FY09 as compared to Rs

29,587 in FY08 and Rs 40,696 million in FY07.

In investments category, an increase has been seen in the held for trading market treasury bills.

They increased from Rs 989 million in FY08 to Rs 7,265 million in FY09. Also the investmentin market treasury bills in available for sale category has increased from Rs 17,078 million in

FY08 to Rs 63,388 million in FY09. Another major increase has been observed in the Sukuk

bonds classified as available for sale. They have increased from Rs 300 million in FY08 to Rs

1,800 million in FY09. The increase of Rs 1,500 million in Sukuk investments reflects the PIA

Sukuk---bonds.

A major concern for SCB is the worsening asset quality. There has been an increase in the Non

Performing Loans of the bank over the last 5 years. The NPLs stood at Rs 8,421 million in FY06

as compared to Rs 12,389 million in FY09. Also the provisions have shown an increase from a

level of Rs 1,477 million in FY06 to Rs 7,454 million in FY09. Non-performing consumer loans

continue to be the key issue in the current economic scenario with interest rate hikes constantly

deteriorating the repayment capacity of individual borrowers, and consequently catalysing

consumer loan losses. Hence provisioning and write-offs against consumer loans has increased

especially in FY08. Application of SCB Group policies for general provision against consumer

loans has also resulted in significantly higher provisions during FY08 than that specified under



28

the prudential regulations. Focused measures for arresting the trend of delinquencies are being

taken by the bank. Reinforcing recovery and collection teams and processes and also realigning

credit policies with changing market dynamics has already been taken by the SCB.

The debt to equity ratio for SCB has declined considerably over the last 5 years. The ratio stood

at 12.28 in FY05 - the period when it had not acquired the Union Bank. However it declined

from FY06 and onwards and has remained around 5. The major liability on the bank s balance

sheet is the deposits of the customers. The deposits of the bank have shown an increasing trend

over the last years. They stood at Rs 83,646 million in FY05, then increased to Rs 156,878

million in FY06 and have reached a level of Rs 206,958 million in FY09. The Bank has

successfully enhanced its deposit base from Rs 174 billion to Rs 206 billion representing an 18%

growth, being amongst the highest in the industry.

This has been a direct result of our customer centric approach, enhanced brand positioning and

expanded footprint. This has not only improved our market share, but has also strengthened our customer base, which creates future business prospects to cross sell our product suite. The

surplus liquidity generated through deposit mobilisation is primarily invested in risk-free

government securities, thereby maintaining a high level of liquidity along with positioning the

book for any interest rate shift. Another major observation within the deposits of the bank is the

increase in the fixed deposits. The fixed deposits of the bank have increased from Rs 46,870

million in FY07 to Rs 51,228 million in FY08 and have further increased to Rs 58,402 million in

FY09 Also the savings deposits of the bank have declined. They declined from a level of Rs

68,996 million in FY07 to Rs 61,960 million in FY08; however they gain increased to Rs 79,300

million---in---FY09.

As can be observed from the graph below the earning assets of the bank have shown an

increasing trend over the last 4 years. The lending’s to the financial institutions has increased

from Rs 3,873 million in FY06 to Rs 20,568 million in FY09. However this is a decline as

compared to the levels of Rs 31,467 million of FY08. The decline has been seen in the

repurchase agreements, which have declined from Rs 1,2476 million in FY08 to Rs 3,446

million in FY09. These carry mark-up at rates ranging from 11 percent to 12.4 percent per

annum, payable at maturity, and are due to mature by January 2010. These arrangements are

governed under Master Repurchase Agreements.

The advances of the bank have shown a consistent trend over the last 4 years. They have

increased from Rs 129,004 million in FY06 to Rs 124,447 million in FY09 - showing only a

slight fluctuation. The amount of advances in FY09 is segmented into Rs 134,642 million in the

form of loans, cash credits, and running finance, Rs 6,588 million in form of bills discounted and

purchased and Rs 1,6784 million of provisions for NPLs.



29

As is evident from the graph of solvency ratios, the ratios have increased during the last 5 years.

The equity to assets grew from 7.53 in FY05 to 16.33 in FY 06 and has since then remained

around 16. It was 15.26% in FY09. The equity to deposits grew in FY06 to 25.644 % from 10%

in FY05. And since then has remained around 23%, it stood at 23.07% in FY09. The earning

assets to deposits increased from 90.35% in FY05 to 99.04% in FY07 and then further increased

to--110.6%--in----FY09.

The overall profitability of the bank has shown a declining trend over the last 4 year. There was a

major decline in the profits of the bank in FY07. They declined from Rs 5,709 million in FY06

to Rs 2,767 million in FY07. They further declined in FY08 to Rs 630 million, and have shown a

slight improvement in FY09 to Rs 669 million. All this has contributed to declining EPS of the

company to Rs 0.17 in FY09 from Rs 3.06 in FY05.



30

Risk management in Standard Chartered bank.

Operational Risk

Operational risk is the risk of direct or indirect loss due to an event or action resulting from the

failure of internal processes, people and systems, or from external events. The Bank seeks toensure that key operational risks are managed in a timely and effective manner through a

framework of policies, procedures and tools to identify, assess, monitor, control and report such

risks. New changes in SCB Operational Risk Framework are made effective from 1st of January2010. Fundamental to the design of changes applicable to Operational Risk Framework is the

principle that businesses and functions are responsible for the identification and management of

the operational risks that result from their activities and that the Risk Function controls the levelof operational risk exposure, ensuring that it remains within acceptable limits. Thus Operational

Risk is now part of the Risk Management function, and Operational Risk Officers report

independently to Chief Risk Officer of the Bank. The Operational Risk Committee has beenestablished as a sub-committee of the Risk Committee to supervise and direct the management of

operational risks across the Bank. ORC is also responsible for ensuring adequate and appropriate policies and procedures are in place for the identification, assessment, monitoring, control andreporting of operational risks.

Compliance and Regulatory Risk

Compliance and Regulatory risk includes the risk of non-compliance with regulatory

requirements. The Compliance and Regulatory risk function is responsible for establishing and

maintaining an appropriate framework of compliance policies and procedures. Compliance withsuch policies and procedures is the responsibility of all managers.

Legal Risk Legal risk is the risk of unexpected loss, including reputational loss, arising from defective

transaction or contracts, claims being made or some other event resulting in a liability or other

loss for the Bank, failure to protect the title to and ability to control the rights to assets of theBank (including intellectual property rights), changes in the law or jurisdiction risk. The Bank

manages legal risk through Legal & Compliance function, Legal risk policies and procedures and

effective use of its internal and external lawyers.

Reputational Risk

Reputational risk is any material adverse effect on the relations between the Bank and any one of its significant stakeholders. It is Bank policy that the protection of the Bank's reputation should

take priority over all activities including revenue generation at all times.Reputational risk is not a primary risk, but will arise from the failure to effectively mitigate one

or more of country, credit, liquidity, market, legal, regulatory and operational risk. It may alsoarise from the failure to comply with Social, Environmental and Ethical standards. All staff are

responsible for day to day identification and management of reputational risk.



31

RECOMMENDATIONS

Problems & Suggestions for the Management

While interning at Standard Chartered even though I noticed that the employees have a strong

commitment to work and are provided with a relatively cooperative work environment. There arestill a few problems that were being faced by the employees who were working in the personal

loans department. Some discussions were also done with the BDE’s and the following are the

issues that they felt were contributing to a less productive and comfortable atmosphere:

Problems:

The Personal Loan staff is at present being treated as the typical Theory X workers. The

only motivation that they are provided with apart from money is that they will face a veryangry “Boss” if they are unable to achieve their targets.

Employees have been complaining about lost visiting card diaries, mobile phones andother articles. These articles are “lost” from their desks or their personal storage space.

This has added considerably to the already tense environment.

On my first day I chanced to witness a person who was being told to present hisresignation to the “Man in Charge”, as he had not been able to achieve his targets.However this exchange was done right in the middle of the department with a clear

intention of disgracing the employee. The major reason as perceived by the other

employees, for this interchange being done so publicly was to make them see an exampleof what might happen to them if they failed to achieve their respective targets.

Solutions:

From the above mentioned problems we can see that the problems that are being faced are very

basic in nature and can be avoided with a few “nice words of comfort.” Some suggestions that I

came up with are as follows:

The Regional Manager has clearly maintained an open door policy. However the

employees of the personal loans department are not entirely comfortable with the idea.

This inhibition is further reinforced by the strict behavior that has been adopted by theTeam Manager and the Team Leaders. To remove this problem the regional manager

should hold a meeting to inform the employees of their importance and brief them as to

how this open door policy will work.



32

If the open door policy is not working then the Team Manager must take it upon him to

keep a few hours each day to listen to the problems of the employees and also help them

with any special cases that they might have brought.

The management must decide to move along the continuum between strictness and

leniency and try to set a more relaxed way to deal with the employees of the PersonalLoan Department in particular and the entire organization in general.

In the end I would just like to reinforce that a few nice words and smiles can make a

world of a difference in the relationship between a superior and a subordinate. This along

with the other suggestions can definitely improve staff morale and motivate them toachieve a more positive direction.

Suggestions for improving the Product:

How Time can be minimized?

The competitors of SCB get the Legal documents signed during the time of approval of the

application. Where as in case of Standard Chartered the legal documentation is carried out onlyafter the approval of the application and amount of loan for a particular case.

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

Mode of repayment in all cases is by Post-Dated-Checks, the applicant provides checksof his/her salary account and he mentions the installment and the date at which it will be

presented according to the Legal Amortization schedule for the installment, which

requires 12, 24 or 36 PDCs. The problem in this system is that local banks like; HBL,MCB, ABL take a week to give checkbooks to the customer. The Banks could have an

agreement amongst themselves to furnish requests for other banks on priority basis. This

may be a very large-scale solution to some. Therefore a simpler solution is to ask thecustomer to request for his/her checkbook as soon as the decision to take the loan is

reached. This can be the 1st thing that BDE’s tell the clients. This will ensure some

saving of time.

The process involves Credit department and Asset operation department. The Creditdepartment approves the deal and then Asset Operation prints the Legal documents for

the approved deal and then the process is carried out further. The extra time added due to

the documents going from one department to another and then back to the originaldepartment can be reduced in a way that Legal documents are added in a formalapplication and the Credit Dept. is given the authority to provide Legal documents.



How Quality can be improved?

• The quality of any services department relies as much on product itself as it relieson the staff that it acquires. The staff is selected on merit and proper training of

the staff is a must for ensuring quality. Proper incentives are also required to keep

them motivated and agile.

Department recently reduced the salary package and strengthened the commission structure. This

must be reviewed to ensure quality improvement.

• The product is only targeted to salaried class and the segments of Businessmenand Self-employed persons are not considered. The product must have flexibilityto accommodate those segments. As the quality of this product can be improved

mainly through showing greater volumes of disbursed loans so that the bank

realizes its increased importance and gives the strategies of this departmentgreater thought.

Bibliography:

Http://www.indiainfoline.com/pefi/apply/plon/stch/

http://www.standardchartered.com/pk /

http://www.standardchartered.com/annual-report 09

http://wholesalebanking.standardchartered.com/en/capabilities/financialmarkets/Pages/default.as px

http://www.tradingmarkets.com/

http://www.standardchartered.com/annual-report 08/

http://www.indiainfoline.com/pefi/apply/plon/stch/

http://www.standardchartered.com/pk/

http://www.standardchartered.com/annual-report%2009

http://wholesalebanking.standardchartered.com/en/capabilities/financialmarkets/Pages/default.aspx



http://www.standardchartered.com/annual-report%2008/

http://www.standardchartered.com/annual-report%2008/




http://www.standardchartered.com/annual-report%2009

http://www.standardchartered.com/pk/

http://www.indiainfoline.com/pefi/apply/plon/stch/

Documents

Project SCB