Bangladesh: The New Frontier for Banks

Citi's chief country officer for Bangladesh, Mamun Rashid, talks about what opportunities lie ahead for the bank

By Lara Wozniak

Bangladesh remains one of the few remaining outposts in investment banking in Asia. But banks are steadily investing in the country and last year Citi established an investment banking presence in Bangladesh. The bank's chief country officer for the country, Mamun Rashid, explains what opportunities lay ahead for Citi in Bangladesh.

What investment banking opportunities are there in Bangladesh?
There is a wide range of opportunities to help clients in Bangladesh raise capital to support their growth or advise them on opportunities to grow either domestically or internationally. We are also seeing an increased interest from companies looking to invest in Bangladesh.

A recent example of this would be the announcement in mid-June where AK Khan & Co signed a definitive agreement for the sale of its 30% stake in TMIB to NTT DoCoMo for a purchase consideration of $350 million. [TMIB is the third largest mobile operator in Bangladesh, with around 7.1 million subscribers as of December 2007: AKK is one of the largest and oldest private sector corporations in Bangladesh.]

The acquisition by NTT DoCoMo will serve to increase its footprint in the fast growing Asian wireless market. What better example of the increasing international investment appetite into Bangladesh than an investment by one of the world's leading corporations?

On the capital markets front, the pace of privatisation is increasing and the government has started floating state-owned enterprises. Last year alone 14 companies were listed on the Dhaka Stock Exchange through IPOs. The pace of reform has been impressive and the government and regulators have done a good job in promoting development. Over the past five years the Asian Development Bank along with the Securities Exchange Commission have developed new trading rules, public issue rules, settlement systems and bond issuance rules to govern the market and create more transparency in the marketplace.

More and more companies in Bangladesh are also increasingly using risk management products and hedging in today's volatile global markets. This is also something where we can play a role via our equities, fixed income, currencies and commodities teams to help clients navigate these volatile markets, including hedging against future rises in commodities prices.

What is Citi's history in Bangladesh?
Citibank established its presence in Bangladesh through a representative office in 1987. The bank opened its first full-service branch in Dhaka in 1995 and the second branch in Chittagong in 2000. At present, Citibank Bangladesh has four branches, and two offshore banking units in the export processing zones in both Dhaka and Chittagong.

Our operations include the major business units of Citi's Institutional Clients Group, such as corporate and commercial banking, global transaction services. We also received a license for investment banking operations earlier this year.

How sophisticated are some of Bangladesh's leading companies? What products and services do they use?
There is a noticeable increase in sophistication, the dialogue we are having with some of our clients in the country is evolving fast: 'What are my opportunities in the international capital markets?' or 'Give me some local and regional ideas to help me grow our business...' are now regular discussions that were not so common just a few years ago.

Our main business though remains in the global transaction services space. Many companies in Bangladesh are looking for-cost effective and flexible transaction management services. In April, Citi signed a network arrangement which will allow our clients to use the more than 10,000 post offices in Bangladesh for their regular banking services. Also this year we signed an agreement with Dhaka Electric Supply Authority to offer our CitiConnect services to help them facilitate online bill collections and payment services. We are also active in the corporate and commercial banking space, providing corporate loans and other products to small- and medium-sized companies and multinationals in the country.