BANGLADESH’S GROWTH STORY IMPRESSIVE
MD FAZLUR RAHMAN
In conversation with The Daily Star, Standard Chartered CEO Bill Winters speaks on both local and global economies
The brutal militant attack on the Holey Artisan Bakery that killed 17 foreign citizens suddenly made Bangladesh a scary place to do business.
The July 1 attack had stoked doubts whether foreigners would keep visiting Bangladesh or working in the country.
Despite a feeling of unease in the air, top officials of foreign companies continued coming to Bangladesh, thanks to stern responses by the government following the attack — to tackle the rise of militancy.
One of those officials is Bill Winters, a star banker and group chief executive of Standard Chartered, who came to Bangladesh on Tuesday on a two-day visit delivering a positive signal to the local market.
“I am happy to see a serious response from the government. I know there is no easy fix to this. It is a global phenomenon,” Winters told The Daily Star in an interview.
“It is a concern in Bangladesh as it is in many of our other markets.”
“The human cost is enormous. Its economic cost is huge,” he said.
Winters said he is sure there are steps that can be taken to mitigate the most calamitous effect on local or global economy.
Winters joined the London-based but Asia and Africa-focused bank in June last year as its new chief executive.
He said he is familiar with Bangladesh and impressed by the progress the country has made in the past several decades, especially in the past several years.
Standard Chartered Bangladesh has become a strong local bank, promoting trade, investment and exports and bringing in capital to the country, he said.
The American banker, who spent 26 years with JPMorgan in diverse leadership roles, said South Asia is a bit of an oasis as it is largely free from geopolitical tensions.
South Asian economies have remained strong partly due to good policies and the import of commodities whose prices are falling, he said.
“Our Bangladesh business remains very strong. No complaints… I know that our team is focused on ways to do better, and we are doing better on the back of the investments we are making.”
In South Asia, the bank’s position is strong in Bangladesh, Pakistan and Nepal while there are challenges in India.
“But our programme remains the same: to invest in technology and people so that we can become a best-in-class service provider and gradually redeploy our capital to higher returning areas from lower returning areas.”
He said, like in India, the bank has repositioned itself quite well in countries like the United Arab Emirates, Kuwait and Qatar. He praised Africa, saying the continent offers a fabulous position for the bank.
He said Bangladesh Bank is very professional when it comes to supervision. “As an organisation, they are quite professional. I don’t think there is a supervision deficit in the country,” he said, adding that there is always room for improvement.
When asked about the health of state-run banks in Bangladesh, he said he has seen in a number of markets around the world that when “you have reasonably high level of government interference in a bank, accidents tend to happen.”
He said, during the financial crisis the US government’s interference came in the form of massive subsidies to the US housing market.
“As a result of the subsidies the housing market created the biggest bubble in the financial history, probably. It caused an extraordinary amount of pain everywhere in the world,” he said.
“I am a very strong advocate of governments staying out of markets because when they are getting into markets bad things tend to happen.”
After taking the helm of the British bank, Winters laid out an aggressive strategy to ensure that the bank is financially strong, raised enough capital from shareholders to dispel capital risks and began the process of cleaning up the balance sheet.
He said, in the last one year the bank made great progress and returned to profitability in the first half of 2016. “Our income is growing albeit slowly. Our expenses and risks are under control, and the investments are beginning to bear fruit. We have quite a bright future.
“We are concentrating on getting it right. We don’t have to look further than Bangladesh where we have a strong market with high customer satisfaction.”
He, however, said the bank takes risks and operates in markets that are risky themselves. “I expect to have some higher than normal level of non-performing loans for a bit longer. But it is under control.”
But he said the bank has to be more efficient. Winters has set a target to slash expenses by $3 billion by 2018, and the bank is halfway done and most of that came from trimming the management ranks.
“The flip side of saving the $3 billion is that the bank is investing every penny of the savings back into its business. Half of the investment will go into technology to be the best-in-class digital bank.”
Winters said the bank is already the best in mobile banking and online banking. “We need to automate not just the frontline but also our entire process.”
Winters said the bank is investing in new capabilities and Bangladesh is already a recipient of significant amount of the new investments.
“We are hoping to add branches and corporate client base. We are making investment in technology here. We would like to ensure that we remain at the leading edge of digital banking in Bangladesh.”
Winters said the bank has very strong business in Bangladesh and high customer satisfaction in a growing population. “We are very happy to be part of that.”
Bangladesh is, in some ways, a role model for Standard Chartered, he said. “The country is a core market.”
Ajay Kanwal, chief executive officer of Standard Chartered for Asean and South Asia region, who was also present during the interview, said it is fair to see that Bangladesh will be among the bank’s top ten markets. “It continues to be a strong investment destination for us.”
Apart from catering for local economy and businesses, the bank is successfully bringing in international businesses, capital and investors to Bangladesh. Half of the capital coming to Bangladesh is coming through Standard Chartered, according to Winters. “We are a big promoter of capital coming into the country and a big promoter of exports going out of the country.”
He said China plans to shift its excess manufacturing capacity and capital to other countries such as Bangladesh.
When the Chinese are looking to finance infrastructure projects in Bangladesh, Pakistan, the UAE, Nigeria or Kenya, the natural partner for them is Standard Chartered because it has a big operation in the world’s second-largest economy and also operates in the countries where China wants to invest in.
“We are a very natural arranger of those sorts of financing. That’s exactly what we are doing.”
Winters said as the remotest part of the population is getting access to digital economy through mobile phones, there is opportunity for the bank to bring in a much larger portion of the unbanked population under the banking operation.
He also thinks that it is not a big issue for Bangladesh that local firms are borrowing from external sources to benefit from low-cost funds.
Abrar A Anwar, CEO of Standard Chartered Bangladesh, said the country’s total debt is 15 percent of its gross domestic product.
“It is very low. Sometimes we wonder whether it is detrimental to our own growth as we have been so conservative and don’t borrow to grow.”
Of the $8 billion that entered Bangladesh’s private sector as loans from international sources, $3.5 billion has been raised by Standard Chartered for power projects, aviation and export-oriented industries.
SEPTEMBER 08, 2016