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Biman Bangladesh Airlines, the national flag carrier, is set to receive US$ 45.50 million in loan soon from Canada for payment of two aircraft, officials concerned said. The loan will be utilised for re-financing of loan that had been taken from the country's largest state-owned bank for making pre-delivery payment (PDP) to Boeing series 737-800 aircraft in 2015, they added. The standing committee on non-concessional loan approved the loan most recently. The loan has an interest rate of three months LIBOR plus 0.55 per cent and is repayable in over 12 years. In April last year, a separate circular was published in different local and international dailies to take out US$ 120 million of loan for re-financing. Different banks and international lenders submitted tenders to provide funds. Of the tenders, the proposal made by Standard Chartered Bank has been selected as the lowest bidder. Toronto-Dominion Bank, a Canadian multinational banking and financial services corporation, is also considered the second lowest bidder, a source concerned said. Later, a committee formed by the Ministry of Civil Aviation and Tourism sat in meeting twice with Standard Chartered Bank for relaxing proposed loan conditions. But the bank submitted a fresh term sheet for the loan after negotiations. As a result, the standing committee did not approve the loan proposal. The standing committee has approved the loan proposal made by Canadian Bank due to its flexible conditions than that of Standard Chartered Bank.     Earlier, a Canadian financier -Maryna Limited- had signed an agreement to make pre-delivery payment (PDP) worth US$ 136.05 million to Biman Bangladesh Airlines to buy four passenger aircraft as part of rebuilding its fleet. But Maryna Limited had failed to give PDP support to buy four passenger aircraft. At last, the government cancelled the agreement with the financer. The national flag carrier started negotiations afresh with Sonali Bank (UK) Ltd to get funds for the purchase of aircraft from Boeing Company following cancellation of its previous contract with a Canadian financier. In November 2015, it signed a loan agreement with the Canadian company for PDP financing of the US-based Boeing Company. Biman already sent a letter to the firm for withdrawal of the loan agreement, according to its 157th board of directors meeting held in December. Biman Bangladesh Airlines signed two agreements with Boeing in 2008 for purchasing four 777-300ER aircraft, two 737-800 aircraft and four 787-800 aircraft to modernise its fleet. Four 777-300ER aeroplanes joined the Biman fleet in October-November 2011 and February-March 2014. The fifth of the Boeing series 737-800 was delivered in 2015. The four remaining aircraft, mostly 787-800, popularly known as Dreamliner, are scheduled to be delivered by 2019 and 2020. Some Tk 4.50 billion has been provided to Boeing as payment for the last two Boeing aircraft.       rezamumu@gmail.com....

Published at: 2017-03-11 00:00:04

The volume of syndicated loans fell significantly in recent years mainly due to lack of large projects in the private sector. This highlights one unwanted development that financial institutions are gradually losing the good mode of financing. People, familiar with the development in banks and financial institutions, told the FE that syndicated loans fell both by number and volume. The syndicated loans amounted to Tk 102.51 billion in 2015, Tk 98.34 billion in 2014 and Tk 1,218.86 billion in 2013, the highest amount recorded. The amount was Tk 53.07 billion up to June in 2016 and the data for remaining six months of that year could not be found.    Relevant officials said many private parties are now sourcing funds from foreign sources thus contributing to such shrinkage in syndicated loans which require well documentation and usually consumes more time. A research study, conducted by the Bangladesh Institute of Bank Management (BIBM), showed that the percentage of bad syndicated loans is less than 1.0 per cent whereas non-performing loans in overall lending are over 10 per cent. Helal Ahmed Chowdhury, a former managing director of the Pubali Bank, told the FE that the main motivation of loan syndication is to spread and share the credit risks among all the participating banks. He said, "The loans usually follow better management, better supervision and scrutiny." He said many countries like Singapore, Malaysia, Korea and even Indonesia resorted to such type of financing for big projects contributing to their economies significantly. Loan syndication is a widely used structured finance product offered by banks and non-bank financial institutions for providing financial support to finance large projects. Syndicated loans involve deals where a group of two or more lenders extend credit to a borrower, governed by one loan contract. The loan usually is of longer maturity period and so far banks and non-bank financial institutions funded Tk 765.29 billion in more than 20 years up to June 2016 to nearly 400 projects, mostly in power and energy as well as telecom sectors. Banks funded sectors such as textile, steel, cement, food, ceramic, real estate, IT, infrastructure etc. However, a number of top executives in commercial banks told the FE last week that the banks' capacity has  expanded over the years and many now offer single exposure instead of involvement of many financial institutions resulting in difficulties in reaching a consensus over a project. Anis A. Khan, managing director and CEO of the Mutual Trust Bank said banks' capacity has been widened and many banks handle big loans singly. Mr Khan, also chairman of the Association of Bankers Bangladesh, said the number of power projects also dropped in recent years. Golam Hafiz Ahmed, managing director and CEO of the National Credit and Commerce Bank noted that a 'bad culture' in the financial institutions has started through aggressive lending by many. "There are many risk factors for such type of single disbursement although borrowers prefer single lending entity to avoid cumbersome process of documentation and other complexities. Some senior bankers argue that this type of loan should be widened in many unexplored areas considering the interest of parties and financial institutions. Md Touhidul Alam Khan, deputy managing director and chief business officer of the privately-owned Prime Bank said there is no effective practice of syndicated loan in firms' working capital. "To my view, this should be introduced immediately to benefit both banks and clients." He noted that there are now unorganised syndicated loans for working capital which, he says, lead to many unethical practices including over-financing among borrowers, among others. He said there is also a psychological aspect of syndicated loans. "If the parties repay installments of syndicated loans in time, they earn goodwill in the banking industry. This  ultimately widens scope for further loans." He also opined that big investors are not coming as before due to lack of infrastructure facilities, gas connection and for various other reasons. As a result, the demand for syndicated loan has now been slightly reduced. He also said, due to increase of capital under BASEL III framework, banks, in some cases, are financing big amounts under the single borrower exposure limit though Bangladesh Bank always asks for diversification of risks through syndicated loan in case of a large loan. Md Ruhul Amin, a faculty at the central bank-controlled BIBM, who dealt with the research, told the FE Thursday that cumbersome and lengthy process discourages good borrowers to raise a large amount of funds from the domestic market through syndication. He also said after issuing drawdown notice by the lead bank under the facility agreement, some participating lenders do not act as per notice with regard to providing fund. This also works as a barrier, apart from lacking skilled manpower to handle such type of loans. In the backdrop of imposing single borrower exposure limit by the central bank and considering the issues like risk sharing, diversification of credit portfolio, meeting large financing need, as well as providing innovative financial solution to clients, banks and NBFIs started loan syndication in Bangladesh in the 90s.     jasimharoon@yahoo.com....

Published at: 2017-03-11 00:00:04

Bangladesh Ambassador in Brazil and former Foreign Secretary Mohamed Mijarul Quayes died at a hospital in Brasília.  "Mr Quayes was admitted to the hospital several days ago for ailments. He breathed his last at 9 pm (Friday) Brazil local time and 6 am (Saturday) Bangladesh time," , a Foreign Ministry spokesman told BSS without immediate elaboration. A career diplomat, Quayes was a 1982 batch officer of Bangladesh Civil Service, who served as foreign secretary and in many other foreign capacities at home and abroad. ....

Published at: 2017-03-11 00:00:04

Commonwealth trade and investment ministers concluded their two-day meeting in London on Friday with a commitment to make the full use of the 'Commonwealth advantage' to boost trade within the 52-member bloc. Ministers and representatives from more than 35 countries attended the meeting, jointly convened by the Commonwealth Secretariat and the Commonwealth Enterprise and Investment Council. Commerce Minister Tofail Ahmed represented Bangladesh in the important meeting. In her address to ministers, Commonwealth Secretary-General Patricia Scotland said: "On trade, our family has never been more needed that it is today. We all know that we've been living in troubled times and together we will have to look very carefully at what advantages there are within our family. Intra-Commonwealth trade has never been more important." The secretary general said there is a 19 per cent trade advantage within the Commonwealth. "We must see how the global trade landscape can be changed in favour of that advantage and the particular factors that drive and differentiate intra-Commonwealth trade and investment be improved." At the meeting, ministers focused on opportunities for the Commonwealth to strengthen collaboration by promoting intra-Commonwealth trade and investment flows, according to a message UNB received from the Commonwealth headquarters. They identified key challenges hindering trade competitiveness and discussed how to overcome them through mutual support. The ministers underscored the importance of building a global economy that benefits all of the Commonwealth's 2.4 billion citizens, noting that developing countries need an enabling global trading environment to achieve the Sustainable Development Goals. Against a backdrop of global economic uncertainty and a slowdown in worldwide growth, the Commonwealth is currently assisting more than 30 countries on their effective integration into the global trading system. It is building their capacity to take advantage of opportunities, including improving trade competitiveness. The ministers also noted the important role of the private sector in facilitating trade and investment. They welcomed Commonwealth initiatives to forge business to business links and pledged to continue to engage with the private sector in a pan-Commonwealth setting. Lord Marland, Chairman, Commonwealth Enterprise and Investment Council said, "there is an opportunity for the Commonwealth to demonstrate global leadership on free and fair trade. Businesses want to see stability, transparency, predictability and the rule of law and the Commonwealth can work together to improve the ease of doing business in all member countries. This will allow companies, particularly Small and Medium Enterprises, to have the confidence to trade and invest across the Commonwealth. Creating a conducive business environment and helping businesses find a route to market is core to the enabling role of our organisation. It was essential to have the private sector fully engaged in the Trade Ministers Meeting." Discussions also took place on the likely impact of the UK's withdrawal from the European Union, which could disrupt market access to the UK and Europe. The Secretary-General stressed that 'no country should be left behind' in the post-Brexit trade landscape. The ministers acknowledged that Brexit provides opportunities for broader cooperation on trade and investment between Commonwealth countries and committed to examining specific recommendations for practical initiatives that can be recommended to the next Commonwealth Heads of Government meeting in 2018.....

Published at: 2017-03-11 00:00:04

Members of Border Guard Bangladesh (BGB) seized smuggled Indian medicines worth Tk 2.4 million from Amrakhali at Benapole in Jessore on Friday, reports UNB. Tipped off, a team of the border force conducted a drive in the area and intercepted the Dhaka-bound bus of 'Sohag Paribahan' around 12 noon, said Afzal Hossain, a nayeb subeder at Amrakhali check-post. However, no one was arrested in this connection. They recovered the Indian medicines after searching the vehicle and handed those over to Jessore customs warehouse.  ....

Published at: 2017-03-11 00:00:04