A BIRD’s EYE VIEW OF THE ECONOMY:

While considering any of the banks working under any of the sectors of Pakistan , first we
will have to take a good look at the total economic situation of the country. Even through grave
depression in the economy and in the political sector Pakistan no doubt is considered to be a
positive developing economy.
Thought the economy of Pakistan have been very positive and upcoming in a few years
but yet the long periods of bad financial and political performance have kept it away from the
status of highly prosperous country. Apart from a few years e.g. 1954, 1991, etc. the economy of
Pakistan has been struggling all the time. Lack of proper planning, ineffective leadership,
political upheaval and inefficient utilization of the resources has put the country in the dungeon of
the heavy debt servicing, inflation, corruption, injustice, poverty, unemployment and many more.
In this turmoil the banking sector also got the pounding very much, and have not been able to
flourish well.

Then came the biggest effecting scenario of “Nine Eleven”. During the last three year,
after the 11th September attacks on USA, the economy showed some improvement in the vital
signs and it is now on its way to the stage of revival,
The basic factors which have influenced the economy in major areas are as followed:

• External reserves continue to increase and are currently at USD 11 billion(approx)

representing seven months import cover.( important factor must be noticed that now the
bank reserves are considered to be the part of the foreign reserves, and now a days the
bank reserves are almost 6 billion USD.)
• The remittances from the people of Pakistan working in the other countries increased bye
a large amount due to the change in the policies of the govt.
• GDP growth improved from 2.5% last year to 3.6%.
• Huge amounts of debts were released bye the foreign and International Islamic banks,
which helped to make the availability of the Foreign Exchange for a better exchange rate.)
 The factors which have been important to play the vital part in the ecomony are as
followed:
o The threat of war with India has subsidized, however clashes on the line of control
continues.
o Stock market has shown some signs of improvement and the currency has stabled
as the restoration of democracy in the country.
o The bank rates have been decreased by a huge amount in the last two years , which
instigated the common man to invest more in the stock exchange and in the real
estate market.
o The democracy have been revived in the country which have given a positive
impact to the foreign investor, and have shown a new dimension of huge
investment in Pakistan. But now a days the political scenario is once again
changing its face.

Why do we need banks …..?

It will not be an exaggerated statement if I do call the bank as the back bone of the
economy of any country , modern or orthodox.
Lets see what the banks are and what are there duties in the enhancement of any economy.
“The banks receives deposits and advances the loans”.
Now lets have a look at a more complex definition which will not only explain the functions of
the bank but will also help us to understanding its role in the economy.
“The banks are the institutions which channel the idle savings of the common
man as well as of the organizations to a pool where the funds are collected for
the further disbursement in order to make the maximum use of them.”
So from the above mentioned definitions we come to know that following are the main roles that
a bank has to play in any phenomenon in which it is functioning;
 A bank is a safe custodian of the money of the people with a promises to earn on the
behalf of the deposited & give them back their money on demand.
 Bank is a dealer in debt of its own & other people A banker is a dealer in capital or more
properly a dealer in money. He is an intermediate party between borrower & lender.
 The bank only deals in the documents not In the goods.
  Banking means the accepting, for the purpose of lending or investment, of deposit of
money from public, repayable by cheque, draft, and order or otherwise. (Banking
Companies Ordinance 1962)
 Banks lends the money to those sectors which are short of the capital and have the
capability to use the capital well

Mainly the following types of the banks are functioning and full filling the needs of the
economy accordingly.

 Central Banks
 Commercial Banks (Scheduled Bank, Non- Scheduled Bank)
 Saving Bank
 Agriculture Development Bank
 Industrial Bank
 Mortgage Bank
 Foreign Exchange Bank
 Investment Bank
 Co-Operative Bank
 School Bank

What are the commercial banks..?

In this particular assignment we are mainly concerned with the commercial bank, so it will
be very handy to have a closer but brief look of the roles , functions and set up of the commercial
banks.

Commercial Banks mainly provide the services to the general public.

The main services provided by the commercial banks to the general public are:
 Deposits of the customers
 Advances to the deserving customers
 Utility bills payment services
 Provision of easy money(plastic money, travelers cheques.)
 Transfer of money from one place to another.

There are two main types of deposits

 Demand & Time Deposits

 Current Deposits
. Normally banks invest and lend in the following forms.
 Treasury bills
 Corporate Financing
 Industrial Financing
 Bridge Financing
 Securities Investment
 S.M.E
 Consumer Banking (Credit Cards, Auto Loans, Personal Loans, leasing)

The deposits in the current account are used for invests in such a manner so that if at any
point of time any customer comes to collect his/her money then they would not face any problem.
Through experience and daily practices, they set a judgment about keeping a particular amount of
money at particular time through a process called Gapping(cash liquidity= Gap between the
money deposited and the money lend). In gapping they match their assets and liabilities and
match the time of there maturing. After analyzing the amount of idle money available between the
time periods of different maturities they decide about the type of investment they would do.

BANKING AND FINANCIAL SECTOR

IN PAKISTAN:
The aggression shown in the sector of banking development in Pakistan has, perhaps very
few parallels in the world. Starting virtually from scratch in 1947, the country today possesses a
full range of banking and financial institutions to cope with the multifarious needs of a growing
economy. At the time of partition, total number of commercial banks in Pakistan was 38. Out of
these, the Pakistani banks were 2, Indian banks 29, and exchange bank 7. The total deposits of
Pakistani banks stood at Rs. 88.0 millions where as advances were Rs. 198.0 millions.
Since 1990 the Government of Pakistan (GOP) has introduced various reforms in the
financial services sector enhancing the level of autonomy enjoyed by the SBP. The number of
banks operating in Pakistan has increased, which in turn has resulted in increased competition.
The banking sector, in general, has shown good progress during the last few years. During
previous five years, the combined total assets of domestic banks, showed an average annual
increase of 22 percent, while combined deposits have recorded an increase of 27 percent per
annum.
Three major nationalized commercial banks (NCBs) are still the dominant players in the
market, controlling about fifty-one percent of the entire banking sector deposits and fifty percent
of advances.
 Commercial banks play a key role in the regeneration of economic activity in the
country. As the country’s largest deposit institutions and the main source of short term credit, they
form, so to speak, the heart of the financial system.

The financial Institutional sector of our economy can be divided into two major categories namely

1. Banking Companies
2. Non-Banking Financial Institutions

The Banking Companies can be further categorized as

 According to the nationality of the share holders

 According to the size of the bank

1) : On the basis of the nationality of the banks the banks are further divided into two categories:
• Pakistani banks.
• Foreign banks.
2): According to the size of the banks they are further classified into two.
• Scheduled Banks
• Non-Scheduled Banks

The Pakistani banks are further divided into the followings:

 Nationalized Commercial Banks
 Denationalized Commercial Banks
 Domestic Private Commercial Banks
 Cooperative Banks

DETAILS OF THE BANKS IN PAKISTAN:

First we will have to take a look at the details of the kind of the banks that exists in Pakistan then
we will see there names and sectors.
  ACCORDING TO THE NATIONALTY OF THE SHARE HOLDERS:
This includes the banking institutions
(a):PAKISTANI BANKS:
 Nationalized Commercial Banks
 Denationalized Commercial Banks
 Domestic Private Commercial Banks
 Cooperative Banks

(b):FOREIGN BANKS

ACCORDING TO THE SIZE OF THE BANK:

In case the basis of classification is size, then these are of two categories:

• Scheduled Banks
• Non-Scheduled Banks

THE NON FINANCIAL BANKING INSTITUTIONS IN

PAKISTAN ARE OF THESE TYPES:

• Investment Banks,
• Leasing Companies,
• Mutual Funds,
• Modarabas,
• Development Financial Institutions (DFIs) and
• Housing Finance Companies.
(All the commercial banks and other financial institutions are governed by the Govt. of
Pakistan through State bank of Pakistan which makes and implements the prudential
regulations accordingly.
 THE FIGURES PERTAINING TO THE BANKS AND
THERE BRANCHES IN PAKISTAN:

There are :
 13 private commercial banks,
 4 privatized commercial banks,
 3 nationalized commercial banks and
 21 foreign banks
 16 Investment Banks
 29 Leasing Companies
 53 Modaraba Companies

LIST(Names) OF THE BANKS OPERATING IN PAKISTAN:

FOREIGN BANKS
 ABN Amro Bank Ltd.
 American Express Bank Ltd.
 Bank of America
 Standard Chartered Bank
 Chase Manhattan Overseas Corp.
 Deutsche Bank AG
 Credit Agricole Indosuez
 Habib Bank AG Zurich
 The French International Bank
 Al-Baraka Islamic Investment Bank
 Emirates Bank International Ltd.
 Mashreq Bank
  The Bank of Tokyo Mitsubishi Ltd.
 Hong Kong and Shanghai Bank
 Oman International Bank S.A.O.G.

LOCAL BANKS/DFIs/MODARABAS

 Allied Bank of Pakistan Ltd.

 First Women Bank Ltd.
 Habib Bank Limited
 Muslim Commercial Bank
 National Bank of Pakistan
 Askari Commercial Bank Ltd.
 Platinum Commercial Bank Ltd.
 United Bank Limited
 Faysal Bank Ltd.
 Prime Commercial Bank Ltd.
 Union Bank Ltd.
 Bankers Equity Ltd.
 Bolan Bank Ltd.
 Prudential Commercial Bank Ltd.
 Bank Al-Falah Ltd.
 The Bank of Khyber
 Gulf Commercial Bank Limited
 Pakistan Industrial Credit & Investment Corporation Ltd.
 Citibank Housing Finance Co. Ltd.
 National Development Finance Corporation
 International Housing Finance Ltd.
 First Professional Modaraba
 Industrial Development Bank of Pakistan
  House Building Finance Corporation
 Investment Corporation of Pakistan
 Khadim Ali Shah Bukhari bank.

Notice :
The number of branches for Pakistani banks, stand at 8,597 and for foreign banks at 87. The
combined total assets of domestic banks have increased from Rs. 771.3 billion in 1992 to 1,616.3
billion in 1997, showing an average increase of 22 percent annually. Similarly, combined annual
deposits have recorded an increase of 27 percent, from Rs. 318.9 billion in 1992 to 1,066 billion
in 1996. Advances recorded an annual growth of 27 percent from Rs. 192.8 billion in 1992 to Rs.
641 billion in 1997. Capital adequacy ratio is 8 percent for domestic private banks compared to
less than 5 percent for NCBs.

Some special info… about Foreign banks …

The twenty one foreign banks operating in Pakistan are playing a significant role by
incorporating new technologies and providing better quality services. Policies of privatization,
foreign exchange reforms and structural adjustments, have increased the inflow of foreign
resources through direct and portfolio investment. Most foreign banks in Pakistan have branches
only in big commercial/industrial centres, unlike local banks which also operate in small towns.
In trade financing, the role of foreign banks is even more significant, as approximately
30 percent of the total trade of the country is transacted through them. Major portion of the trade
financing is for importers to establish letters of credit.
In 1991 when GOP allowed resident Pakistanis to open foreign currency accounts, many banks
directed their efforts towards the previously untapped consumer and retail banking sector. New
products such as credit cards, housing finance and automobile
finance were introduced. Foreign banks also play an important role in assisting local corporations
to access international capital markets. The total deposits of the foreign banks increased from Rs.
74.4 billion in 1992 to Rs. 213.4 billion in 1997. Furthermore, their advances increased from Rs.
34.2 billion in 1992 to Rs. 100 billion in 1997 showing an annual increase of 37 percent.
 THE STATUS OF STANDARD CHARTERED BANK IN
PAKISTAN:

The standard chartered bank is one of the oldest and the leading foreign banks in Pakistan, which
is operating in our country right since our formation.

Currently it is the elite foreign bank in Pakistan with a very wide and well knitted network
right through out all the four provinces. Standard chartered has also been considered one of the
very best by the exporters of Pakistan as it gives them the Letter of credit and funds transferability
right through out the globe. It has also been one of the pioneers to introduce the plastic money in
Pakistan. Like Standard Chartered visa card and now the Standard Chartered ATM cards. Due to
this facility you can be a beneficiary at any time and at any place right through out the geography
of Pakistan.

The standard chartered bank has also done a great deal in raising the living standard of the
people of Pakistan by providing them the most swift and effective utility banking services. It is
also a source of training and employments for the groomed locals who does have the capability to
make them self be known at the highest level.

Through out the country Standard Chartered have a very good coordination with the other
local and foreign banks which gives the flexibility to the services provided by the bank. For
example SCB have got it self connected with the M-net of the Muslim commercial bank , so now
the ATM card holders of the SCB can also use the ATM facility at any MCB outlets.

These and many other financial and social facilities and benefits provided by SCB have
made it a very popular and well recognized bank through out Pakistan and have given it the
STATUS of one of the best banks in Pakistan.
 Window to the bank:
Before knowing the historical back ground of the institution in the lime light first we will have to
take a look at the brief introduction describing the incorporation, locations and performance of
SCB

 Standard Chartered is the world's leading emerging markets bank headquartered in

London. Its businesses however, have always been overwhelmingly international.(which
very positively depicts one of its cores)
 The Bank is currently operating in Africa, Asia Pacific, America, Middle East & South
Asia and Europe.(this gives the bank one of the most well knitted network)
 Standard Chartered is employing nearly 30,000 people in over 750 offices in more than 56
countries primarily in countries in the Asia Pacific Region, South Asia, and the Middle
East, Africa and the Americas and its assets stand at approximately US$ 90 billion.
 The bank has the privilege of holding two of the largest acquisitions in the history of the
bank with the purchase of Grindlays Bank from the ANZ Group and the acquisition of the
Chase Consumer Banking operations in Hong Kong in the year 2000.
 The Bank target market comprises of both Consumer and Wholesale banking customers.
 In Pakistan, the Group comprises of Standard Chartered Bank and Standard Chartered
Grindlays Bank(which have now eventually merged into standard chartered bank), the
largest foreign banking group in the country, with a collective experience of 270 years in
Pakistan alone(it includes the pre-partition time as well).
 The bank with its long heritage of nearly 150 years is capable to change with
time(adaptive behaviour), offering quality products by means that are convenient to the
potential customers.
 The bank has currently 21 online branches across Pakistan in all the four provinces and
eight major cities which ensure that the services are being performed quickly and
efficiently.(instalment of a new tailored info. sharing network)
 There are 6 branches (two of Standard Chartered Grindlays Bank and four of Standard
Chartered Bank) in Lahore, offering unmatched services to its customers.
  The bank head office capital account stands at Rs. 2,521.236 millions where as its reserves
and no-remitted profits aggregate at Rs. 618.691 millions as on 31st Dec. 2001.
 The bank recorded an increase of 20% in the deposit holdings in the financial year 2001.
 First Grindlays Modarba, the pioneer and the largest leasing entity, has been introduced by
Standard Chartered Bank (a foreign bank) in the industry and this is the only Modarba in
Pakistan with an external credit rating of A2.

HISTORY & GLORY:

Standard Chartered is the world's leading bank headquartered in London. However, it has
been operating all around the world. In fact it is more successful in the regions other than Europe
such as South Asia and Middle East. Here I am giving a brief summary of the main events in the
history of Standard Chartered and some of the organizations with which it merged.

BANKS AT THE BEGINNING , STEPIING FORWARD INCH BY

INCH..:

THE CHARTERED BANK:

1853

Of the two banks, the Chartered Bank is the older having been founded in 1853 following
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 prominent publications.

1858 ;The Chartered Bank

• opened its first branches in Chennai and Mumbai

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

1861

The Singapore agency was upgraded to a branch which helped provide finance for the
rapidly developing rubber and tin industries in Malaysia.

1862

The Chartered Bank was authorized

• To issue bank notes in Hong Kong.

• 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 Marketing in South Africa. Today Standard
Chartered is still one of the three banks which print Hong Kong's bank notes.

1863

The Chartered Bank opened its branches in Pakistan and Indonesia.

1892

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

1900
 The Chartered 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.

1904

During 1904, a branch opened in Vietnam.

THE STANDARD BANK

1862

Nine years after the formation of The Chartered Bank, 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.

1885

The Standard Bank 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 goldfield in
the world passed through the Standard Bank on its way to London.

1912

Uganda was the one included in the global banking network of the bank in 1912.

Of these new businesses, Botswana, Zanzibar and the D.R.C. proved the most difficult and the
branches soon closed.

1934
 A branch in Botswana opened again in 1934 but lasted for only a year

1950

The Bank re-opened for business in Botswana in 1950.

THE IMPACT OF THE POLITICS AND THE WARS:

Politics have always been the biggest factor of economic ups and downs in the developing
countries like Pakistan and other south Asian countries. The wars fought between nations and
locals have been a negative of this region for many years from now. The world politics have been
playing a pivotal role in the economics of these areas.

Lets have a look at the fact that how the politics and the wars have effected the banking
system in general and Standard Chartered bank in particular

The First World War:

Even the First World War offered opportunities for expansion when the Standard Bank set up a
branch in Tanzania shortly after British troops occupied the formerly German administered Dar-
es-Salaam in September 1916. Both banks survived the inter-war years but the world trade slump
led to the closure of operations in the Canary Islands, Liberia, the Netherlands, and Equatorial
Guinea. Disaster struck the Chartered Bank's office in Yokohama, Japan, when it was destroyed
by an earthquake in 1923 killing a number of staff.

The Second World War:

The Chartered Bank was particularly affected by the Second World War when numerous Asian
countries were occupied by Japan.

The International Financial Institutions :

 After the second world war there have been the establishment of the two new international
financial institutions. One called “international monetary fund “and the other one was named as
“world bank”. These two banks were suppose to provide the monetary system to the member
countries and finance there restructuring . they were looking forward to operate with the help of
the local and the international banks. So in this era the role of the banks also changed a lot. Now
they were converted into the facilitators and financers and refinancers and they were no more
merely only the service providers to the general public.

THE POST WAR YEARS & OUR BANK:

After the Second World War many countries in Asia and Africa gained their
independence. This led to local incorporation in some countries, particularly in Africa. Other
operations such as those in Iraq, Angola, Myanmar and Libya were nationalized, while in
Indonesia the Jakarta office was destroyed in an attempted coup detest.

1948

In 1948 the Chartered Bank opened in Bangladesh.

1957

During 1957 it acquired the Eastern Bank. The Eastern Bank gave the Chartered Bank a
network of branches including Aden, Bahrain, Beirut, Cyprus, Lebanon, Qatar and the
United Arab Emirates.

1959

The Chartered Bank also entered into a joint venture to form the Irano-British Bank
which opened for business in 1959. The bank grew rapidly and had 24 branches when it
was nationalized in 1981. By the mid 1950s the Standard Bank had around 600 offices in
Southern, Central and Eastern Africa.
1965

Its network grew substantially in 1965 when it merged with the former Bank of British
West Africa which had some 60 branches in Nigeria, 40 branches in Ghana and eleven
branches in Sierra Leone in addition to operations in Cameroon and Gambia. Despite
these acquisitions and expansion into new countries such as Mexico, South Korea and
Oman (1968), both the Standard and Chartered Bank networks were comparatively small.
Both viewed the future with some trepidation as the need to protect themselves from
acquisition became ever more apparent.

Constituents of the new merger:

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.

THE CORNER STONE IN 1969, THE FRIENDLY

MERGER:

In 1969 the decision was made by the Standard Bank and the Chartered Bank to undergo a
friendly merger thus forming Standard Chartered Private Limited Company. It was one year later
that the descendants of the "Chartered Bank of India, Australia and China" were finally permitted
to open a representative office in Sydney, Australia.

Acquisition Of Hodge Group:

Standard Chartered subsequently acquired the UK based Hodge Group, in which it already had a
minority shareholding. The Hodge Group brought to Standard Chartered an extensive network of
UK offices specializing in instalment credit and industrial leasing, and after a period of
rationalization its name was changed to Chartered Trust Limited.
Acquisition Of Wallace Brothers Group:

Subsequently Standard Chartered acquired Wallace Brothers Group. Its operations in Jersey
emerged from the integration of other Hodge Group businesses with those of Wallace Brothers
Bank (Jersey), Limited.

Strategy Following Merger:

Standard Chartered decided, after the merger, to expand the Group outside its traditional markets.

In Europe

• A number of offices were opened including Austria, Belgium, Denmark, and

Ireland, Spain and Sweden as well as several major cities in the UK.
• Standard Chartered also opened offices in Argentina, Canada, Colombia, the
Falkland Islands, Panama and Nepal.

In USA

• A number of offices were opened and three banks were acquired. These included the
Union Bank of California which 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.
 STANDARD CHARTERED AND THE TRI-DECADE:

Standard Chartered In 1980’s:

By the late 1980s

• Standard Chartered already had considerable exposure to third world debt.

• The bank had provisions against loans to corporations and entrepreneurs who
could not meet their commitments.
• The bank 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.
• Prime focus in Asia, Africa, and Middle East led to a series of divestments notably
in Europe, the United States and Africa.
• Staff numbers were reduced; businesses not considered core were sold or closed;
associate holdings disposed of; unprofitable branches closed and back office functions
consolidated.
• Expensive buildings were sold with the proceeds reinvested in the business, and
the senior management team was radically changed and strengthened.

Standard Chartered In 1990’s:

The main headlines included

• 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.

Standard Chartered In 2000:

Today Standard Chartered is the world's leading emerging markets bank employing
30,000 people in over 750 offices in more than 56 countries primarily in countries in the Asia
Pacific Region, South Asia, the Middle East, Africa and the Americas.

The Acquisition of ANZ & GRINDLAYS BANK:

The new millennium has brought with it the largest acquisitions in the history of the bank with the
purchase of Grindlays Bank from the ANZ Group in the regions of Middle East and South Asia
for US$ 1.34 Billion.

The Acquisition of Chase Consumer Banking operations:

The acquisition of the Chase Consumer Banking operations in Hong Kong for US$ 1.32 Billion in
2000 demonstrates Standard Chartered firm committed to the emerging markets, where it has a
strong and established presence and where it sees its future growth. Deal Makes Standard
Chartered Market Leader in Hong Kong Cards.

Standard Chartered PLC announces that it has signed an agreement with The Chase
Manhattan Bank to acquire the entire issued share capital of Chase Manhattan Card Company
Limited ("Chase Manhattan Card") and Chase’s Hong Kong-based retail banking business for
around US$1.32 billion. The total consideration, which includes goodwill of US$1.02 billion, will
be paid in cash and will be determined by reference to completion accounts.

CHARTERED TRUST SOLD TO LLOYDS TSB:

Standard Chartered sold Chartered Trust, the group’s UK and Channel Islands consumer finance
and contract hire businesses, to Lloyds UDT, a subsidiary of Lloyds TSB Group, for 627 million.

THE PRESENT STATUS:(Opening of the new horizons…)

Standard Chartered is a leading player in the world's major financial centers with clear leadership
in the emerging markets. Through their onshore presence in 57 countries, they offer a one-stop
risk management solution to our customers - the local corporate, multinational companies,
investment and financial institutions, and central banks.

At Standard Chartered, they understand your needs and they seek to deliver their products
and services to the customer without compromising on their standards of service and delivery.

The Standard Chartered Bank is the first in the MESA (Middle East And South Asia)
region and the First in the local market to offer E-Statements to its customers. The launch of this
service further reinforces Standard Chartered’s commitment towards providing prompt and
hassle-free services to its customers. It allows its customers to access to their statements anywhere
in the world.
The Bank serves:

 Consumer banking customers

 Wholesale banking customers
 This has been the brief history , introduction and some thing about the current playing
status of the standard chartered bank. Now we will concentrate on more of the bank itself and its
contemporary role specifically in the banking sector of Pakistan
 THE CHAIRMAN AND THE CHIEF EXECUTIVE SAYS!
“We are proud to promote our support for Corporate Social Responsibility. We
recognize that this public statement is only the start of the journey. We believe that
our actions demonstrate our support for these commitments.”

CORPORATE GOAL (why to do…):

Organizational goal and strategy define the purpose and competitive techniques that set it
apart from others organizations. Goals are often written down as an enduring statement of
company intent.
A strategy is the plan of action that describes the resource allocation and activities for
dealing with the environment and for reaching the organizational goal. Goals and strategies define
the scope of operations and the relationship with employees, clients and competitors.,
With over 140 years of experience in trade finance and an extensive international branch
network, Standard Chartered is committed to help the customer succeed in every competitive
environment. To keep pace with changing needs, SCB constantly review its comprehensive cash,
trade and treasury products and services, ensuring that a full range of flexible and innovative
services is always available for the customer wherever they trade.

THE MISSION STATEMENT:

 As it is said that an organization’s culture, products, services, employees, their attitude,
philosophy, self-concept, markets and environment throws light on the corporate mission, so one
of the business executives at the bank, based on his personal observation and judgment, carved
the following mission of The Standard Chartered Bank as:

“Be the emerging markets leading consumer bank and winning equals doubling
the economic profit in three to five years.”
This is not only a mission of the bank but also an inspiration for the entire management
either at higher level or at bottom.

Vision Statement:
To put it simply
“Committed to making today’s more complex financial world easier for our customers.”

OBJECTIVES:(why to do it ….)

The main objective is

“To offer outstanding value to the customers by providing a knowledgeable,
efficient and reliable service in a personal, helpful and responsive-manner.”
The objectives of the Standard Chartered Bank carving way towards the mission are
• To be fast, focused, and determined.
• Its tough out there- we face brutal challenge from both global competitors and local banks.
• Like leopard- be more agile, move swiftly, respond faster, and work smarter.
• Creating values for the customers, shareholders and employees.
• Customer satisfaction and delight is given the top priority as we are for the customers and
not the customers for us.

STRATEGIES: (how to do it….)

FOCUS:
Wealth management, secured loans, basic financial services, and shared distribution are
the ways we can create value for our customers as well as for shareholders and employees.
5 value centers have been created so as to show to the customers that how much we value
them.

Wealth management, secured} creating value

Loans, unsecured loans, BFS &} for customers, shareholders

Shared distribution} and employees

TRANSFORMATION:( be adaptive……)
Keep focused on the new opportunities in order to capitalize on them timely, profitably
and efficiently.

{Focus our organization against the opportunities} 5 core Values centre

INVOLVEMENT & MOBILISATION:

Ensuring the involvement through team work and participation.

Teamwork delighting customers

HOW… to deliver the best?

These objectives and guiding mission will be achieved through
• Focused objective
• Winning as a team
• Excellence in delivery
• Relentless quality
• Upward rising sales
 HOW TO DELIVER THROUGH FIVE CORE VALUES:

“The core as we all know are the basis of any structure. So if the structure of success and glory
is to be built and the sky scrapper of good will and trust is to be made we will have to focus our
self on the five cores which are the foundation stone for our future glory.”
Says Mr. Khalil-ul-Rehman , Manager SCB, Mall road.

(a):Courageous:
Being courageous is about confidently doing what’s right. Often the task may seem
insurmountable but with courage and tenacity the odds can be overcome. A truly courageous
act aspires and builds character.

(b):Responsive:
How we respond to our customers will influence their belief in our commitment to
them. A productive response is often unexpected and more effective for that. It clearly
demonstrates our willingness to go beyond the expected.

(c):International:
As a member of global village, we view the world from the widest perspective. We are
all global citizens and believe the world is full of new opportunities and exciting
possibilities. We also deliver world-class product and services.

(d):Creative:
Creativity belongs those of us who are excited by challenges and engage them with fresh
thinking and an open mind. Creative thinkers are not limited by convention but allow their
minds to soar beyond practical solutions.

(e) :Trustworthy:
Trust is the foundation of every successful relationship. We trust, because, we believe in the
sincerity of the promise. Building trust can take forever. Losing trust takes only moments.
 WE BELIEVE THAT……for:

People
Standard Chartered is an international organization operating in over 50 countries.
Standard Chartered has world-class managers and employees. Its aim is to develop this
talent even further. This will create greater customer loyalty and greater benefit for all -
staff, shareholders and the community.

The challenge for the bank is that, unlike organizations who may be working in
one country or countries with similar cultures and laws, the bank have to achieve the best
people policies it can while being mindful of the different countries and cultures in which
it operate. Differences in culture, social structure and economic status mean that one size
may not fit all. Each of the countries in which it operates will potentially have different
laws, regulations and customs. It strives to balance the need for global policies and
processes without imposing rules that may conflict with the diverse local needs and ways
of working of different countries.

Ethics
Standard Chartered reputation is critical to being the world's leading emerging markets
bank. The preservation and enhancement of that reputation depends upon businesses operating to
the highest standards of ethical conduct.

SCB faces a particular challenge to uphold consistent standards of conduct while at

the same time respecting the culture and varying business customs of all the countries in
which it operate.

The principles that govern the behaviour of its business and employees are
reflected in a Group Code of Conduct. The Group Code of Conduct is a practical working
document which guides employees through the many difficult conduct issues which
 confront them on a daily basis. Complying with each element of the Code will not always
be easy but the employees recognise that they will be judged not just by what is set out in
the Code but on how this is reflected in their day to day activities and the behaviours.

Environment
Standard chartered Bank is proud to display commitments to and awareness for the environment
and encouraged if motivated by the customers in making day-to-day choices.

The president says:

“Through all this we can serve the community in the best possible manner and we BELIEVE
that ‘WE’ will be the future option for every person in this prospering nation.”
 THE CORPORAT SETUP
The Executive Directors: (Who Owns The Bank..)
Sir Patrick Gillam
The Chairman

• Mervyn Davies CBE

Group Chief executive (CBE)
• Mike Denoma
corporate governance
• Chris Keljlk
Group’s business in Africa, Middle East, & South Asia, Risk Management,
• Kia Nargowala
Age-51 years
• Peter Sands
Finance Director

The Non-Executive Directors:

Lord Stewartby RD
Deputy Chairman
Ronnie Chan
Age-53 years
Sir Ck Chow
Age- 51 years
Barry Clare
Age-49 years
Rudy Markham.
Age- 55 years
David Moir
Age-62 years

MANAGEMENT TEAM: (who runs it for us..)

• Chief Executive Officers

UAE Andrew Duff
Bangladesh Rumee Ali
Jordan Zahid Rahim
Lebanon B Chandresekar
Bahrain Usman Morad
Qatar Arif Mansoor

• Regional Heads Of Corporate Affairs

UAE Alex Blake Milton
Africa Audrey Mpunawana
South East Asia Wong Ai Kwei
North East Asia Bethy Tam
America Rory Hayden
UK & Europe Sue Solomons
Kenya & East Africa Titus Mutiso
Ghana & West Africa Willing Vanderpuije

• Regional General Manager (MESA)

John Filmerids

• Country Heads of Corporate Banking (MESA Region)

 Bahrain Abdul Rahman Buchiri
Bangladesh Bahul Ahsan
Gulf Andrew Duff
Jordan Sabry Ghouse
Lebanon Corine Sawaya
Pakistan Khadija Hashmi
Srilanka Jayasundara
Oman Shelton Peiris

• Head of Emiritisation & Administration Abdulla Al Sayyah

• Executive Director of Centre for Policy Dialogue
Dr. Debopriyo Bhattacharrya
• Group Economist of SCB Gill James
• MESA Coordinator Rumee Ali
Head of Media Relations Paul Marriage
 STANDARD CHARTERED PLC
ORGANOGRAM

BOARD OF DIRECTORS
(stationed at the head office in London)

GROUP CHIEF EXECUTIVE (region)

It is different for all the regions stationed at the regional head quarters

GROUPs SENIOR REPRESENTATIVE & CHIEF EXECUTIVE (country)

HEAD OF CORPORATE & INSTITUTIONAL BANKING & CHIEF EXECUTIVE

After the hierarchy shown in the above diagram comes the branch managers. They
are individually entrusted with the responsibility of the affairs of the branch.
 MANAGEMENT STLYE:
The management style observed at the Standard Chartered is more like an autocratic one.
Although in some departments it does give a glimpse of a democratic style to some extent. The
basic reason of this observation is the fact that the decision making and the exposure management
is totally centralized.

Autocratic Style:
The management of Standard Chartered Group believes in the centralization of authority and
unilateralism of decision making. All the work methods are dictated to the employees limiting
their participation in majority of the matters. Almost all the decisions are taken at the head office
located in Karachi and the instructions follow to all the branches which are to work accordingly. I
have observed that, at times, even for a very trivial matter they have to wait hours for the
instructions and operations of Karachi Head Office which creates chaos and demoralizes the
employees. It does give the feeling of working in an environment with both hands tied and limited
circle to move and operate.

Democratic Style:
At SCB, there are a few departments in which democratic style of management is being
followed. The departments work in the form of teams with a team leader who delegated authority
with limitations. Any operation exceeding those limits is to be referred back to Karachi Head
Office and is to be finally executed by them. However the team leaders are free to take decisions
within the limit sanctioned to them.
In some departments, the subordinates’ participation and involvement is encouraged but
this is not true for all the departments. For example, in the Direct Sales Department, Khurrum
Butt, the head of the department, encourages and appreciates team participation and involvement
and decisions are taken based on collective thinking. But I didn’t get the same feeling while
working in Lending Department. Asif Habeeb, the team leader, assumes the role of more like an
autocratic leader and believes less in employee/sub-ordinate orientation. He shows more concern
for the tasks and less for the employees performing the tasks.
 In short, we can say that Standard Chartered Group is highly centralized in decision
making with the limited delegation and employee participation.

HOW DECISIONS AND CONFLICTS ARE RESOLVED

The higher authority in Karachi branch does decision-making of all sorts. Decisions
making in Standard Chartered Bank is of programmed type i e. repetitive and well defined and
Conflicts are resolved through negotiation and group meetings.
In case on small problems the higher authorities in Karachi office solve through group
meetings and negotiation while in case of huge problems search has been made to confirm that
who is responsible for that, who is affected, when, who and how is involved. After the
identification of the problem different alternatives solutions are invited and the higher authorities
try to seek solutions and suggestions from the subordinates. Different alternatives are evaluated
and judged and they choose the best alternative in that.
The decision making in Standard Chartered bank is highly logical and rational. Due to
centralization higher authorities make most of the decisions but in case of unclear problems
decision-making is shared to some extend with other managers.
During my internship I never observe any huge conflict in the bank but small conflicts do
occurs. Conflicts are there whenever there is more than one person so if a large number of people
are working under a single roof conflicts are there.
In case of small conflicts like difference in opinion the employees of Standard Chartered
bank try to solve them by them selves, if the situation is little worse the take their conflict to their
immediate boss and most of the conflicts solve then. But if the situation becomes worse the case
is sent to Karachi head office and action is taken there (but this happens rare). Most of the
conflicts are solved through negotiation.

The environment of the Standard Chartered bank is not always stable it changes according
to the environment out side the domain chances. So the uncertainty arises and disputes may occur.
But it will solve immediately to make the environment certain and stable.
Moreover to avoid conflicts face-to-face meeting are held after time to time with other
departments heads and list what he or she expects from the other departments. Standard Chartered
bank have shared mission and goals to make this bank an ideal one, this shared goals mission and
goals require cooperation among departments.
In Standard Chartered bank there is family friendly atmosphere and all work as a member
of a single family so they have no psychological distances with in them and conflicts are there.
They are able to customize a suite of risk management products and services as well as
package debt financing solutions to meet the unique needs of each of their customers. Through
more than 150 years of emerging market experience, their in-depth understanding of the local
market is unrivaled by most other financial institutions, especially in the currencies of Asia, the
Middle East and Africa.

CUSTOMIZED CLIENT SOLUTIONS

• Structured risk management products to match customers' risk appetite and requirements
• Solutions for currency, interest rate and corporate finance exposures:
- Foreign Exchange: Transaction, translation, economic exposure
- Interest Rates: Funding enhanced deposits, hedging
- Corporate Finance: arising from acquisitions disposals, CAPEX and dividends
• Access to more than 100 onshore and offshore illiquid and restricted currencies
• Asian Currency and G3 Currency Debt Financing capabilities
• Syndicated Loan financing
• Treasury and Fixed Income research
• On-Line Treasury trading capabilities

ORGANIZATIONAL ENVIRONMENT

TASK ENVIRONMENT
Task environment of Standard Chartered Grindlays bank includes market sector, Human
resources, international sector and customers (both priority or general) they have direct influence
on the bank and that have a direct impact on the bank’s ability to achieve its goals.
 Market sector have a direct influence on the bank as the market criteria changes so is the
bank’s environment, human resources have also affect the environment domain the bank tries to
attract the highly skill and qualified personnel .The customer have its own importance to the bank,
the bank is due to its customer and is for its customer. The international sector has also a direct
influence on the bank. Like advance technology, communications, ideas and capital investment,
business strategies, products and services flow freely and rapidly around the world. Standard
Chartered Grindlays bank has to update it self according to the environment. The customer invests
its money in the bank and the bank flourished and provides products and services to its customer.

GENERAL ENVIRONMENT
The general environment of the Standard Chartered bank includes the government, socio
cultural, economic conditions, technology and financial resources sectors.
The bank regulates according to government rules and regulation and the criteria changes
whenever the government regulation or criteria changes. The economic conditions have a very
immediate and direct influence on the bank. In inflation the bank behaves in a different manner so
is the case with deflation. Socio cultural conditions also binds the bank to some extends the bank
has to behave in a specific manner according to the country culture and socio economic
conditions. As mention earlier technology affects an organization in many ways it may promote
an organization to superior or wrong usage may cause heavy losses to it. Whenever the
technology advancement take place the bank has to up date its technology too, to pace with the
current environment. All has to concern to financial resources so is the Standard Chartered bank.
Beside all this the environment of the Standard Chartered bank is unstable and organic in
nature. They changes occurs more frequently than any other competitor bank.

ORGANIZATIONAL CULTURE
A culture is the underlying set of key values, beliefs, understandings and norms shared by
the employees. Standard Chartered Grindlays Bank has a good corporate culture having a touch of
clan culture. It has a good family friendly environment that pertains to ethical behavior,
commitment to employees, efficiency or customer services and they provide the glue to hold
organizational members together.
 POLICIES FORMULATION PROCESS:
Policies are needed to make a strategy work properly. Policies refer to specific guide lines,
methods, procedures, rules, forms, and administrative practices established to support and
encourage the work towards the stated mission. Like every organization, SCB/SCG also follows a
number of policies in order to ensure strategy implementation with success. However before
discussing these policies, I would like to discuss the policy formulation process followed at the
bank.

POLICY STATEMENT:
“Operating our businesses to the highest standards of ethical conduct is crucial to the
preservation and enhancement of bank’s reputation. Individually, and as a Group, we must
earn that reputation every day by consistently demonstrating unquestionable integrity and good
judgment in the conduct of our banking business.

Our Group faces a particular challenge - to uphold consistent standards of conduct while at
the same time respecting the culture and varying business customs of all the countries in which
we do business.
For these reasons, we have taken various steps over the years to develop our compliance
standards, such as issuing the Group Code of Conduct and growing a network of compliance
officers to help businesses operate to the required standards. We now have to achieve a more
fundamental goal.
The goal is to fully integrate compliance into our day to day operations, so as to develop and
enhance the culture of compliance in the Group. This is particularly achieved by continually
evaluating the compliance risk areas and successfully managing them through comprehensive
compliance training programs, implementation of policies and procedures and ongoing
awareness program within the various-businesses.
Demonstrating a high level of compliance will provide the necessary reassurance to the
Board, our stockholders and to our regulators. It therefore follows that responsibility for
compliance lies with every individual in each area of operation. It is essential to our continued
success that we all accept this personal responsibility and treat compliance as a priority. This
will help us to achieve our goal of a successfucomplianceculture.”

Group-Chief-Executive
July 2001

CORE PRINCIPLES OF THE POLICY

1. Respect for the Privacy of Employees

2. Data Protection and Privacy Laws
3. Collection and Use of Personal Data
4. Rights of the Individual
5. Sensitive Personal Data
6. Disclosure of Personal Data
7. Data Security
8. Cross Border Transfer of Personal Data
9. Automated Decisions
10. Appointment of Delegates

MAJOR MANAGERAIL POLICIES:

The Standard Chartered Bank has a strong management, which formulates implements
and evaluates different policies. Through this process they are able to determine the most
effective goal seeking objectives. These policies act as a path, which focus the bank in the
required direction. The bank is able to cope with imbalances in the banking procedures due to
these policies.
The main policies followed at Standard Chartered Bank is namely:

 Financial Policies
  Lending Policies
 Procurement Policies
 Service Policies
 Human Resource Polices
 Research & Development Policies
 Audit Policies
 Investment Policies
 Money Laundering Policies
 Security Policies
 Social & Environmental Policies

Now we will discuss the more important policies one by one and will
have an in-depth look of some of these prominent policies.

Financial Policies:
The financial policies of any bank are the most important policies through which the whole
banking activity is conducted. These policies are primarily conducted on:
• Source of funds
• Use of funds

Sources of funds:
One part of bank’s finance policy is acquiring funds from the following sources such as:
• Deposits received from the various account holders.
• Different type of accounts designed to meet the customers’ requirements.
• Interest income and commission by providing the services to its customer.
• Mark up/interest earned on advances and loans granted to the debtors.
• Fees, brokerage and commission from the various services provided by the bank.
• Discount earned on specific facilities provided.
 • Dividend earned from investments in other securities (shares of listed and unlisted co.)

Uses of funds:
After the acquisition of the funds, comes the next stage i.e. the utilization of these funds in an
efficient way.

• The bank has an investment portfolio according to which it allocate its funds

 to different classes of debtors,

 to different sectors of the economy

 investment in the securities,

 Investment in the real estate property and so and so.

Note that the banks don’t invest the whole funds raised by them as they have to comply with
certain restrictions imposed by the State Bank of Pakistan such as
• The bank has to maintain 25% of its time and demand liabilities with the SBP.
• A further 5% of its time and demand liabilities are deposited with the SBP in order to be a
member of clearing house.

Lending Policies:
Lending policies of the bank are composition of two different heads
• Firstly, there are some regulations to be followed by the commercial banks while
disbursing funds to various borrowers named Prudential Regulations by State Bank of
Pakistan.

• Secondly, the policies formed by the top level management regarding the disbursement of
funds in the form of loans.

The Prudential Regulations are discussed while discussing the Lending Department of the bank in
the Departments Section in detail.
The bank’s lending policy depends on the interest rates it offers, balances maintained and
repayments. The Bank follows some rules as far as lending is concerned, which are as follows:
1. the bank conducts a complete analysis of the borrower before sanctioning any amount.
2. The bank only invests in those sounds viable projects, which have good rate of return.
3. Loan is sanctioned against Govt. Securities and Bank Deposits (maintained at any
bank), Property and stores (stocks & raw materials) are not financed against.
4. Bank prefers to advance loan to their account holders as the bank already knows
his/her credit worthiness.
5. No political loan is sanctioned by bank.
6. The manger appraises the past record of account holder and his credit worthiness in
order to clear his apprehensions and in case any thing wrong he can refuse to sanction
the amount.
7. CBI report from SBP is the main document determining the sanction of loan to a great
extent.
8. The bank while taking security prefers Govt. securities over shares.
9. Lending against cash is done after marking lien on the amount to be lent out (75%
lending is allowed and 25% is the margin maintained by the Bank).
10. Lending against Government Securities is allowed up to 75% of the security and 25%
margin is to be maintained by the bank.

The rate that the Bank charges on loans mainly depends on the following factors:

a) Global economic prosperity

b) General conditions of the economy
c) Competition in the market.
d) The rates prevailing in the local market.
e) Taxes levied on the Bank’s products.
f) The demand and supply of funds in the market
g) Government regulations on interest rates.
h) Compensating balances or minimum balance requirements that are maintained by the
account holders in their accounts.
 i) The credit managers get a guideline as to how to proceed in identifying profitable projects
which have good creditworthiness so that more loans could be extended to them and
interest earnings could be increased.

SERVICE POLICY:
The bank emphasizes on providing personalized services. The bank’s efficient and
competent staff is there to provide top class services to its customers. The service policies
followed by the bank are
• This includes 9a.m. –5p.m. nonstop banking so that the customer can come to the bank any
time it is convenient for him.
• ATM facility allows the customer to access his account after banking hours and on holidays
from any Branch of the bank.
• Evenings banking for those people whose busy schedule don’t permit them to visit the bank in
the morning.
• Phone banking allowing banking on phone anytime, anywhere.
• Online banking according to which the customer can operates his account from any Branch of
the bank in Pakistan.
• Solving the problems of the clients on the phone lines and thus saving their precious time.
• Having the Bank Statements e-mailed ensuring privacy.
• ATM cards let availing exiting discounts across outlets forming part of Bargains network.
• Priority banking facility for its privileged customers (maintaining large accounts) to provide
them the best service.

Human Resource Policies:

These policies are concerned with the recruitment and training of staff in order to maintain
the same standards of banking services.
Standard Chartered supports the rights of the individual as expressed in the 1948 United
Nations Universal Declaration of Human Rights (UDHR).
The UDHR contains a number of fundamental rights, which it aims to uphold in all
circumstances, including:
• The right to life
• The right to legal recognition as a person Freedom of thought, conscience and religion
• Freedom of opinion and expression
• Freedom from torture
• Freedom from cruel, inhumane or degrading treatment
• Freedom from slavery and servitude
• Freedom from retroactive penal legislation

Standard Chartered meets all relevant international legal obligations and all relevant local legal
obligations in the countries in which it operates.

Research & Development Policies:

This policy is essential because it gives vision, insight and creativity to the Bank. We can
discuss its two aspects.
• Research and development as far as the technological progress of the bank is concerned is
conducted at its Head office, which is situated at Dubai. All the soft wares, which are used
by the Bank, are created here. This department is concerned with updating I.T. procedures
and it tries to incorporate the latest techniques as well. Supervision of the computers,
software, servers, teller systems & signature systems all is done there.
• The Marketing Department also conducts research and develops new products. This
department conducts surveys to determine the needs and requirements of the customers so
that new products can be launched accordingly.

Audit Policies:
An Audit is very important since it helps to regulate the operations of the bank. The bank
conducts three audits:
(a) Regulatory Audit
(b) Group Audit
(c) Internal Audit

(a)REGULATORY AUDIT
The State Bank of Pakistan performs the regulatory audit. This audit starts in the month of
January and it is usually conducted in the main branches of all the banks. The SBP checks the
performance of the banks on all issues. The SBP has given license protection to the banks and
they are supposed to follow its regulations. The auditors inspect the functions performed by the
banks to check whether the policies enforced by SBP and the procedures which have an impact on
government revenue collection, are being followed or not, such as collection of withholding tax.
The regulatory audit is applicable to all the banks.

(b) GROUP AUDIT

The Standard Chartered Bank’s auditors perform the group audit. The auditors come from
the Regional Head office in United Arab Emirates or the Group’s Head Office in London to audit
the MESA region (Middle East and South Asia). The group rating depends on the level of
abidance of the group policy. The auditors rate the performance of the different branches in the
countries. The country with the best performance is rated at the top. This audit is conducted
rarely, only when the need arises.

(c) INTERNAL AUDIT

This audit is conducted at the National level. One representative of the management
committee is appointed to perform the audit. He further appoints a Hub Manager to conduct the
audit in his region. The Hub Manager assigns the job to a particular Branch Manager in his
region. Presently Mr. Abad Ullah (the BSSM of the Mall Road Branch) is in change of
conducting the audit in the Lahore Region. A group of employees are selected from the different
branches as auditors. Those people are selected who have an enriched experience of the Bank’s
operations. The auditor checks the procedure of documentation and related records. This is an
ongoing process as records are scrutinized every month. At the branch level the branch manager is
held responsible for the performance of his employees. The employees are supposed to follow the
key control standards (KCS). These standards specifically mention the duties to be performed by
them in their own capacity. The BSSM monitors their working according to the KCS.

Investment Policies:
The Bank’s Treasury invests its deposits in profitable ventures. The funds, which are not
required for lending in the foreseeable future, prove to be a source of the Bank’s investment
portfolio. The Bank aims at obtaining the maximum income with the minimum exposure to risk.
The Treasury usually deals in stocks at the national and the international level. The Treasury deals
with international trading. At the national level it invests in federal investment bonds, treasury
bills, national investment units (NIT) and Federal and Provincial loans. The whole amount of
funds generated from various sources is not invested because it is a requirement of the State Bank
of Pakistan to keep a certain percentage of funds with it as assigned capital. The Treasury also
deals in the sale and purchase of different currencies.
 STANDARD CHARTERED BANK’S

DEPARTMENTS

Consumer Banking Sales & Services

This department provides all sorts of products and services discussed in the Product &
Service Mix (Section of Marketing Mix). Further details are given ahead.

Collection
This department is located in Karachi Head office for the collection of outstation cheques.
The whole collection process is performed by there. Details given ahead ( while discussing BSU).

Verification
This department is located at the Mall Branch, Lahore. The main work vested into this
department is to conduct physical verification of the loans, specially the clean loans against which
there is no security/collateral received by the bank. Since special care is required in disbursing
clean facility, this department has been designed to deal with this sole responsibility.
The main functions performed by this department are as follow:
• Conducts all the correspondence with the potential borrower
• Get their addresses, telephone numbers and checks their genuineness.
• Receives information about the client from outside sources.
• Finally, make recommendation whether the loan facility should be sanctioned or not.

Personal Loan
Personal loans have also been discussed in detail in the Product Mix (Marketing Mix
Section) of the report.

Telemarketing
 Telemarketing, as the word signifies refers to the process of marketing the products and
services on telephones. The department vested with this responsibility has been placed at SCB,
Mall Branch, Lahore. The department is responsible to call various target customers, generally the
well known businessmen and industrialists and to convince them to take the benefits of the world
class portfolio of products and services offered at SCB.

IBG (Institutional Banking Group)

This department deals in the accounts of the banks and various financial institutions. The
whole services relating to the account opening to the operation of various accounts of the banking
and non-banking financial institutions are conducted by this department

Administration
The administration department of the bank is placed at SCB, Tufail Road branch, Lahore
assigned with the responsibility of the general administration of the bank’s operation.

PSB (Premier Service Banking)

PSB is a specialized department of the bank located at SCB, Mall Branch, Lahore. It has
been authorized in dealing with the priority customers in the corporate sectors. The national and
multi-national corporations, with high prestige are required to be given specialized services and
this department is there to fulfill this requirement. Special privileges and services are provided to
a few priority corporations matching with their status.

Consumer Service Unit

Consumer Service Unit is the department placed in the Head office Karachi assigned the
responsibility of all the back office operations such as
• Govt. securities,
• Credit Cards
• Operations etc.

C & IB Trade Service

Consumer and Institutional Banking Trade service deals in the services to the general
consumer and institutions such as
Exports;
 Export L/Cs
Export Collection/ Bills
Credit Bills Negotiated
Imports;
Import L/Cs
Trust Receipts
Shipping guarantee
In short, all the services with regard to import and exports are performed by this department
located at SCB, Mall branch, Lahore.

Consumer Banking Auto Loan

This department is located at the SCB, Tufail Road, Lahore. This department provides the
loan for owing the car of ones liking by selecting the monthly payment plan suitable for the
current earning patterns of the borrower.
The further details have been provided in the section of “Departments at SCB, Mall Road Branch”

The departments I have been working in ……

I have been mainly working in the department named as “Trade”. The department was
working under the management of “Mr. Khalil-ul-Rehman” , Manager Trade. The department
was sub-divided into different sub department. Like export and import documentation,
Guarantees, Verification of the documents, filing department, corporate client department.

• In the department of Guarantees I have been attached with Mr. Farhan Chaudhary. This
department was dedicated for the corporate clients only and was handling the Guarantee
contracts on the behalf of its clients.

• Then I have been attachet with Mr. Rafaay who deals in the taxation and duties on the
corporate cases.

• Then I worked with Mr. Muhammad Amin , he was the sole handler of the export and
import documentation (mainly consisting of the letter of credit). It has been a great
opportunity to learn much about the documentary credit.
• Then I worked with Mr. Adil Saleem, in the department of documents verification. He
also has the additional responsibility of foreign correspondence.

• Then I worked for a short period of time with the file keeper, Mr. Arshad. During my stay
with him I learnt the art of file keeping and maintenance of records.
 MARKETING MIX

Standard Chartered PLC follows an Adapted Marketing Mix as the marketing mix elements are
adjusted to each target market.
Marketing mix covers
1. Product & Service Mix
2. Place
3. Price
4. Promotion

PRODUCT AND SERVICE MIX:

SCB follows a planned strategy in launching as well as diffusion of the products and services.
Product mix is the set of all products offered by SCB. Product mix structure of SCB has both
breadth and depth. Breadth in the sense that a no. of customized products has been offered by the
bank and depth in the sense that there is wide range of variety & flexibility within each product
offered. So it gives a huge choice to the customers .

(a):PRODUCT MIX

PERSONAL BANKING (for the individual customers)

• Managing Personal Needs
• Deposits
• PKR Deposits
• Current
• Saving
• Fixed
• Foreign Currency Deposits
• FE12
 • FE 25
• FE 31
• Loans
• Over Draft
• Personal Loans
• Auto Loans
• Lifestyle Loans
• Personal Banking Plans
• Priority Banking
• Services
• Phone banking
 Evening banking
 Cheque Books home delivery
• E statements
• Bargain Network
• Money link (ATM)
• Free online services
• Remittances

CORPORATE & INSTITUTIONS ( for corporate clients and organizations)

• Cash Management
For corporate affairs
 Account Services
 Payment Services
For financial Institutions
 Collection Services
 Asian Gateway
 Clearing Services
 Continuous Linked Settlement
• Trade Services
• Custodian Services
• Lending Services
• Structured Finance
• Electronic Banking

(b) :SERVICE-MIX
A no. of valuable services are offered at SCG such as

PHONE BANKING
“Bank on your phone anytime, anywhere.”
One doesn’t have to wait to visit the branch or stand inline. With most banking services at
fingertips, the bank is only one call away.
A TIN (Telephone Identification Number) is assigned to each account holder in order to ensure
confidentiality.

EVENING BANKING
Standard Chartered banking has broken the orthodox nutshells and now the branches are open for
customer dealings from 9 A.M. till 5 P.M. Evening banking has brought convenience for those
who find it difficult to get free time in the morning to visit the bank.

CHEQUE BOOKS HOME DELIVERY

In the modern era when every one is in haste and busy, Standard Chartered‘s home delivery of
cheque books is the right facility at the right time. One doesn’t need to visit the bank personally in
order to collect the cheque book.

E-STATEMENTS
“Have your bank statement mailed to you-anywhere and everywhere.”
Any person having an e-mail address can have his e-statement mailed by the bank resulting in
minimum paper work and maximum convenience.
MONEYLINK
“Get super-convenient complete banking in the time it takes a red light to turn green.”
Standard Chartered’s ATM’s network, with over 150, 24 hours ATMs, provide super convenient
banking to its account holders.
Standard Chartered Group ATM bearing the MNET sign provide following facilities to its
account holders.

 CASH WITHDRAWALS:
 Cash Or Cheque Deposits
 Mini-Statement
 Cheque Book Request
 Special Instructions
 Funds Transfer
 Pin Changing

What is M –NET…..?
MNET-collaboration with MCB has opened new avenues of greater convenience and
accessibility for its customers. Now the customers can have the access to over 150 additional 24
hour ATMs, 356 days a year, around Pakistan. MCB ATMs bearing the M -NET has made it
easier, convenient, and simpler to withdraw cash and check the account balances.

ONLINE BANKING :
Online connectivity ensures access to the accounts from across Pakistan. 21 online branches from
the largest foreign banking network in Pakistan gives access to its world class product and service
portfolio which includes checking accounts and term deposits, lockers facilities, credit facilities,
auto and personal loans. One can enjoy online transactions of up to RS.1 million without any
charges.

(c): PRICE MIX

 INDICATTIVE PKR DEPOSIT RATES (p.a.)
From 1st July 2002 to 31st December 2002
(the details of only the three main services are provided)

SAVING DEPOSITS
1)Super-save
Tiers 6 monthly APR
0-24,999 0.01 0.01
25K-99,999 0.03 0.0302

100K-499,999 0.04 0.0404

500K-4,999,999 0.045 0.0455
5,000k+ 0.055 0.0558
Account opening requirement Rs. 25,000
Profit calculated on minimum Monthly Balance
No upper limit for profit calculation

2)Privilege
Tiers monthly APR

0-4999,999 0.01 0.01

500K-999,999 0.045 0.0459

1,000K+ 0.055 0.0564
Account opening requirement Rs. 500,000
Profit calculated on minimum Monthly Balance
No upper limit for profit calculation

3)High Yield Savings

Tiers monthly APR
0-499,999 0.50% 0.005
500K-999,999 3.50% 0.0356

1000K-2,999,999 4.50% 0.0459

3000K+ 5.00% 0.0512

Account opening requirement Rs. 500,000

Profit calculated on Daily Balance
No upper limit for profit calculation

OPERATIOIN OF FOREIGN CURRENCY ACCOUNTS:

 The bank offers FE25 in currencies like USD, GBP and EURO only.
 No mark up is offered on all FE25 deposits except for USD deposits.
 No markup is offered o all Frozen FCY deposits.
 A negative sign with the interest rate in case of frozen end extension EUR & JPY Deposits
is indicative of the administrative cost charged for their operation.

(d): PLACE MIX

Standard Chartered Bank, a local international bank gives the peace of mind that only
comes when you're at one of the world's leading banks. You can avail Standard Chartered
Bank's value-added, award winning services across 21 branches in Pakistan's 8 major
cities.

1. Karachi
2. Lahore
3. Faisalabad
4. Ialamabad
 5. Rawalpindi
6. Sialkot
7. Peshawar
8. Quetta

The branches marked with an asterisk (*) offer exclusive Priority Banking Centres.
Branches marked with ** show 24-hour banking with ATMs.

(e): PROMOTION MIX

Standard Chartered Bank promote its products through various medias, different
ads are made to promote new products and to introduce different packages offered on different
occasions Moreover billboards on public places are upright, in newspapers different printed ads
were published from time to time and the same case with the electronic media, ads are given on
highly favorite and. famous channels of the media to attract the customer through out the world.

Standard Chartered Bank has many ways to promote its product and services. Some of the
common promotional strategies are:
 Advertisements
 Sales Promotion
 Public Relations
 Personal Selling
 Direct Marketing

ADVERTISEMENT:
 Advertisement is used by the bank to build up a long term image and to trigger quick sales
of the products and services it offers and the Media used includes both
o Print Media
o Electronic Media

SALES PROMOTION:
Sales promotion tools showing the incentive and benefits for the customers are also used by the
bank on timely basis. The schemes such as
 Free services such as phone banking, e-statements etc.
 Discounts offered at the qualified outlets for being a part of SCB
 Special service offered at Shell Petrol Pumps (Outlet Boxes to pay off the utilities
bills of SCB’s customers..)
PUBLIC RELATIONS
 SCB believes in maintaining good public relations and positive publicity as it helps
in reaching out for the prospects who prefer to avoid sales people and
advertisement.
 Publications, events, news, speeches and public-service activities are use from time
to time.
Sponsorships such as organizing a walk in support of pure and clean environment
are the tactics which help in building up strong public image.
 Children’s day at Wonderland on 19th May, 2002 sponsored by SCB
PERSONAL SELLING
SCB adopts the personal selling tools for building up the buyer preferences, conviction
and action (generally the last stage of the buying process).
 Sales representatives are trained in developing personal relations with the
prospects and ultimately converting them into the loyal customers. They have
customers’ best interests at heart. Some other tactics are
 Brochures are presented to various visitors to the bank
 Call Centers have been established to provide information and satisfy queries.

DIRECT MARKETING
 Promotional Letters mailed to potential and existing customers the Bank’s
products.
  Telemarketing to potential and existing customers.
 Internet marketing

Besides this the Marketing Department of the Bank performs a very vital job. It dispatches
its sales representatives in the market to promote itself and introduce a new clientage to the Bank.
These sales representatives are given targets to meet over a specified time period.
Note :Apart from the sales representatives, the bank’s internees also play a major role in
promoting the bank’s credibility. The internees placed in the Direct Sale Department of the bank
are kept busy in conducting surveys and preparing their research report on the basis of their
integrated survey results. They visit major commercial areas across the city getting the views of
the people regarding the products it is launching, the services it is providing, the facilities it is
offering and the contribution it is paying in the uplift of the economy and common man as well.
Not only they get feed back about its current performance but also what the general public aspires
to be in the future.

COMPETITIVE STRATEGIES
Competition is very dominant now a days and every firm is trying to have an edge on
others. Standard Chartered is aware of its competitors its competitors include CITY BANK, ABN
AMRO and others.

Standard Chartered Bank tries to satisfy its customer and keep an eye open for improvements and
innovations. The head office in Karachi makes these strategies to compete the growing
environment. It is not necessary that Standard Chartered Bank follow all the strategies prevailing
and used by its competitors but it try to have an innovation when there is no rustle in the
competitive environment.
What the competitors try to implement Standard Chartered bank tries to implement it in a
more innovative and advanced form. All sort of competitive strategies are made by higher
authorities.
REVENEU AND SALES COLLECTION STRATEGIES:

Standard Chartered Bank is both the service and product firm .Its major revenue collection
is through accounts; Loans and interest rates gain from different products.
In sales collection strategies, direct sales department is performing best to sales it product
efficiently (open accounts efficiently) which have a big part in revenue collection. The employees
of direct sales department offer visits to different companies, businessman, wormers to have an
account in this bank, mean while PFCs (personal financial consultant) try to get revenue for this
bank in the same manner but they have an authority to open an account of a customer who even
walks in for some other purpose.

WHAT WE (SCB )THINK ABOUT MARKETING……

Is to develop long-term relations with their clients/customers, based on understanding
their business, selecting the most appropriate and cost effective methodologies, accepting
challenges and exceeding expectations

PRIMARY RESOURCE
As with any professional service, the primary resource they offer is the experience of their staff
brings to research. Their research process utilizes a ‘participative approach’ - and work in close
conjunction with Customer representatives.
SECONDARY RESOURCES
Extensive field network all across Pakistan, Integrated word and data processing.

DATA COLLECTION
They design research instruments, which ask the right questions using the best methodology, such
as,
 In-depth Interviews,
 One-on-One interviews,
 Telephone Interviews,
 Central Location Tests,
 Mall Intercepts,
  Mail Surveys,&
 Observation Formats.

STUDIES INCLUDE
 Attitude Research --------Customer Satisfaction
 Advertising Pre-&-Post Evaluation ---Corporate image studies
 Concept and Product Development ---Pricing
 Creative Solution Finding----------------Social marketing research
 Media Research------------------------------ Audit

REPORTING
Reporting of study results culminates in the development of specific marketing recommendations.
Their aim is to provide workable solutions to marketing problems based on sound research.
Different products are offered like auto loan, over draft, running finance, personal loan,
corporate financing and others and in this return bank charges some percent of mark up/interest is
charged which contribute to the revenue collection of this bank.

MARKETING-MIX POLICIES
According to Berry
“The most important contribution the marketing department can make is to be exceptionally
clever in getting everyone in the organization to practice marketing.”

Policies Regarding Marketing Mix include

i. Product
ii. Pricing
iii. Place
iv. Promotion

PRODUCT
Banks are non-manufacturing concerns which deal in those products that are highly intangible,
perishable, inseparable, variable and client based. Their products should meet both
• a personal need ( a saving account like High Yield)and
• a business need ( a current account like the one offered at SCB named Tijarat, or the
overdraft facility to finance the working capital requirements a business).

The various product policies followed at the Standard Chartered Grindlays are:
• The policy is to constantly figure out how to give the customers more for less.
• The emphasis is on the development of new, innovative and creative product for its
present as well as potential customers on timely basis.
• Offering a rare combination of unique products and convenient services so that a large
number of potential customers could be converted into the loyalty customers.

PRICING
• At Standard Chartered Grindlays the pricing strategies applicable are:
 One price strategy
 Flexible price strategy
• Many of the charges have been waived for Priority Customers in order to benefit them for
building up loyalty with the bank and provide them with top-class services.
• The bank staffs at top levels have the authority to waive some charges in order to oblige
their customers.
• The banks’ employees are also offered some concession in the listed prices of the products
and services.
• Prices offered are variable and flexible depending upon the type of the customer.

DISRIBUTION (placing)

The concept of distribution channels is not limited to the distribution of physical goods. The
service organization, SCB also formulate the policies to

• Make its ideas and services available and accessible to target population.
 • To establish new branches in order to reach out for the population spread out over far
distance places.
• Providing a Banking Network that provides access to world-class products and service
portfolio across Pakistan.
• To help people enjoy its services without expending unreasonable amount of time, effort
and/or money.

PROMOTIONAL POLICIES (promotion)

Promotional policies go a long way in determining the success of any organization

including the banks. As far as promotional activities are concerned, the main objective of the bank
is to inform the existing clients and the potential customers about its new products or
modifications in the existing products and introduction of new and innovative services.

The SCB group has adopted the Dual Adaptation (both in terms of product and
communication) promotional policy as it uses the same theme globally but adapts it slightly to
different local markets.

The Bank emphasizes on product promotion if it wants to progress in the highly competitive
market. The employees are required to promote the assets (i.e. credit cards, personal loans etc)
and liabilities (i.e. savings accounts or current accounts) of the Bank. Each employee has a sales
target to meet, which is supposed to be accomplished in a specified time period.
BALANCE SHEET AS AT 31ST DECEMBER,
1998-2001
(Rupees in 000)
Rs Rs
2000 2001
ASSETS:
Cash and balances with treasury bank 3,376,100 6,980,293
Balances with other banks 1,974,241 5,653,482
Investments 2,724,265 5,172,377
Lending to financial institutions Investments 2,616,623 1,149,492
Advances 22,557,236 16,598,631
Other assets 2,149,411 2,300,029
Operating fixed assets 199,229 317,359
Total Assets 35,597,105 38,171,663
LIABILITIES:
Bills payable 160,024 123,690
Borrowing from financial institution 3,938,337 1,351,887
Deposits and other accounts 27,337,250 32,809,299
Liabilities against assets subject to finance lease
141,694
Other liabilities 569,238 568,811
Total Liabilities 32,004,849 34,995,381
Net Assets Represented by: 3,092,256 3,176,282
Head office capital accounts 2,426,013 2,521,236
Capital reserve 15,018 15,018
Unremitted profits 635,139 603,673
3,076,170 3,139,927
Surplus on revaluation of fixed assets 9,456 9,456
Surplus on revaluation of securities 6,630 26,899
3,092,256 3,176,282
Contingencies and commitments
 PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED DEC. 31, 1998-2001
Figures in '000'
1998 1999 2000 2001
RS RS RS RS
4,974,81 3,394,09
Mark Up/Return/Interest Earned 7 3,861,437 8 3,520,724
3,427,95 2,005,64
Mark Up/Return/Interest Expensed 8 2,626,787 4 2,292,074
1,546,85 1,388,45
Net Mark Up/Interest Income 9 1,234,650 4 1,228,650
Provision against non-performing Loans &
Advances 156,454 103,149 501,977 152,974
1,390,40
Net Mark Up/Interest Income after provisions 5 1,131,501 886,477 1,075,676
Non-Mark Up Interest Income
Fee, Commission and Brokerage Income 517,103 528,075 71,787 525,148
Dividend Income 20,823 22,506 25,387 48,591
Income from dealings in foreign currencies - - 159,730 167,839
Other Income 257,342 183,548 92,536 20,360
Total Non-Mark Up/Interest Income 795,268 734,129 849,440 761,938
2,185,67 1,735,91
3 1,865,630 7 1,837,614
Non-Mark Up/Interest Expenses
Administrative Expenses 808,517 833,172 942,085 923,821
Other Provisions 17,379 1,493 1,997 -
Other Charges 2,190 143,972 16,917 128
Total Non-Mark Up/Interest Expenses 828,086 978,637 960,999 923,949
1,357,58
7 886,993 774,918 913,665
Integration Cost 407,061
1,357,58
Profit Before Taxation 7 886,993 774,918 506,604
Taxation Current 820,500 512,846 -549,377 465,377
Profit After Taxation 537,087 374,147 225,541 41,227
Unremitted Profit brought forward as 1,198,01
previously reported 919,101 1,106,188 3 751,959
Reversal of Indemnity from ANZ Group 116,820
1,198,01
Restated Unremitted Profit 919,101 1,106,188 3 635,139
1,456,18 1,423,55
Profit Available for Remittance 8 1,480,335 4 676,366
Reversal of provision for diminution in the
value of investment 15,816
1,456,18 1,439,37
8 1,480,335 0 676,366
Profit Remitted 350,000 282,322 -804,231 -72,693
1,106,18
Unremitted Profit carried forward 8 1,198,013 635,139 603,673
 FINANCIAL ANALYSIS
Before having a look at the financial figures and facts we must know the core meaning of finance
as to come to know the importance of financial analysis. The definition of finance will also help
us to have the under standing of the art of interpreting the figures given in the analysis.
Finance can be defined as:
“The science and art of managing resources especially money”.

Virtually all the organizations earn or raise money and spend or invest money. But this area is
extremely important in context of the banking concerns.
Information describing even the smallest firm is enormous, spanning the company’s
internal operations and its relations with the outer world. Financial statement analysis is very
helpful in this respect because it highlights company’s strengths and weaknesses.

Compliance With The Laws Applicable

All the financial statements have been prepared in accordance with the laws applicable in
Pakistan;
• Companies Ordinances 1984
• International Accounting Standards

(A) TREND ANALYSIS

Trend Analysis, also called Horizontal Analysis of the financial statements is one
directional- upward or downward analysis and involves the computation of the percentage
relationship that each statement item bears to the same item in the base year.
 FINANCIAL SUMMARY OF BALANCE SHEET
AS AT DEC, 31, 1998-2001
Rs. in ‘000’
1998 1999 200 2001
Deposits 28,495,209 22,074,053 27,337,250 32,809,299
Cash & Balances with treasury 5,291,458 6,088,201 3,376,100 6,980,293
Balances with other banks 87,812 1,029,469 1,974,421 5,653,482
Advances 15,568,271 18,135,804 22,557,236 16,598,631
Operating Fixed Assets 203,973 176,597 199,209 317,359
Bills payables 211,488 200,874 160,024 123,690
Deposits and other accounts 28,495,209 22,074,053 27,337,250 32,809,299

TREND ANALYSIS
Using 1998 as Base Year
Figures in %age:

Year 1999 2000 2001

Deposits 77.46 123.84 120.02
Cash & Balances with treasury 115.06 55.45 206.76
Balances with other banks 1172.38 191.77 268.36
Advances 116.49 124.38 73.58
Operating Fixed Assets 86.58 112.80 159.30
Bills payables 94.98 79.66 77.29
Deposits and other accounts 77.47 123.84 110.02

TREND ANALYSIS
Using Moving Base Year
Figures in %

Year 1999 2000 2001

Deposits 77.46 95.94 115.14
Cash & Balances with treasury 115.06 63.38 131.92
Balances with other banks 1172.36 2248.26 6438.17
Advances 116.49 144.89 106.62
Operating Fixed Assets 86.58 96.76 155.59
Bills payables 94.98 75.67 58.49
Deposits and other accounts 77.47 95.94 115.14

TREND ANALYSIS
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED DEC. 31, 1999-2001
Using 1998 as Base Year
figures in %
1999 2000 2001
Mark Up/Return/Interest Earned 77.6197 68.2256 70.77092
Mark Up/Return/Interest Expensed 76.6283 58.5084 66.86412
Net Mark Up/Interest Income 79.8166 89.7596 79.4287
Provision against non-performing Loans and Advances 65.9293 320.846 97.7757
Net Mark Up/Interest Income after provisions 81.3792 63.7567 77.36422
Non-Mark Up Interest Income
Fee, Commission and Brokerage Income 102.122 110.575 101.5558
Dividend Income 108.082 121.918 233.3525
Income from dealings in foreign currencies -
Other Income 71.3245 35.9584 7.911651
Total Non-Mark Up/Interest Income 92.3122 106.812 95.80896
85.3572 79.4225 84.07543
Non-Mark Up/Interest Expenses
Administrative Expenses 103.049 116.52 114.2612
Other Provisions 8.59083 11.4909
Other Charges 6574.06 772.466 5.844749
Total Non-Mark Up/Interest Expenses 118.181 116.051 111.5765
65.336 57.0805 67.30066
Integration Cost
Profit Before Taxation 65.336 57.0805 37.3165
Taxation Current 62.5041 66.9564 56.71871
Profit After Taxation 69.6623 41.9934 7.676038
Non-remitted Profit brought forward as previously
reported 120.355 130.346 81.81462
Reversal of Indemnity from ANZ Banking Group
Restated no-remitted Profit 120.355 130.346 69.10437
Profit Available for Remittance 101.658 97.7589 46.44771
TREND ANALYSIS
Reversal of provision for diminution in the value of
investment PROFIT AND LOSS ACCOUNT
101.658 98.8451
FOR THE YEAR ENDED DEC. 31, 1999-2001 46.44771
Profit Remitted
Using Moving Base Year 80.6634 229.78 20.76943
Non-remitted Profit carried forward 108.301 57.4169figures in 54.57237
%
RS RS RS
Mark Up/Return/Interest Earned 77.6197 87.8973 103.731
Mark Up/Return/Interest Expensed 76.6283 76.3535 114.281
Net Mark Up/Interest Income 79.8166 112.457 88.49057
Provision against non-performing Loans and
Advances 65.9293 486.652 30.4743
Net Mark Up/Interest Income after provisions 81.3792 78.3452 121.343
Non-Mark Up Interest Income
Fee, Commission and Brokerage Income 102.122 108.278 91.8433
Dividend Income 108.082 112.801 191.401
Income from dealings in foreign currencies - 105.077
Other Income 71.3245 50.4152 22.0022
Total Non-Mark Up/Interest Income 92.3122 115.707 89.6989
85.3572 93.0472 105.858
Non-Mark Up/Interest Expenses
Administrative Expenses 103.049 113.072 98.0613
Other Provisions 8.59083 133.758
Other Charges 6574.06 11.7502 0.75664
Total Non-Mark Up/Interest Expenses 118.181 98.1977 96.1446
65.336 87.3646 117.905
Integration Cost
Profit Before Taxation 65.336 87.3646 65.3752
Taxation Current 62.5041 -107.12 84.71
Profit After Taxation 69.6623 60.2814 18.2792
Non-remitted Profit brought forward as previously
reported 120.355 108.301 62.7672
Reversal of Indemnity from ANZ Banking Group
Restated non-remitted Profit 120.355 108.301 53.016
Profit Available for Remittance 101.658 96.1643 47.5125
Reversal of provision for diminution in the value of
investment
101.658 97.2327 46.9904
Profit Remitted 80.6634 284.863 9.03882

Non-remitted Profit carried forward 108.301 53.016 95.0458

 INTERPRETATION OF TRENDS:
Trend percentage analysis is most valuable when various related trends for a number of
year are compared and interpreted.
The following favorable and unfavorable tendencies may be noted in SCB’s financial growth over
the last four years.
The liquidity position is essentially important for the bank as it must have all the time
sufficient funds to meet the demands for the money that may be made on it. It is the protection
against the risk that losses may develop if banks are forced to sell or liquidate creditworthy assets
in an adverse market. ). The current liquidity position of the bank has improved as indicated by
the percentages shown in the above table.
The improvement in the liquidity position is also indicated by the fact that the deposits,
both short as well as long term, have increased, but at a slightly lower rate in comparison with the
current assets (cash and balances with the treasury. As the liquidity position of a commercial bank
must be related to the demands made upon them for funds over the period of time. An overview
of the deposits portfolio of the bank indicates that the bank is having almost 75% of its total
deposits creation in current or PLS accounts which means requires more liquid funds at hand and
this is what the bank has done over the last year. It reveals a growing financial strength and a
greater safety for the depositors.

The main reason for these changes appears to be:

• the economic crisis our country is faced with,

• absence of democracy,
• insecure economy for the investors,
• un-profitable businesses.

The internal factors resulting in the decline in the advances by the bank are
• high rates of mark up charged by the bank,
• strict lending policies,
• and grant of the advances to selected customers with good track record.
 Owing to such uncertain circumstances, any bank in the world would be reluctant to
advance credit as there is doubt about the future recovery of the funds disbursed.
The foregoing data shows that Bills Payable by the bank is on a continuous decline. They
have decreased to half the amount if we consider the figures in 1998. It is a good sign as there
would be less pressure on the current assets of the bank which is very important to stay in the
banking business.
Operating fixed assets have increased from Rs. 203,973,000 to Rs. 317,359,000 at a rate
of 156% and during the same time, the deposits of the bank have increased by 107%. The bank
acquired fixed assets in the current year. The source of capital used for the expansion of the assets
during the period under review included a finances lease with a down payment of nearly 12%.

Now comes the income statement positions during the last four years.

First and far most important item in the income statement of a bank is the mark up earned
by the bank. Presently it is showing a declining trend. It is supported by the fact that the loan
disbursements by the bank have also declined in relation to previous years’ performances. There
is a direct relationship between mark up earned and the loans advanced by the bank. However
despite the decrease in the advances, the mark up earned is showing a slight improvement in the
current year. This improvement may be due to the fact that the bank raised its mark up charges
resulting in rupee increase in the mark up earned.
But this increase in mark up income when compared with the mark up expenses and the
operating fixed assets of the bank, don’t indicate favorable condition. Although the mark up
earned by the bank has increased slightly over the last year but the increase in mark up expenses
is more abrupt. As the mark up income has increased from 88% to 104%, the mark up expenses
incurred by the bank has decreased at a higher rate i.e. from 76% to 114 % in the current year.
The bank is unable to maintain the mark up expenses at the same level while providing the
financing facilities.
An upward trend in deposits accompanied by a downward trend in advances and mark up
revenues means in effective credit policies, inefficient credit collection resulting in unhealthy
financial development. But there are two points satisfying this adverse trend; one is the increase in
the liquidity position which is extremely important for any commercial bank and second is the
fact that the bank has increased its lending to the financial institutions in the recent years which
are more secured disbursements in the face of financial crisis of the economy.
The trend in the provision for non performing loans is highly satisfactory. It shows the
efficiency of the credit department to have reduced the amount of provisions by 70% in the
current year. The reasons for this improvement may be
• Careful scrutinizing of all the documents
• Intelligent corresponding with the customer
• True 7 C’s analysis of the customer such as his business and moral character
• Granting facility to selected customers who rate well on the selected criteria for loan
disbursement.

This improvement is extremely large if we compare it with the figures of 1999. The
amount of provisioning was 487% of the figure of 1998 and this might be the reason for the
substantial decline in the amount of advances over the years.
The foregoing data reveal that the non mark up earnings of the bank has decreased by 10%
in the current year. The main factor attributable to this decline is decline in the others incomes in
the form of bad debts recovered, frauds recovered etc. In view of this trend, the bank has become
more selective in disbursing the funds.
In contrast to the trend observed in the mark up expenses, the performance of the bank in
controlling its non mark up charges is quite satisfactory. These charges have decreased by nearly
10 % in the current year. The bank is able to keep its non mark up expenses at almost the same
level. One obvious factor is the substantial decline in the other charges such as penalties. SCB
was imposed penalty by State Bank of Pakistan as a result of late submission of returns and short
fall in maintaining statutory liquidity result. It seems that the bank has learned from the last years
experience as this figure has been reduced to a very low amount this year. This argument is
further strengthened by the improvement in the liquid assets of the bank.
Taxation charges imposed on the banks have decreased from 67% to 57% owing to the
decrease in the overall taxation rates imposed by the government on the banking organizations.
Last comment is on the profit for taxation trend. This figure stands at just 18% of the last
year’s figure. But it does not mean that the bank is not performing well. If we at profit and loss
account items, we find out that the bank has to incur huge integration costs as a result of the
acquisition of ANZ Grindlays in the 2001. Although presently these costs are distracting the net
profit figure but the bank will definitely reap the benefits in the future.

(B):R A T I O ANALYSIS

LIQUIDITY RATIOS:
The liquidity position of a bank is like a reservoir. It may be adequate, although nearly depleted,
just before the start of the rainy season. Or it may be inadequate, although three quarters full just
before the summer drought.

Liquidity can be defined as

“the bank’s ability not only to meet possible deposit withdrawals but also to provide for
the legitimate needs of the economy as well”.

Now lets see the liquidity ratios one by one and have a brief look at there interpretation.

CURRENT RATIO

Formula = Current Assets

Current liabilities

2001 = 35,891,555 = 1.36

26,337,445

2000 = 27,555,173 = 1.15

 23,874,712
Calculations:
Current Assets 2001 2000
Rs. in ‘000’
Cash and balances with treasury banks 6,980,2939 3,376,100
Balances with other banks 5,653,482 2,974,241
Lending to financial institutions 5,172,377 2,224,265
Investments 1,149,492 2,616,623
Short term advances 14,635,882 15,214,533
Other Assets 2,300,029 2,149,411
Total Current Assets 35,891,555 27,555,173

Current Liabilities 2001 2000

Rs. in ‘000’
Bills payable 123,690 160,024
Burrowing from financial institutions 1,351,887 3,938,337
Deposits and other accounts (short term) 24,861,868 19,776,351
Total Current Liabilities 26,337,445 23,874,712

Interpretation:
In case of Standard Chartered bank, we witness quite a strong current ratio in 2000 and 2001. It
indicates that the bank has substantial capacity to solicit more deposits.
There is an increase in almost all the current assets of the bank except for investments. On
the other hand, the bills payables and borrowing from the financial institutions have decreased
resulting in a strong current ratio. Although deposit have increased as compared with the previous
year’s figure, but the increase in the current assets of the bank is more than the increase in the
deposits creation.
As a result, we observe more liquidity which means greater ability to meet the credit
demands that may be made on the bank from time to time. If we go through the notes, we find out
that the bank was charged penalty for not meeting the liquidity statutory requirement. These
charges have decreased to a greater extent in the current year indicating the focus of management
activeness, attention and concern for improvement in the liquidity position of the bank. That is
why the bank’s liquidity position has increased in the current year.
ADVANCES TO DEPOSITS RATIO:( An important ratio for a bank…)

Formula = Advances x 100

Total Deposits

2001 = 16,598,631 = 50.56%

32,809,299

2000 = 22,557,236 = 82.51%

27,337,250
Interpretation:
It demonstrate the degree to which bank has already used up its available resources to
accommodate the credit needs of its customers.
This ratio, a comparison of funds generation and its funds mobilization, indicates the total
loans sanctioned by the bank in relation to total amount of money deposited with the bank stands
at 50.56% as compared with the last year figure of 82.51%. This shows that the bank has greater
potential to advance additional loans. Total loan able funds roughly measured by the deposits are
sufficient to enable the bank to make additional loans without recourse to more or less continuous
borrowing. At present, the bank has got a relatively small amount of advances as compared with
its deposits raised. One reason for fewer advances is the cautious and selective approach on the
part of the management while deciding upon credit proposals. But this should not be taken as a
negative node.

QUICK ASSETS TEST RATIO

Formula = Quick Assets(current assets)

Total Deposits

2001 = 13,736,736 = 41.87 %

32,809,299
2000 = 7,920,433 = 28.97 %
27,337,250

Calculations:
Quick Assets 2001 2000
Rs. in ‘000’
Cash and balances with the treasury 6,980,2939 3,376,100
Balances with other banks 5,653,482 2,974,241
Investments:
Federal Govt. Securities
Federal Investment Bond 956,630 2,242,852
Federal Govt. Loan 46,042 247,220
Listed securities
First Grindlays Modarba 79,800 55,763
National Investment Unit 20,489 24,257
Total Quick Assets 13,736,736 7,920,433

Interpretation:
The ratio of advances to total deposits reveals little, however the bank’s other assets available for
conversion into the funds with which to meet withdrawals or make additional loans. The ratio of
quick assets to deposits is more significant for this purpose.
The bank’s quick assets constitute 42% of its deposits, which means the bank has the
ability to accommodate the withdrawals of deposits up to 42% of its total deposits (a situation
which hardly happens). It also indicates that the bank has great potential to meet the demand for
new credit approvals. The liquidity position is quite sound in view of not only the deposit
withdrawal possibility but also unforeseen cash/funds demands faced by the bank in the future.

FINANCING TO DEPOSITS & BORROWED FUNDS

Formula = Total Financing x 100

Total Deposits
2001 = 21,771,008 = 66.36 %
32,809,299

2000 = 24,781,501 = 90.65 %

27,337,250
Financing 2001 2000
Rs. in ‘000’
Lending to Financial Institutions 5,172,377 2,224,265
Advances 16,598,631 22,557,236
Total Financing 21,771,008 24,781,501
Interpretation:
This ratio highlights the relationship between the deposits raised by the bank and their obligations
in the form of advances and loans to financial institutions.
As indicated above, this ratio for the bank has decreased from 91% to 66% in the current
year. Again the reason is the same; the desire of the bank’s management to attain high/good
liquidity to safeguard the interest of the depositors. It also indicates low level of advancements
being made by the bank in the current year. Although it sounds ineffective to held cash today the
funds needed to make loans two years from now. But this is the demand of the economy today.
As our economy is passing through rough patches, the advancements made by the banks are less,
as these are insecure. However the bank has adopted a more secure means of utilizing the funds
raised through deposits and this source is heavy lending to the financial institutions with less
chance of becoming bad. Although the financial institutions pay less rate of mark up as compared
to the ordinary borrower, but for a bank, liquidity is overrides the profitability aspects.

FINANCING TO DEPOSITS & BORROWED FUNDS

Formula = Total Financing x100

Deposits & Borrowed Funds

2001 = 21,771,008 = 63.73 %

34,161,186
2000 = 24,781,501 = 79.24 %
31,275,587

Deposits & Borrowed Funds 2001 2000

Rs. in ‘000’
Deposits 32,809,299 27,337,250
Borrowed Funds 1,351,887 3,938,337
Total Deposits + Borrowed funds 34,161,186 31,275,587
Interpretation:
This ratio takes into consideration not only the deposits liabilities but other liabilities as well i.e.
borrowed funds.
If we look at SCB, its assets to deposits ratio is 61% and financing to deposits and
borrowed funds ratio is 63% showing a decline from 79% in the previous year. This shows the
ability of the bank to meet other liabilities such as borrowed funds along with the deposits
withdrawals. The bank’s management is efficient as it has taken significant measures to safeguard
against not only the withdrawals but also the repayments of the borrowed funds.

DEMAND DEPOSITS TO TOTAL DEPOSITS

Formula = Demand Deposits x 100

Total Deposits

2001 = 24,861,868 = 75.78 %

32,809,299

2000 = 19,776,351 = 72.34 %

27,337,250

Demand Deposits 2001 2000

Rs. in ‘000’
Customers 18,055,308 15,259,792
 Saving
Current 6,634,564 15,259,203
Margin 47,981 148,202
Financial Institutions
Non-remunerative 124,015 122,154
Total Demand Deposits 24,861,868 19,776,351

Interpretation:
All the deposits raised by the banks require some level of liquidity. However this level varies
from deposit to deposit depending on its type and purpose. The bank requires more level of
liquidity for the demand deposits and less for the fixed deposits. This ratio indicates the required
level of liquidity for the bank.
This ratio for SCB is nearly 76% of the total deposits held by the bank. It highlights the
fact of why the bank is having a large degree of current assets in its assets structure. The deposits
held by the bank are very volatile. The management is quite effective as it has already taken
actions to successfully meet any deposit withdrawal.

BORROWED FUNDS TO TOTAL FINANCING

Formula = Borrowed Funds x 100

Total Financing

2001 = 1,351,887 = 6.21 %

21,771,008

2000 = 3,938,337 = 15.89 %

24,781,501

Interpretation:
It shows the extent to which borrowed funds have been utilized in advancing loans facility.
 The ratio for SCB is 6.21 % showing that the management relies less on the borrowed
funds for advancing credit facility to the customers. Most of the advances are granted against the
deposits and the capital funds. Since these funds add up the pressure on the bank’s current
resources, a decline in the ratio from 16% to 6.21% is quite encouraging.

DUE TO BANKS TO DEPOSITS

Formula = Due to banks x 100

Total Deposits

2001 = 1,351,887 = 4.12 %

32,809,299

2000 = 3,938,337 = 14.406 %

27,337,250
Interpretation:
This ratio is an indicative of the proportion of the lending from the financial institutions in
relation to the total funds raised by the bank in the form of deposits.
This ratio for SCB is 4% in the year 2001. There has been a significant decline in this ratio
as previously the bank depended slightly more on the borrowings from financial institutions. It
shows that the bank is concentrating on raising funds from depositors and relies less on the
borrowed funds.
• It is a favorable indication in the sense that the bank has large potential to ask for
borrowed funds in the phase of tight liquidity position.
• Further more, it shows the efficiency of the marketing department to have created so much
of deposits that the bank does not need to look at the financial institutions for help in
improving its liquid position.

DUE FROM BANKS TO DUE TO BANKS

Formula = Due from banks x 100

 Due to Banks

2001 = 5,172,377 = 382.6 %

1,351,887

2000 = 2,224,265 = 56.48 %

3,938,337
Interpretation:
It shows the relationship between what the bank owes from other banks and what is due to it. A
tremendous improvement has been observed in this ratio in the current year showing the fact that
the bank has to seek fewer funds from the financial institutions owing to the strong liquid
financial position. On the other side of the picture, the bank is continuously increasing funds
allocation in this sector causing further rise in the ratio. This ratio is favorable from another
perspective. In the phase of economic instability, the bank’s management is efficient to access the
risk involved in lending and that is why it has chosen to provide support to the banking and
financial institutions more in the year 2001.
DUE FROM BANKS TO TOTAL ASSETS

Formula = Due from banks x 100

Total Assets

2001 = 5,172,377 = 13.55 %

38,171,663

2000 = 2,224,265 = 6.34 %

35,097,105
Interpretation:
It is an indication of SCB’s funds management policies. The funds allocation to the financial
institutions has increased to a great extent despite the fact that still it holds a small proportion
relevant to the total resources raised by the bank. It is a positive indicator in the sense that the
financing to the banks are the most secure ways of lending. Considering the economic conditions
of the country, it seems to be the best alternative available to the bank.

GEARING RATIOS:
Gearing ratios show the extent of debt in the bank’s resources.

Debt to Total Assets Ratio

Formula = Total Debt x 100

Total Assets

2001 34,995,381 = 91.67 %

38,171,663

2000 = 32,004,849 = 91.19 %

35,097,105

Interpretation
This ratio indicates the bank’s strategic risk of financial failure i.e. how much company owes in
relation to its size. The above given ratio indicates that SCB is utilizing nearly 92% of the
external funds in its business operations. For a banking concern, this ratio is quite acceptable as
the whole structure of banking is based on the funds provided by the depositors.
Case #2: If we consider the bank’s liabilities excluding the depositors funds, the situation
would be like this;
2001 2,186,082 = 5.72 %
38,171,663

2000 = 4,667,599 = 13.30 %

35,097,105

Interpretation:
 It shows the true picture of the gearing. Excluding the bank’s core function i.e. Deposits
Creation, the bank seems to be relying less on the borrowings to support its operations. In the year
2000, this figure stood at 13.30% but the bank has further decreased this ratio to just 5.72% in the
year 2001. This shows the efficiency of the bank’s management. There is another positive aspect
of this ratio; the banks and other potential lenders will be willing to advance further funds
This decrease in gearing can be attributed to a no. of factors. Firstly, the acquisition of
ANZ Grindlays in the year 2001 has resulted in a large no. of deposits for the bank. Due to this
fact, the bank does not have to resort to outside funds causing decline in the ratio. Secondly, the
marketing and sales department of the bank is so efficient to raise so much of deposits that the
bank is self-sufficient to discharge its obligations at the right time without getting the support of
lending institutions.

Provision For loans to Total Loans Ratio

Formula = Provision for loans x 100

Total Loans

2001 = 152,974 = 0.92 %

16,598,631

2000 501,977 = 2.27 %

22,557,238

Interpretation
This ratio has decreased in the year 2001 as compared to year 2000 resulting in a more favorable
picture.
 COVERAGE RATIO:
Coverage ratio measure the capacity of the bank to cover its interest charges, which are the
main obligations on the bank.

Interest Coverage Ratio

Formula = Earning before int. & Tax
Interest Exp.

2001 = 2,798,678 = 1.2 times

2,709,181

2000 = 2,780,562 = 1.39 times

2,005,644

Interpretation
It shows whether the bank is earning enough profit before mark up charges to be paid to the
financiers and the taxation obligations due to the government in order to remain solvent.
The above figure shows the less capacity on the part of the bank to cover its interest
payments. It has declined as compared with the last year. The bank cannot afford it to decline
further as it would mean no benefit for the capital providers. But this is a short term perspective of
the bank’s financial position. In view of the long run financial perspective, this ratio is good for
the bank. The reason is the huge integration costs incurred by the bank on the acquisition of ANZ
Grindlays going to yield tremendous benefits for the bank in the future.
 PROFITABILITY RATIOS

Profitability ratios are a measure of reasonable rate of return and adequate profits turnover.

Return on Capital Funds

Formula = Net mark up Received X 100
Capital Funds

2001 = 41,227 = 1.313 %

3,139,927

2000 = 225,541 = 7.33 %

3,076,170

Interpretation
This ratio relates the net profits to the amount of capital funds that have been employed in making
that profit.

The above given ratios suggest that the profitability of the bank has decreased very sharply in the
year 2001 indicating less profitable operations of the bank.

Return on Investment
Formula = Net income after taxes X 100

Total Assets

2001 41,227 = 0.108 %

38,171,663

2000 = 225,541 = 0.6426 %

 35,097,105

Interpretation
This ratio indicates the profit earned by the bank on the resources employed.
As far as SCB is concerned, we observe a decline in the efficient utilization of the resources. It
has decreased to 0.108 % in the year 2001 from 0.6426 % in the year 2000. The reason for this
low profitability is the same given above; the increase in the mark up expenses relative to mark up
earned and incurrence of huge integration costs which is good in view of long term profitability.

Return on Risk Assets

Formula = Net income after taxes X 100

Total Risk Assets

2001 41,227 = 0.248 %

16,598,631

2000 = 225,541 = 1.0 %

22,557,236

Interpretation
This ratio, with a minor fluctuation in 2000 came down from 1.0% in 2000 to 0.248 % in the year
2001. It is indicating less active utilization in the form of advances. The bank is finding it difficult
to keep the level of its expenses less in proportion to the advances it has disbursed. Lending, no
doubt is the core function of a banking concern. But the bank should find out effective ways of
credit provisions affecting less on profitability of the operations. Non mark up revenues should
also be increased in the face of lower credit disbursements resulting in more returns for the bank.

Return on Deposits

Formula = Net income before taxes

 Total Deposits

2001 506,604 = 1.54 %

32,809,299

2000 = 774,918 = 2.8 %

27,337,250

Interpretation
This ratio indicates to what extent deposits which represent funds mobilization on the part of the
bank contribute towards income generation. Apparently, this ratio is giving negative remarks on
the part of the bank’s profitability and efficient utilization of the deposits. But a review of the
profit and loss account indicates that the bank has performed well in keeping its overall expenses
low. As the above calculations include the integration expenses incurred in the year 2001 by the
bank which was not present in the last year.

Operating Expenses to Net Revenue

Formula = Operating Expenses (excluding integration cost)

Net Revenue

2001 = 923,949 = 85.89 %

1,075,676

2000 = 942,085 = 106.27 %

886,477

Interpretation
This ratio signifies the proportion of the revenues that is used to cover the operating expenses of
the bank. The ratios calculated above gives a poor picture of the bank’s operations. Although this
ratio has decreased in the year 2001 from 106 % to 86% but still it is giving a dismal picture of
the profits for the bank. The reason for this low profitability is high level of liquidity attained by
the bank as there is trade off between these two concepts. The bank has increased its liquidity at
the expense of its profitability.

In short, the bank in an attempt to maintain at a good level of liquidity, has a low level of
profitability but there is a continuous push in the profits and there are chances that the bank will
reach at a point of high liquidity and profitability in the near futures.

Capital Adequacy/Leverage ratios

Capital Adequacy/Leverage ratios indicate bank’s capacity to meet its short and
long term obligations.
Capital adequacy is very important as the bank’s depositors as well as the supervisors as his
representative, favor maximum amount of capital as protection against the risk inherent in the
banking operations.

Capital Funds to Deposits Ratio

Formula = Capital Funds X 100

Total Deposits

2001 = 3,139,927 = 9.57 %

32,809,299

2000 = 3,076,170 = 11.25%

27,337,250

Interpretation
This is the first and widely used ratio to measure the capital adequacy of a bank. Ideally this ratio
should fall near 10 %. So the bank is quite up to the mark as far as the protection of the
depositors is concerned. However the bank has decreased it from 11.25% in the year 2000 to
9.57% in the year 2001 keeping in view the short range profit maximization to operate with as
much of capital funds as is sufficient in order to gain average leverage in earnings from the
employment of the depositors’ funds but still it is not in conflict with the interest of the
depositors. The bank’s management is quite concerned about its public images i.e. the capital
providers to assume more risk. In this regard the bank’s management is efficient in combining the
profitability and safety because in the longer run, their investment will become more profitable
only if the bank stays in business. In order to maintain the confidence of the public (depositors
current and potential), the bank has tried to hang around 10% as public trust and confidence is
vital ingredient in the success of a bank.

Capital Funds to Total Assets Ratio

Formula = Capital Funds X 100

Total Assets

2001 = 3,139,927 = 8.23 %

38,171,663

2000 = 3,076,170 = 8.76 %

35,097,105

Interpretation
This ratio indicates the extent of the funds employed by the bank in the total resources as shown
in the balance sheet. It shows that for ever rupee invested in the assets, 82 paisa is attributable to
the owners. Although this ratio has decreased in the current year, but still it is good enough to
satisfy the general public.

Capital Funds to Risk Assets Ratio

Formula = Capital Funds X 100
Risk Assets
2001 = 3,139,927 = 18.92 %
16,598,631

2000 = 3,076,170 = 13.64 %

22,557,236

Interpretation
This ratio takes into account the difference between cash and marketable securities and other kind
of assets. Cash and marketable securities, which are Less risky items, are excluded to find out the
true picture of the capital adequacy. A ratio of one rupee of capital to five rupees of quick assets is
considered sufficient. In case of SCB, this ratio is near 20 % which is sufficient to ensure the
public that the bank is in a position to withstand what ever strains may be placed on it. As the
bank has decreased the advances in the year 2001, the result is the improvement in the risk
coverage from the perspective of the depositors. Previously it was quite low i.e. 13.64%. It shows
that the bank is concerned about its public image regarding risk absorbance.

Capital Funds to Total Financing Ratio

Formula = Capital Funds

Total Financing

2001 = 3,139,927 = 14.42 %

21,771,008

2000 = 3,076,170 = 12.41 %

24,781,501

Interpretation
This ratio gives more or less the same picture as given by the above one. It calculates the risk
absorbed by the owner in both types of financing; borrowing to the financial institutions and
debtors. Although the lending to the financial institutions does not involves the same level of risk,
so this ratio is calculated from a conservative perspective. An increase in this ratio from 12.41%
in the year 2000 to 14.42% in the year 2001 favors both
• the depositors as their money is safe and
• the potential borrowers as they have the confidence that the bank is in a position to give
genuine considerations to their credit needs.
 (C): SWOT ANALYSIS

Before moving on to the figurative analysis , lets see what the swot analysis means and how does
it carry the responsibility to measure the level of efficiency of the Organization.

“An analysis indicating towards the organizations strengths, weaknesses, opportunities

and threat is termed as SWOT Analysis.”

Such an analysis is very important for the management in retaining the strength,
overcoming the weaknesses, capitalizing over the emerging market opportunities, and carving
ways to successfully tackle with the threats and ultimately converting them in the strengths for the
organization.
During six weeks of my stay at SCB, Mall road, I have come across the following SWOT
analysis of the bank. But it must be kept in mind that the SWOT have my personal perception
dominance, so it may be biased. No word should be taken as the last.

STRENGTHS
Largest Foreign Banking Network:
The Standard Chartered Bank is the largest foreign banking network in Pakistan with 21 online
branches in eight major cities of the country. The acquisition of ANZ Grind lays in the last year
has given added further to the reputation enjoyed by the bank and the positive results have started
to appear.
Comprehensive Range of Money Transfer Options:
Through Standard Chartered Bank, one has at his disposal, a comprehensive range of money
transfer options including cashier's orders, drafts and telegraphic transfers. The bank ensures its
customers that whether it's local or foreign currency transfer to local or overseas destinations,
their money will reach its destination safely and quickly.
24 hour, Non-stop Banking
One can avail the benefit of the services provided at the bank till 5:00 P.m. which is highly useful
for those customers who find it difficult to leave their officers in the morning..
ATM Network
The bank, in collaboration with the Muslim Commercial bank, has the largest ATM Network
cross the country. The customers of SCB can withdraw access their funds any time at more than
150 Sites with MNET Logo.

Some of the other major qualities that I noticed were:

Attractive Facility Layouts
Priority Banking
Phone Banking
Ethical concerns and Public Image:
Technological Advancements
Electronic Banking
Customized Solutions
USD Clearing

WEAKNESSES
In my opinions these are the points that might be detrimental to the efficiency and profitability of
the bank.

Low Job Satisfaction

Understanding and the effective management of the human resources is the most difficult
challenge faced not only by the bank but by all the organizations. Even though the people have
been sacrificed in the new organizational developments, it is becoming clear that the true lasting
competitive advantage comes through humn resources and how they are managed. SCB seems to
not focussing on this highly critical issue as the job satisfaction level of the employees working at
SCB, tufail road was quite low. These are some of the possible reasons of this low morale based
on my personal judgement.
• Contractual Hiring
• Low Salary Package
• Job In security
Lack of specialisation
This famous and useful concept given by Adam Smith in 1776 seems to be missing in the bank.
The employees are constantly rotated from one job to another job of totally different characteristic
in the view of giving them the know-how of the working in all the departments. But I think this is
not a very good tactics used by the management. Otherwise the situation might be like this ‘Jack
of all and master of none.’
Others are :
Basic Banking Service
Centralization
Lack of training facilities

OPPORTUNITIES

Apart from the ones discussed in External Factors Evaluation Matrix, the following threats and
opportunities are being faced by the bank currently:
Wholesale/Corporate banking
The corporate bond market is still in its infancy in Pakistan. Few companies such as Pakistan
Telecommunications Ltd. (PTCL) and Water and Power Development Authority (WAPDA)
introduced corporate bonds for general public and received good response but no similar initiative
was taken by other companies. Market for corporate bonds needs to be developed as it will offer
greater opportunities to the bank.
Joint Ventures
In order to capitalize on the emerging market opportunities, joint ventures offer the best strategy.
Standard Chartered so far has just three joint ventures, one with MCB, the other one with
McDonalds and the last one with the Akbar Group of Companies.
But if we look at some of it competitors, we find out that they have formed a no. of joint ventures
such as Al-falah Bank with 42 and Prime Commercial Bank with 33. So the bank should also
undertake joint ventures in order to be successful opportunist.

THREATS
High Employees Turnover
As discussed above, the job satisfaction level of the employee is very low resulting in high
turnover which is bad for any organization as there are huge monetary and non-monetary costs
involved in the fresh recruitments.
High charges
The schedules of charges indicate that the fees charged by the bank on the various services it
provides are extremely high. It may result in decrease in the number of its exiting customers.
Further more, this could be very alarming situation for the bank in case some of the competitors
grasped the opportunity and lowered its rates. The result would be either the lost of market share
or decrease in the charges resulting in lowering the bank’s income.
Others are:
Less attractive rate of return
Stiff Competition
Over view of the analysis….
After having a good study of all the ratios and financial tools we come to the point to suggest that
standard chartered bank is doing a great job in the financial banking sector of Pakistan.
It have a growing base day by day and it have all the makings to become (or remain) as
the market leader of the foreign Private banks in Pakistan.
 CREDIT CARDS

(PLASTIC MONEY)
“the one to choose”
Credit cards are defined as
“An interest free loan for a specific time period with revolving facility”
There are mainly two types of credit cards which Standard Chartered bank offers, these are
 Master card
 Visa classic
 Visa (Gold /Silver)
 Visa Classic
One can also avail “Photo Cards”.

Standard Chartered credit cards combine the international acceptability of VISA/ Master card
with the worldwide reliability and excellent service that Standard Chartered represents. One can
use credit cards more than just making purchases. The Standard Chartered credit cards provide
travel benefits, added securities features, access to other Standard Chartered banking services and
a Varity of entertainment facilities.

GLOBAL ACCEPTABILITY
Standard Chartered credit cards are globally accepted:
MASTER CARD
Over 16.8 million establishments in 160 countries (including 10,000 in Pakistan) around
the world displaying the Master Card logo accept it.
VISA CARD
Acceptable at 18 million establishments worldwide with 10,000 in Pakistan.
SERVICES:
INSTANT CASH
Standard Chartered Credit cards allows to with draw any mount up to 75 % of the
available credit limit assigned.
For Master Cards 456,000 ATMs with 16 ATMs in Pakistan
For VISA Cards 562,000 ATMs with 16 ATMs in Pakistan

OVER THE COUNTER CASH ADVANCE:

Cash can also be withdrawn by requesting a cash advance “over-the-counter” at
• 360,000 financial institutions world wide (VISA CARD),
• 23,000 financial institutions world wide (Master Card),
including 21 Standard Chartered branches in Pakistan, or other VISA/MASTER Card member
banks in Pakistan.

PROCESSING TIME:
Processing of the application and delivery of the credit cards generally takes 3 to 4 weeks to
complete.

24-HOUR CUSTOMER SERVICE

A well trained Customer Service team is available 24 hours a day, 365 days a year to
• Answer the queries
• Register and resolve the complaints
• Report a lost/stolen card

ZERO LOSS LIABILITY

In case of lost of a card, all fraudulent charges are covered as soon as the reported lost to the
bank. SCB’s Credit Cards ensure complete security from loss, theft and even bad luck.
 STANDARD CHARTERED MASTER CARD
“a better way to plan your major purchases.”

LOWER FINANCIAL BUREDN

Standard Chartered master card features a low financial charge of only 2.33% per month. A free
credit up to 40 days is also available in case of retail transactions provided that the billed amount
in the monthly statement of the account is fully paid.

STANDARD CHARTERED VISA CARD

Putting more within reach, Standard Chartered Visa cards promises global acceptability and
empowerment of lifestyle.
Standard Chartered Visa Card has two sub cards i.e.
Visa Gold
Visa Classic
 THE CREDIT CARDS OF THE SCB:

Smart Credit Classic Card

Need the power to realize the dreams

DIVA Gold Card

'Diva' - is an international credit card specially
designed for women.

Executive card ATM

Cards

PHOTO CARDS

“Enjoy Instant Recognition Where Ever You Are”

One can have the option of converting credit card into a photo card. The color photo digitally
embedded can secure the identification.
 Priority Banking

Standard Chartered Bank Priority Banking is created specifically for a chosen few individuals,
who will settle for nothing but the best and demand the highest standards of service in all their
banking relationships.

• Is your personal banker really qualified to help you realise your financial objectives?
• Are you sure you're making investments that are appropriate for yourself and your family?
• Is your bank giving you the priority treatment you deserve?

• As an exclusive programme for those who wish to get more benefits out of their bank,
Standard Chartered Priority Banking caters to the banking and investment needs of
successful individuals who are busy with work & family commitments.

Excel Banking:
In today's fast paced, technology-driven world, customers need a special
product to fulfil all their banking needs. SCB’s new package - Excel banking
has been designed to help them make the most of their money.

Phone Banking:
“Bank on your phone anywhere, anytime…..”

As part of SCB’s commitment to meeting all customers needs, they offers the customers a service
that enables them to access a wealth of financial information, 24 hours a day, 7 days a week. So,
just call Phone Banking, or

Now you can bank from the privacy & comfort of your home, office or car. Get to the bank
without leaving for the bank. Standard Chartered's latest innovation, Phone Banking, gives you
quick, easy and hassle-free access to your account details without wasting your valuable time and
energy.

Retail Services:
Standard Chartered offers you a comprehensive range of retail services in many countries. These
include:

• Automated banking services

 • Demand drafts
• Foreign exchange services
• Local and foreign currency cheques
• Safe deposit boxes
• Telegraphic transfers
• Traveller's cheques

Personal Loans
Standard Chartered Bank helps you to be in control of your own finances. Personal Loans,
without any guarantees or collaterals, are available to you to meet your specific credit needs.
Choose our instalment Loan or Revolving Loan, whatever suits you best. Whether you're planning
a vacation, re-decorating your home, paying for your child's college education, or simply wish to
have a standby line of credit for unforeseen expenses, Standard Chartered Bank's Personal Loans
can help you fulfil your dreams.

Mobile And E-mail Alerts

Standard Chartered always try and make life simple for customers. Their Mobile and E-mail
Alerts' service is designed just for that. With this FREE and personalized service customers can
get timely reminders, confirmations and alerts pertaining to their Credit Card transactions - and all
this, right at their fingertips.

Money link:
SCB’s state of art color ATMs provide the customers 24-hours of convenient,
Complete banking. Now customers can enjoy banking over 150 cities 24 hours’ ATM.

E_Statements:
If the customers have e-mail address, they can receive an e-statement. Standard Chartered’s fast,
reliable and ultra-efficient service designed to minimize paperwork and maximize convenience.
 BRANCH NETWORK

STANDARD CHARTERED ACROSS PAKISTAN

KARACHI
Karachi's Clifton* Branch
Karachi's Main Branch**
Karachi's Hill Park* Branch
Karachi Rashid Minhas Road**
Off-site ATM t Shell Select
LAHORE
Lahore's Mall Branch
Shahrah-e-Quaid-e-Azam, The Mall,
PO Box 6, Lahore
Tel 42-7351921
Fax 42-7237407

Lahore's New Garden Town* Branch

Lahore Defence**
Tel. 589907-77
Fax: 5899126
Lahore Shami Road**
Of site ATM**

FAISALABAD
Faisalabad's Railway Road Branch

ISLAMABAD
Islamabad :Saudi Pak Tower
 STANDARD CHARTERED GRINDLAYS ACROSS PAKISTAN
(Now Standard Chartered Bank from Dec. 01,2002)
KARACHI
Karachi Chundrigar Road**
Karachi Allama Iqbal Road
Karachi Centenary**
Karachi Clifton**
Karachi Garden Road
Karachi Gulshan
Karachi Metropole Hotel**
Karachi North Nazimabad**
Off-site ATM at McDonald’s
Karachi Sheraton**
Off-site ATM located in the main body

LAHORE
Lahore Gulberg**
Lahore Tufail Road**
SIALKOT
Sialkot
ISLAMABAD
Islamabad**
RAWALPINDI
Rawalpindi**

PESHAWAR
Peshawar**
QUETTA
Quetta
UAN in Karachi, Lahore and Islamabad: 111-001-001
 What I learnt at Standard Chartered Bank:
It has been a great experience to work in Standard Chartered bank and to learn the arts and tools
of real competitive banking. My basic training emphasis was in the department of Corporate trade
which was sub-divided into many other categories. Each of the departments was specialized in a
different corporate service. Following are the main departments and the personal with whom I
worked during the pleasant tenor of my internship.

I did the work in the following departments

 Trade & Service(Khalil –ul- Rehman, Manager trade and services)
 Guarantees (Farhan chaudhry)
 Credit Cards Department (Idrees Mughal, now transferred to Bank Al-Falah)
 Government Securities Department (Miss. Maryam)
 Document verification (Adil Saleem)
 File keeping (Arshad chaudhry)

Trade and Service Department

Trade And Service
I did work in this department for 2 weeks and learn about the procedure of the export
documentation of the bank. The documentation was consisted of the issuance of the E-FORM and
its proper completion. I also learnt the art of issuing the M-form completion and attestation . the
basic difference between E-FORM and M-FORM is that E-FORM consists of 4 similar
copies(which are used by different parties to the contract) and M-FORM consists of single copy.
E-FORM is used for the export purpose(as very much clear from the name) and M-FORM is used
for the commission which is to be paid to the agent or any other foreign bank. M-FORM is filled
by the bank officer. I also gathered the experience about the fact that how these forms are to be
negotiated with the customer and how to get there operations be completed with the State Bank
Of Pakistan And how to these form are operated with the customers and state bank. And I also
learnt about the fact that how to guide the customers(both consumer and corporate) and provide
relevant information to him.

This department deals in the services to the general consumer and institutions such as:
 Exports;
 Export L/Cs
 Export Collection/ Bills
 Credit Bills Negotiated
Imports;
 Import L/Cs
 Trust Receipts
 Shipping guarantee
In short, all the services with regard to import and exports are performed by this
department located at SCB, Mall branch, Lahore.

Procedure
 Customer should be the account holder of the company
 Customer gives a request in written form on the letterhead of its company.
 The request letter must be signed by the CEO or Director of the company or the any
authorised officer of the company.
 The number of the requested E-FORM must be mentioned.
 The bank officer issues the required no of E-FORM.
 Record the serial No of the E-FORM’s and the company name and date of issuance in the
register.
 Customer fills the required fields of the form and return to the bank to attest and attach the
required document.
 Bank officer check the form and attest the form and attach the No Objection Certificate
(NOC) in case of Letter of Credit.
 In case of contract no need of No Objection Certificate (NOC).
 I n case of CIF\C&F bank issues the certificate of TO WHOM MAY IT CONCERN.
 In case of FOB no need of the certificate of TO WHOM MAY IT CONCERN.
 In case of shipment the bank issues the certificate of TO WHOM MAY IT CONCERN.
  In case of any other mode of transportation no need of the certificate of TO WHOM MAY
IT CONCERN.
 All these form are signed and stamp by the manager of TRADE AND SERVICE
department.
 Attested form return to the customer.
 After the export is complete and 2 copies of the E-FORM is return to the bank.
 Bank fill the requirements of the State Bank Of Pakistan and send one copy of the E-
FORM to the State Bank Of Pakistan.

4 copies of the E-FORM is processed as follow during the export.

 Original copy give to custom department
 Duplicate copy send to State Bank Of Pakistan
 Triplicate copy has bank own.
 Quadruplicate copy gives to the applicant.

These E-FORMs’s helps the State Bank Of Pakistan to calculate the exports and imports
of the company.
I-FORM is used for the import and it consist of 6 copies and the same procedure is
followed for I-FORM.

Guarantees
Guarantees are the main part of any of the contracts involving the sentiment of risk. I
worked in this department for 1 week and learnt about the procedures of issuing the Guarantees
and maintaining them. In the simple words Guarantee can be defined as “

“guarantee is a promise on behalf of the guarantor to full fill the promised deed in
case of failure of the beneficiary(the person for whom the guarantee is given)”

Guarantee is the document issued by the bank to assure the completion of work. If the
work is not done within the required time by the person on whose behalf the guarantee has been
given by the bank, the bank will be liable for the compensation. Guarantee call up means
guarantee time is expired and work is not completed. So the bank pay full amount to the
contracting person. Then after wards the bank will negotiate the terms with the beneficiary and
will cover its lose and margin.
 When the work is complete the original guarantee is returned to the bank.

Normally the guarantee is issued @10% of original amount and in some cases it is
extended to the requirements. The amount and the issuing and expiry date is mentioned. And no
clause in law to change the amount and date.

Bank charge against guarantee issuing is 2 % of the guarantee amount. The claim of the
guarantee is different for different departments.

Government department: claim after the expiry of 60 years.

Semi- Government department: claim after the expiry of 3-5 years.

Others: claim after the expiry of 3-7 years.

The Standard Chartered issues these types of guarantee.

 Tender Guarantee
 Advance Payment Guarantee
 Performance Guarantee
 Custom Guarantee
 Bank Guarantee

Credit Cards Department

I done work in this department for 1 week and learn how to issue the Credit Card and how to
receive the payments.

Credit card is called plastic money and you use it every good reputed store and where it accepted.

Standard chartered credit card is accepted at most in all reputable hotels and restaurants and shops
and give discount on the purchase through the credit card of the Standard Chartered.

Government securities Department:

 This department was totally dedicated for the procedures of the government securities.
The bank operates in the government securities on the behalf of there customers. Bank invests and
collects on behalf of the customers which are account holders in the bank.

I learnt how to buy and sell securities on the customer’s behalf and how to get the profit of the
customer into his account. The basic thing in this procedure was the approval of the State bank of
Pakistan.

Documents Verification department:

This department was concerned with the verification of the documents which are
submitted with the bank by different corporate of consumer clients. In this department it is
checked that whether the documents provided for a certain service are in accordance with the
policy of the bank and the rules of the State bank of Pakistan.

This department was given and additional responsibility to handle the correspondence
with the foreign banks and delivery of the cases concerned to them.

“It has been a wonder full experience to be at Standard Chartered Bank , Mall road Branch.
The staff and the manager himself were real cooperative. The delivered me the knowledge to
there best capabilities. They tried to expose me to the real world of banking. I have been able to
learn a little due to my limited knowledge but I am really obliged to them all.”
 BANKS

AND

PAKISTAN
(A brief comment……)
Why , what

and

who to do….?
Who own’s the Bank

&

who runs it

for us…..
Management styles
& system
Marketing

Management
Departments of the
Standard Chartered
Bank
 Financial
Analysis
(and evaluations)
Banking under the
NEW VISION

looking forward…
What I have learnt
from….

my interenship at
SCB Mall Road,
lahore
 CONTENTS
Page No.

1. Banks and Pakistan 1

2. Welcome to Standard Chartered bank,,, a bank with a history to deliver 11
3. Why what and how to do it.. 24
4. Who owns the bank and who runs it for us. 30
5. Management styles and systems 34
6. Departments of the banks 48

7. Marketing management 52
8. Financial Analysis (and evaluations) 65
9. Credit cards of the bank, 99
10. Banking under the NEW VISION 104
11. What I have learnt from….my internship at SCB Mall Road, Lahore. 108
 Final report
ON

Standard Chartered bank,

The Mall , Lahore

Presented to: Prof. Chaudhary Nazir

Ahmad.

Assignment coordinated by: Mr. Muazzam Mughal.

Presented by: Mirza Muhammad Sohail

Qadri

(Roll No: 139)

M.Com, session 2000-02

Hailey College Of commerce, University of

The Punjab, Lahore.
 Welcome To The World Of….

STANDARD
CHARTERED
BANK
A bank with a history to deliver Standards…..
Credit cards of the ……

Standard chartered bank .

 In The Name Of Allah The Most Beneficent And
The Most Merciful .

With the blessings of Allah who has given me the

strength and has shown me the way to the completion of this
important task handed over to me. I with my utmost
capabilities and knowledge have fulfilled my assignment.

The basic Purpose of this assignment is not only to

increase my knowledge through research but also to bring the
important facts about this leading foreign bank of Pakistan to the light.
It was also intended to depict my learning during this 6 week tenor of
internship, assigned to me by the college.

It has been a real learning curve for my professional career as I

have been made to work in the real office-environment. Due to this fact I
came to know the office ethics, temperament of sub-ordinance and art of
leading.

During this comprehensive assignment I also came to know a lot

about the most important financial and services sector of the economy of
our country(Banking sector).

May Allah Almighty accept my efforts through the

Relationship of Holy Prophet ( S.A.W.W ) and may give me
its fruit in this world and
Its counterpart. ( Amin) .
From:
Muhammad SohailQadri
 : Dedication :

I dedicate this assignment to my parents , with

the prayers , affections and efforts of whom , I
am able to stand , where I am.