strategic management of southeast bank limited

7/24/2019 Strategic Management of Southeast bank Limited

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1. Introduction

1.1. Origin of the report

Professor Dr. A.K.M. Saiful Majid, the Course Instructor assigned the course participants onAugust 19, 2 1! to prepare an anal"tical report on Strategic Manage#ent of the particular co#pan" participants$ %or& for. 'hus, the report has (een prepared as re)uire#ent of the*M+A Course Strategic Manage#ent- at Institute of +usiness Ad#inistration I+A/ %ith a0ie% to relating course contents %ith the particular practical field the students in0ol0ed %ith.

1.2. Objective of the report

'he #ain purpose of this report is

'o ha0e an o0er0ie% of the Strategic Manage#ent of Southeast +an& i#ited 'o assess different strategies appl"ing different anal"tical concepts, tools and

techni)ues of Strategic Manage#ent 'o pro0ide suggestions for possi(le strategic direction for the (an& in the co#ing da"s

(ased on findings of the report.

1.3. Methodology

'he co#pan" %e(sites, annual reports, 0ision 3 #ission, 0alues and o(jecti0es, other (oo&lets3 #anuals etc %ere studied to identif" the strategies of the (an&. 'op le0el e4ecuti0es andother e#plo"ees %ere also consulted to ha0e their opinion on the rationale of different

strategic #o0es of the co#pan".

'he theoretical (ases for the reports are pri#aril" those taught as part of StrategicManage#ent course. 'he industr" co#petiti0eness and outloo& ha0e (een re0ie%ed. 'he toolsand techni)ues such as Strategic group #apping,P*S'* anal"sis, Porter$s fi0e forces #odelof co#petition, S56' anal"sis, Ke" Success 7actors KS7/, fi0e (asic generic (usinessstrategies and other strategies li&e alliance, di0ersification, etc %ere applied.

1.4. Scope and limitations

'his report has co0ered &e" (usiness strategies of the (an& in relation to target custo#ers. Italso co0ered +an&$s strategies in net%or& e4pansion, operational strategies i.e. internal control3 co#pliance, asset lia(ilit" #anage#ent, loan #onitoring and reco0er" etc. 'he report alsohas atte#pted to gi0e insights in the strategies of product offering and differentiations,custo#er ser0ices, strategic alliance %ith other partners, di0ersifications, industr"co#petiti0eness, *thics and CS8, Corporate culture and leadership etc. Despite the fact thatthe report has (een prepared as part of an acade#ic course stud", it #a" (e useful for differentsta&eholders li&e e)uit" in0estors, creditors and regulator" agencies.

'he report also has certain li#itation too. It has not (een possi(le to produce in depth

co#parison %ith industr" pla"ers as rele0ant data could not (e #anaged due to ti#econstraint.

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2. Organi ational Overvie!

2.1. Southeast "an# $imited %S&"$' at a glance

Southeast +an& i#ited is a scheduled pri0ate co##ercial (an& esta(lished in 199: under the+an&ing Co#pan" Act 1991 and incorporated in +angladesh as a pu(lic li#ited co#pan"under the Co#panies Act 199; to carr" out (an&ing (usiness in +angladesh. 5ith aco##it#ent to (ring )ualit" and e4cellence in ser0ice, the +an& %as esta(lished (" leading

(usiness personalities and e#inent industrialists of the countr" %ith sta&es in 0ariousseg#ents of the national econo#". 'he incu#(ent Chair#an of the +an& is Mr. Ala#girKa(ir,7CA, a professional Chartered Accountant. Mr. M. A. Kashe# and Mr.


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)able 2.1* (ive years financial performance at a glance

'&. in #illion

+articulars 2,12 2,11 2,1, 2,,- 2,,AuthoriBed Capital 1 , . 1 , . 1 , . 1 , . !,: .Paid up Capital ?, !2.?@ ?,!1 . 1 @,9! .?; !,;22.@; 2,?:2.28eser0e 7und 6thers 1 ,?@;.@? 1 ,@?!. : 1 ,1@:. @ @,: ;.@2 ;,? ;.?1Deposit 1:2,9 1.2; 12 ,1 ?.22 1 , 29.:? 9@,@@9. : @?, 1;.@Ad0ance 12@,9@?.9 1 ,2??.:@ 92,;:2.@2 ,;9 .: @ ,2?1.2@In0est#ent ! ,@:@.:@ 29,?;@.@ 1?,!2 .@: 21,!: .2! 12,299.@1I#port +usiness 111,:! .: 99,: 9. 1 1 !, 2@. @9,:?2.92 :?, 19.*4port +usiness ?;,;@;.2 :,9?2. @ :?,1:?. @ ;@, 2;.; ;2,1 ?.@uarantee +usiness 21,: @.@: 2:,@ !.9 22, ?1.19 11,91@. ; 1:, ?.998e#ittance +usiness ;1,;::.; ;9,:;;.1 2?, ?2.2: 2!,? . 1:,221.?'otal Inco#e 2!,1!;.1? 19,9!1.91 1@, 1.!! 1!, 2.2: 1 ,2: .1!'otal *4penditure 1 ,@!?.99 1!,?;@.2; 9,!1@.!9 9, ? . 9 ,2! .::6perating Profit :,;9:.19 @, ?:.@@ @, :;.9; ;,@1;.@@ !, 12.:?

Eet Profit after 'a4 andPro0ision

1,@;?. 2 1,912.19 2, @!.1! 1,? .19 ?? .2;

7i4ed Assets ,@ .:1 ,! !.11 ;,;@!. ? ;,!!?.!: 2,@?:.:@'otal Assets 1?9,921.:? 1:?, ?.:9 1!1,9;!.;? 112,@ @.9? ?1,1?1.:

Source* /nnual 0eport of S&"$ 2,12

)able 2.2* &mployee and branch gro!th

+articulars 2,12 2,11 2,1, 2,,- 2,,

*#plo"ee per#anent/ 1?:: 1:2@ 1! ! 12:; 1 ?

+ranch 9; ?; @ :@ ;@

Source* /nnual 0eport of S&"$ 2,12

3. irection for Southeast "an# $imited

3.1. ision

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'he +an&$s 0ision is to (e a pre#ier (an&ing institution in +angladesh and contri(utesignificantl" to the national econo#"-.

'he characteristics and )ualit" of its 0ision can (e e0aluated under follo%ing para#eters

(igure 3.1* haracteristics and 5uality of vision of S&"$

3.2. Mission

In har#on" %ith the 0ision, the (an& has tried to set its #ission state#ents %hich are pi0otal tounderstand the present state, acti0ities and stri0ing of the +an&. 'he #ission state#ents are%ell constructed as those fulfill ! essential &e" ele#ents i.e. %hat is (eing satisfied, %ho is

(eing satisfied and ho% custo#ers$ needs are satisfied. 'he #ission is presented (elo% %ithrele0ance %ith a(o0e &e" ele#ents

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(igure 3.2* &valuation of "an#6s Mission

60erall the #ission state#ents define the current (usiness acti0ities, nature of products andser0ices fairl" %ell.

3.3. alues

'he 0alues for the (an& are as follo%s

Integrit"

8espect

7airness

=ar#on"

'ea# Spirit

Courtes"

Co##it#ent

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Ser0ice *4cellence

Insight 3 Spirit

*nthusias# for %or&

+usiness *thics

Most of the (an&s offer sa#e &ind of 0alues. 6ne #ight argue that there are too #an" 0alues.+esides, there could ha0e (een little e4planation of %hat these 0alues #ean to (an& in itsannual report.

3.4. Objectives

Strategic objectives

Strategic o(jecti0es of the +an& are #ainl" designed to gain co#petiti0e ad0antage in thelong run. 'hese o(jecti0es are

a. Achie0ing long ter# sustained gro%th in shareholders$ 0alue and operational perfor#ance through introducing *4cellence in +an&ing

b. enerating surplus at a least cost co#(ination through #o(iliBation of sa0ings fro#relati0el" lo%er inco#e group (" e4panding (ranch net%or& and (" %a" of efficient

deplo"#ent of in0est#ent resources on (est econo#ic considerations.

c. Maintaining asset )ualit" through di0ersification of credit portfolio (oth sector %ise andclient (ase %ise, constant #onitoring and follo% up of the dis(ursed loans, nursing of SMA accounts to regulariBe loans and strengthen reco0er" dri0es.

d. *sta(lishing a full" co#pliant +an&, #eeting all regulator" re)uire#ents, #aintainingade)uate capital (ase through appropriatel" (lending the set ris& re%ard para#eters anddisclosure in line %ith international standard, core ris& #anage#ent guidelinesincluding green (an&ing and en0iron#ental ris& #anage#ent principles.

e. In0est in 8esearch and De0elop#ent 8 3 D/ %ith focus on integration of state of theart technolog" to achie0e i/ full auto#ation in (an&ing ii/ e4cellence in (an&ingoperations and iii/ i#ple#entation of (est (an&ing practices in line %ith changingglo(al (an&ing scenario.

f. Custo#ers as first priorit" and co#pan" philosoph" is to esta(lish its (rand i#age as acusto#er friendl" +an& through efficient and pro#pt Custo#er Ser0ice, *0entManage#ent, product Di0ersification, Positioning, 8epositioning etc. Stri0ing toesta(lish long ter# profita(le relationship %ith its custo#ers through pro0iding total

(an&ing solutions to custo#er pro(le#s and creating a %in %in situation (oth for the

custo#ers and the +an&. g. Co##itted to e4plore ne% #ar&et niches

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h. Ser0ing the distressed hu#anit" in fulfill#ent of our corporate social responsi(ilit"CS8/ and a(iding (" all rules and regulations including pa"ing ta4es to the nationale4che)uer

i. Produce #ore s&illed hu#an resource (" training and de0elop#ent %ho %ill pledge

their head, heart and soul to esta(lish a leading financial institution that our futuregeneration can (e proud of.

(inancial objectives

Short ter# o(jecti0es of Southeast +an& i#ited #ainl" include financial o(jecti0es. 7or e4a#ple, the (an& is ai#ing a profit target of '&. : . Crore %ith 2 F increase of itsdeposit and credit portfolio in 2 1!.7inancial o(jecti0es are not constant and changes e0er""ear.

3.7. Strategic intent

'he strategic intent is o(0ious fro# the goals and o(jecti0es set (" the (an& as #entioneda(o0e. 'he intent and focus of the (an& is as follo%s

Achie0ing long ter# sustained gro%th

enerating surplus at a least cost

Maintaining asset )ualit" through di0ersification of credit portfolio

*sta(lishing a full" co#pliant +an&

In0est in research and De0elop#ent 8 3 D/

Custo#ers as first priorit"

Stri0ing to e4ploring ne% #ar&et niche

Produce #ore s&illed hu#an resource

All these o(jecti0es and rele0ant action suggests that the +an& is %illing to attain sustaina(leco#petiti0e ad0antage.

3.8. "usiness Model

In line %ith its #ission to #a&e stead" return on share holders$ e)uit", Southeast +an& i#ited has de0eloped a (usiness #odel that has (een a(le to generate enough re0enue to

pro0ide the# a fair return o0er the "ears. 'he +usiness #odel of +an& has (een outlined

(elo%

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'he +an& initiall" decided that it %ill li#it its operation to corporate (an&ing onl"%ith li#ited nu#(er of (ranch not e4ceeding 2 . Although there is a shift fro# thatstandpoint of the (an& nota(l" in the last @ "ears %ith e4pansion of (ranches thatreached to a nu#(er of 9@, corporate (an&ing still re#ains the #ajor concentration of

financing. Corporate clients include large corporate fir#s in0ol0ed in gar#ents 3te4tiles, phar#aceuticals, ship (uilding, leather and large scale co##odit" trading.

'he +an& finances (oth %or&ing capital and capital in0est#ents

'he (an& has e#phasiBe and priorit" for e4port and i#port (usiness, through C and+ . 'he o(jecti0e is to increase non interest inco#e through fees and co##ission

'he +an& practices a Credit Polic" that onl" encourages financing the projects and (usinesses that are producti0e and self li)uidating.

Although the (an& finances the (usinesses #ainl" (ased on their cash flo%s, financialstrengths and credit%orthiness, there is also e#phasiBes on o(taining collateralsecurit" to secure the lending.

5hile corporate financing is #ain concentration on in0est#ent, the (an& targets allt"pes of depositors such as people (elong to lo%er inco#e group, s#all and #ediu#

(usiness concerns and corporate clients as their depositors.

'he (an& is ai#ing to e4pand its SM* portfolio as corporate financing has (eco#ei#(alanced capturing a(out ?:F of the credit portfolio.

8ecentl", special focus is (eing gi0en for ta&ing ad0antage on the spread of depositand lending rate. 8elati0el" lo%er inco#e group of depositors ha0e (een targeted to

procure lo% cost deposit. =igh cost deposit has (een identified as the #ajor %ea& point of the (an&.

'he +an& is e4panding its agri finance as a re)uire#ent of regulator" co#pliance.'hough its SM* +ranches are de0oted to #a&e agri finance, the #ajor dis(urse#entis (eing ai#ed through #icro finance institutes for their e4pertise in this sector.

'he success of the (usiness #odel can (e e0aluated (" co#paring the return on e)uit" 86*/and return on assets 86A/ %ith the rele0ant industr" pla"ers. +esides, non perfor#ing loansEP / is also a &e" co#ponent for #easuring success of the +an&.

ast : "ears 86*, 86A 3 EP of Southeast +an& i#ited in co#parison %ith industr"a0erage Pri0ate Co##ercial +an&s/

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)able 3.1* omparison of 0eturn on &5uity

9ear 0eturn on &5uity %:' of + "s 0eturn on &5uity %:' of S&"$

2 ? 1@. ; !1.1

2 9 21. !2.;

2 1 2 .9 ! .

2 11 1:. 2!.!

2 12 1 .1 1?.9

Source* ;alf 9early "usiness onference of S&"$ 2,13

)able 3.2* omparison of 0eturn on /ssets9ear 0eturn on /ssets %:' of + "s 0eturn on /ssets %:' of S&"$

2 ? 1.; 1. 9

2 9 1.@ 1.@@

2 1 2.1 2.2@

2 11 1.@ 1.!2

2 12 .92 9:

Source* ;alf 9early "usiness onference of S&"$ 2,13

)able 3.3* omparison of


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3.7. "alanced Scorecard

'he (alanced scorecard of Southeast +an& i#ited in0ol0es (oth financial and strategico(jecti0es %ith special e#phasis to pursue strategic outco#es that strengthen +an&$s (usiness

position and gi0e it a gro%ing co#petiti0e ad0antage o0er ri0als. As clarified in its (usiness#odel that the (an& has consistent financial perfor#ance o0er the "ears does indicate therationale for pursuing strategic o(jecti0es for long ter# co#petiti0eness and sustaina(ilit".'he (an& has recogniBed that to #aintain sustaina(le profita(ilit" for a long ter#, thereshould (e lin&age (et%een financial and strategic o(jecti0es %hich inspired the (an& to setstrategic o(jecti0es for achie0ing o0erall lo%er cost deposits than its ri0als. 'he 8etail+an&ing Di0ision %as #ainl" for#ed couple of "ears (ac& to procure lo% cost deposit in line%ith (an&$s strategic o(jecti0e of enerating surplus at a least cost co#(ination through#o(iliBation of sa0ings fro# relati0el" lo%er inco#e group-. 'he +an& is also co##itted toesta(lish its (rand i#age as a custo#er friendl" +an& through efficient and pro#pt

Custo#er Ser0ice, *0ent Manage#ent, product Di0ersification, Positioning, 8epositioningetc- %hich stresses +an&$s stri0e for attaining long ter# co#petiti0e ad0antage.

4. Situation /nalysis

4.1. +&S)&$ /nalysis

4.1.1. +olitical factors

+olitical stability* Progression of the industr" is directl" related %ith the sta(ilit" of thego0ern#ent. In0estors are un%illing to ta&e ne% projects if the state of go0ern#ent isunsta(le. It has (een o(ser0ed o0er the "ears that the position of ruling parties (eco#eunsta(le in the pre election "ear due to different issues raised (" opposition parties.Conse)uentl" =artals Stri&es (eco#e the regular practice that disrupts the econo#icacti0ities. 'he countr" is at present passing such phase. Gntil August 2 1!, there %ere !?=artals called (" opposition parties in the current "ear. Eaturall" econo#ic acti0ities suffer and slo% do%n resulting in slo% e4pansion of credit (" the +an&.

=ncertainty about continuation of >overnment +olicy* +usiness#en or entrepreneurs areuncertain a(out the sustaina(ilit" of go0ern#ent policies fearing possi(le changes of go0ern#ent after election #a" result in #ajor shift in policies. 'his hinders the entrepreneursto underta&e ne% projects. Along %ith the entrepreneurs, +an&s are e0en cautious to in0est inne% projects. 'his scenario #a" continue until for#ation of post election go0ern#ent, #a"there (e an" change or not. 'hus, despite recent urges of +angladesh +an& to co##ercial

(an&s for e4pansion of loan flo%s in the econo#", the prospect for the industr" is slo%gro%th in the ne4t 1 "ear. =o%e0er, the situation is e4pected to (eco#e to its nor#al fro#>ul" 2 1; after pu(lication of ne4t "ear$s (udget.

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4.1.2. &conomic (actors

> +* 7or the second consecuti0e "ear, DP gro%th rate in 7ul" 2 12 to 11. percent in >ul" 2 1!.Interestingl" enough, industrial loan has increased 2 F fro# >ul" 2 12 to March 2 1! after

ne% rescheduling rules passed (" +angladesh +an& in 6cto(er 2 12. 'his does not #atch%ith slo% pri0ate credit gro%th and hints a(out illegiti#ate rescheduling of the (an&. Anu#(er of sca#s afflicting the (an&ing sector led to restrained (eha0ior on the part of the

(an&s. 7re)uent la(or unrest in the 8M #a" ha0e also discouraged in0estors in #a&ing ne%in0est#ents in the industrial sector.

+ublic Investment* In contrast to the depressed pri0ate in0est#ent, pu(lic in0est#ent hasincreased steadil" since 7


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in0est#ent as a share of DP/ %ill i#pro0e (" 1.; percentage points in a single fiscal "ear.'his further indicates that +an& %ill ha0e opportunit" to finance in pu(lic projects.

Inflation* Inflationar" pressure is easing out in the econo#". eneral inflation %as a(out .? percent in April 2 1! co#pared to 1 .@ percent in April 2 12. Such trends suggests thatinterest rate on deposit #a" (e lo%er in the (an&ing sector.

Monetary ? (iscal +olicy* Ee% #onetar" polic" un0eiled (" +angladesh (an& on >ul" 2:,2 1! ai#ed at &eeping the inflation rate at . percent %hile targeting 1:.: percent pri0atesector credit gro%th %hich #a" (e a realistic one considering current state of politicalsituation. It #a" (e #entioned here that the last #onetar" polic" for the last >anuar" to >une

period targeted 1?.: percent credit gro%th (ut achie0ed onl" around 11.: percent. So, slo%credit gro%th ai#ed (" +angladesh +an& is setting a (ench#ar& for pri0ate co##ercial

(an&s to fi4 their target. 'he annual de0elop#ent (udget, ta4ation rate etc are outlinedthrough fiscal policies %hich affect econo#ic acti0ities and (usiness gro%th in the countr"and there(" influence the (an&ing (usiness. Eaturall", pre election (udget includes a#(itioustarget in pu(lic spending %hich creates opportunit" to in0est in go0ern#ent financed projectsthrough pri0ate sector in0est#ent.

4.1.3. Socio@cultural factor

iterac" gro%th 3 religious 0ie% point pla"s a 0ital role for inclusion of people in the

(an&ing channel. People are (eco#ing conscious a(out their sa0ings and no% started preferring (an&ing channel for depositing their #one". 8ecent sca#s of organiBations li&eDestin", Gnipa" and cheating (" nu#(er of co operati0e fir#s ha0e also #ade peopleconscious a(out the necessit" of +an&s.

Due to interest ele#ents in0ol0ed in (an&ing, #an" people did not used (an&ing channelearlier. =o%e0er, e#ergence of nu#(er of Isla#ic +an&s and Isla#ic +an&ing +ranches of Con0entional +an&s has also lifted this (arrier.

4.1.4. )echnological (actors

All the (an&s are going through a phase of technological up gradation. *0en State o%nedCo##ercial +an&s SC+s/ are no% offering on line (an&ing through their selected (ranches.Most of the (ranches of the PC+s ha0e no% co#e under on line (an&ing facilit". +esides, inhouse soft%are up gradation is (eing underta&en (" nu#(er of +an&s to secure co#petiti0eedge. I' infrastructure not onl" presents (etter custo#er ser0ice, (ut also reduces cost of e#plo"ing costl" hu#an resources. All the PC+s Pri0ate Co##ercial +an&s/ are no% under %a" of offering internet (an&ing. atel" #o(ile (an&ing has opened ne% opportunities for

(an&s for inclusion of large nu#(er of people in the (an&ing channel.

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4.1.7. &nvironmental (actors

As per +angladesh +an& uidelines, e0er" (an& has to for#ulate its green (an&ing polic".+an&s are re)uired to allocate a considera(le a#ount for green (an&ing in their annual

(udgets, %hich %ill include i/ +udget for green finance ii/ +udget for Cli#ate 8is& 7undand iii/ +udget for reen Mar&eting, 'raining 3 Capacit" +uilding. +an&s no% also

perfor#s *n0iron#ent 8is& 8ating of projects as a pre condition of appro0ing ne% projects.In house operation of (an&s is li&el" to (e done %ith #ini#iBation of paper usages throughincreased use of internal net%or& 0ia internet.

4.1.8. $egal (actors

'he industr" is do#inated (" different regulations of +angladesh +an&. Different policiesand guidelines for#ulated (" +angladesh +an& is one of the dri0ing forces of the industr".6ne #a" recall the stringent rescheduling rules of +angladesh +an& that increased the EP

of (an&ing sector and caused drastic fall of the profita(ilit".

4.2. Industry lifecycle

As the econo#" of the Count" is gro%ing, the (an&ing industr" is still in its gro%th stage. 'hecountr" currentl" has :@ (an&s in total, #ost of %hich are do#estic pri0ate (an&s. =o%e0er,there is huge co#petition a#ong these (an&s. 'he pro(le# is not that the industr" is shrin&ing,rather it is chasing of selecti0e custo#ers (" too #an" (an&s. All the (an&s are co#peting in

selecti0e locations %here other locations are o0erloo&ed. 'here are #an" regions in thecountr" %here (an&ing facilities are not a0aila(le. An" +an& has the opportunit" to e4plore

prospecti0e locations for their gro%th. *0en e4isting (usiness of the (an&s ha0e tre#endous potential of e4pansion if proper strategies are i#ple#ented.

4.3. Industry /ttractiveness

As pre0iousl" #entioned, the econo#" of the countr" is #o0ing ahead. So, naturall" there is

scope for (an&s to e4pand their (usiness. Despite current "ears slo% progress of the (an&s dueto se0eral reasons such as political tur#oil, tight #onetar" polic" etc., the industr" is stillattracti0e. +angladesh as a countr" has tre#endous potential for econo#ic gro%th in the ne4tdecade and (an&ing acti0ities are integrated %ith the econo#ic acti0ities of the countr". 'heconcept of industr" attracti0eness for (an&ing industr", thus, has to (e assessed %ith long ter#

prospect %hich is prett" pro#ising. *0en in the current dis#al situation, choosing (usinesslocation and targeting right group of custo#ers is i#portant and can (e a #ajor strategic #o0efor an" (an&s to (eco#e successful. 'here is still scope for product differentiation to attractuntouched custo#ers %hose needs are o0erloo&ed. Despite ne% entrance of 9 (an&s, entr"e4it (arrier is still high %hich can (e considered as an added ad0antage. +esides, there is

possi(ilit" of horiBontal integration (" esta(lishing su(sidiaries in related areas.

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4.4. riving forces of the industry


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4.7. +orter6s (ive (orces Model

4.7.1. 0ivalry among industry players

8i0alr" a#ong e4isting (an&s is re#ar&a(l" high. 'he factors that ha0e contri(uted to

increase ri0alr" are

a. Saturated mar#et* 'he industr" (elie0ed to (e saturated %ith too #an" pla"ers. *ntr" of ne% (an&s ha0e intensified the co#petition. +esides, there are nu#(er of non financialinstitutions that are fighting for the sa#e custo#ers.

b. $o! demand for investment* 'he de#and for loans has (een slo%ed do%n considera(l".As a result, #ost of the (an&s are finding the#sel0es %ith e4cess li)uidit". 'oo #an" (an&sare si#pl" chasing relati0el" s#aller nu#(er of esta(lished in0est#ent clients.

c. $o! s!itching cost ? alternative options* Custo#ers ha0e #an" alternati0e options for (oth in case of ta&ing loan and place#ent of deposit. As s%itching cost is 0er" lo%, custo#erstend to s%itch fro# one (an& to another (an& and sho% little lo"alt" to an" (an&s.

d. Similarity of products* Mar&ed differentiation in ser0ices and products is hard to create in (an&ing industr". 'here is re#ar&a(le si#ilarit" in different ser0ices pro0ided (" #ost of the (an&s. *0er" (an& instantl" copies the ser0ices and technological ad0antage offered (" other (an&s that intensifies co#petition.

4.7.2. )hreat of ne! entrants

'he polic" of +angladesh +an& %as that of restriction in respect to gi0ing license to ne% (an&s for a period fro# 2 1 to 2 12. +ut +angladesh +an& has recentl" allo%ed 9 +an&sto enter into the #ar&et. 'hese ne% (an&s %ill intensif" the co#petition in the industr" inrespect of deposit #o(iliBation and loan dis(urse#ent. 'hough it is generall" considered thatthe entr" e4it (arrier in the (an&ing industr" is high, recent #o0e of +angladesh (an& #a"challenge this notion as #ore ne% (an&s #a" enter into the #ar&et, especiall" under politicalconsideration.

4.7.3. "argaining po!er of suppliers

'he suppliers for the (an& are grouped into 2 groups. 6ne is depositors of the (an& %hoha0e great (argaining po%er. 'he institutional custo#ers %ho deposit large a#ount of fi4eddeposit can (argain for (etter interest rate to so#e e4tent. 6ther is those %ho pro0ide officee)uip#ent, stationer", co#puters, and soft%are etc. 'he second group does not ha0e #uch

(argain po%er to put the (an& in trou(le. 'here are too #an" suppliers in the #ar&et %ho areread" to suppl" the #aterials and ser0ices at a co#petiti0e rate.

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4.7.4. "argaining po!er of buyers

'he (orro%ers fall into this categor". arge corporate custo#ers can (argain for lo%er interest rate for credit facilities. 6ther SM* loan custo#ers and indi0idual depositors ha0e no

(argain po%er for interest rate. Despite presence of too #an" (an&s in the #ar&et, the pricingof the products #o0e %ithin a narro% range. 'he +an&s ha0e associations %ho for# so#esort cartel to fi4 up the range for deposits rate and den" co#petition. =o%e0er, due to rise inco#petition a#ong (an&s, e0en good ran&ed SM* custo#ers are getting (argaining po%er due to co#parati0el" lo%er s%itching cost.

4.7.7. )hreat of substitutes

'he #ost do#inant su(stitute for con0entional (an&ing products is Isla#ic +an&ing products.

Isla#ic +an&ing is gro%ing at a faster rate in the econo#". Appro4i#atel" 21F #ar&et sharein ter# of deposit is held (" Isla#ic +an&ing. So, real threat for con0entional (an&ingindustr" co#es fro# Isla#ic (an&ing products.

'he su(stitute asset products %ithin con0entional real# include lease finance, fi4ed inco#ede(t securities li&e (ond, de(entures etc and e)uit" securit" through stoc& #ar&et. 'hesu(stitute deposit products are offered (" insurance co#panies insurance polic"/, 'reasur"

(ills and (ond (" the go0ern#ent, stoc&s and #utual fund (" in0est#ent fir# and co#paniesand ti#e deposits (" E+7I. 'he (an&s need to adjust product offerings in an attracti0e %a" to#aintain edge o0er these su(stitutes. =o%e0er, there are no i##inent threats fro# these

products.

4.8. SAO) /nalysis

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Strength Aea#ness

1. *4pertise in corporate financing

2. Sound 8is& Manage#ent s"ste#

!. ood asset )ualit";. SiBa(le 3 gro%ing Isla#ic +an&ing

portfolio adding related di0ersification

:. *fficient and talented hu#an resource%ith good leadership

@. *4cellent I' infrastructure 3 Moderntechnolog" (ased online (an&ing

. 5ide product lines

?. Strong +rand i#age

1. =igh cost of deposit in co#parison %ith peer (an&s

2. Gnfair recruit#ent in the earl" "earsresulting in so#e unproducti0e hu#anresources

!. *4posed to credit concentration ris&.? Fof the +an&$s loan is large loans

;. Moderate nu#(er of A'M (ooths, #oree4pansion needed

:. 7e% no of SM* custo#ers

@. oan docu#entation procedures not stillcentraliBed

Opportunities )hreat

1. reater opportunities for financing in Ship+uilding Industr", Cera#ic 'a(le%areIndustr", Agriculture and agro processing

(usiness

2. Southeast +an& i#ited can further strengthen its Isla#ic +an&ing 6perationthrough its Isla#ic +an&ing +ranch and I+SD

!. 8etail +an&ing 6peration can (e further strengthened for #o(iliBing lo% cost deposit.

1. Slo% credit gro%th ai#ed (" +angladesh (an& in its #onetar" polic" #a" #a&e itdifficult for (an& to achie0e e4pectedgro%th

2. Ee% +an&s #a" snatch a%a" the)ualified e#plo"ees

!. Ee% +an&s #a" capture a portion of e4isting #ar&et share

;. Capital (ase #a" need to (e enhanced%ith the ad0ent of +asel iii Accord

:. =u#an 8esource cost #a" increase dueto entrance of ne% (an&s

4.B. Strategic >roup Mapping

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Gnder (road perspecti0e, all the PC+s can (e included in Strategic roup of Southeast +an& i#ited. Most of the PC+s pursue corporate (an&ing strateg" though the structure of offeringser0ice #a" (e different. So#e of the# follo% centraliBed process %hereas other follo%decentraliBed (ranch (an&ing process. In its (usiness conference held in >anuar" 2 1!, the

(an& included 1@ to 1 (an&s in its strategic group #apping as co#petitors considering their #ar&et share and perfor#ance Anne4ure I/.

4. Cey success factors of the Industry

"an# reputation and good image* 8eputation and i#age is 0ital for deposit#o(iliBation. People still prioritiBe the safet" of their #one" (efore considering the

profit %hile depositing their #one". Sound a(ilit" to #o(iliBe deposit is the one of the#ost 0ital &e" factors for success in the (an&ing industr". i)uidit" crisis is anight#are for an" (an&s. *0en in the financing acti0ities, corporate clients 0alue thereputation of the (an& as their re)uired funding in the future %ould depend on thesoundness of the (an&.

&ffective "usiness strategies* A (an& #ust ha0e a set of strategic priorities for (usiness and operations and a certain (usiness #odel that %ill generate re0enue for the (an&. 'he (usiness focus #ust (e set i.e. %hether to target the corporate (an&ing,or SM* seg#ent or Consu#er (an&ing or trade finance etc. 'he product offering and

pricing to (e co#petiti0e

"an#ing +ractices* +an&ing practices are industr" standards such as ho% the (an& handles cash, deposits, %ithdra%als, pa"#ents and financial records. 'he successful

(an& %ill al%a"s ha0e state#ents accurate to the penn" and on schedule. Although no (an& is perfect, the successful (an& has a reputation for fe%er #ista&es and satisfiedcusto#ers. igilant #anage#ent, conscientious e#plo"ees and al%a"s i#pro0ing inareas of technolog" and custo#er ser0ice &eeps successful (an&s in the lead.

Mar#eting* +an&ing is a (usiness and as such #ust al%a"s search for ne% custo#ersand e4pand #ar&et share. A successful (an& %ill #ar&et ser0ices, con0enience andfinancial ad0antages. In an increasingl" co#petiti0e #ar&et, effecti0e #ar&eting of

(an&s products and offers is &e" to its success. Man" of the old (an&s in +angladeshare lagging (ehind the ne% co#ers due to a(sence of effecti0e #ar&eting. +urninge4a#ple is the perfor#ance of #ost of the second generation (an&s %ho ha0e alread"challenged the first generation (an&s %ith li#ited nu#(er of (ranches.

+rand i#age pla"s an i#portant role in selecting the product or (an&. +an&s need to (uild up its (rand i#age and ad0ertise to attract (oth asset and lia(ilit" custo#ers in

print and tele #edia. +an&s need to conduct CS8 acti0ities that (righten the i#age of the (an&.

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Superior ustomer Service and relationship* As a ser0ice industr", the degree of differentiation in product offerings is 0er" s#all. Glti#atel", it is the superior andfaster custo#er ser0ice that account for success in (an&ing (usiness. Gsuall", the

(usiness custo#ers continue for a longer and fir# relationship %ith the relationship

#anagers. 'he +an& #ust consider for retaining and recruiting e#plo"ees %ho ha0egood s&ills for #aintaining relationship %ith the custo#ers

&fficient and trained Aor#force* 'he hu#an resources of a (an& are the #ainarchitects of a (an&. +an& needs to pro0ide pro#pt custo#er ser0ice as %ell as ensureregulator" co#pliances. 'he financing acti0ities and financial #ar&ets, products andris&s ha0e graduall" (een co#ple4 and di0erse. In addition to that the nu#(er of credit%orth" custo#ers and deposits are li#ited co#pared to nu#(er of #ar&et

pla"ers. It is the e#plo"ees %ho need to #o(iliBe the asset and lia(ilit" #ar&eting as%ell as proper ris& assess#ent and #anage#ent, co#pliance etc. 'he pools of

efficient and trained %or&forces are the &e" to re0enue generations.

Spread Management* Difference (et%een lending rate and cost of deposit is #ainearnings of the (an&. Accordingl", the (an&s that #anage higher spread do (etter thantheir co#petitors.

/sset $iability Management %/$M'* It is an integral part of (an& #anage#ent. It isessential to ha0e a structured and s"ste#atic process for #anaging the (alance sheet.According to the guidelines of the Central +an&, (an&s #ust ha0e a co##itteeco#prising of their senior #anage#ent to #a&e i#portant decisions related to their

(alance sheets.

/doption of Information )echnology and Online service* +an&ing industr" is inthe #idst of an I' re0olution in +angladesh toda". 'he arri0al of foreign and so#e

pri0ate +an&s on the scene %ith their superior technolog" (ased ser0ices pushed theo0erall (an&ing industr" to follo% suit (" going in for the latest technologies so as to#eet the threat of co#petition and retain their custo#er (ase.

Infor#ation 'echnolog" has (asicall" (een used under t%o differenta0enues in (an&ing. 6ne is co##unication and connecti0it", and theother is (usiness process reengineering.

Infor#ation technolog" ena(les sophisticated product de0elop#ent, (etter #ar&et infrastructure, control of ris&s and reachinggeographicall" distant and di0ersified #ar&ets.

0is# management* +an&s deal %ith different t"pes of ris&s. 'he sustaina(le gro%thand long ter# success of a (an& solel" depends on proper ris& #anage#ent. 8is& #anage#ent is at the core of (an& (usiness and ris& is generated fro# (oth e4ternaland internal sources and #a" #a&e the %a" haBardous for +an&$s e4istence if not#itigated or #ini#iBed properl". Introduction of +asel II has en0isioned a

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co#prehensi0e set of 8is& Manage#ent practices for a sound (an&ing s"ste# acrossthe glo(e. Accordingl" the Central +an& has identified fi0e core areas of ris& andoutlined 0arious processes to effecti0el" #anage the#.

'he ris& areas are

Credit 8is&

Asset and ia(ilit" +alance sheet 8is&

7oreign *4change 8is&

Internal Control and Co#pliance 8is&

Mone" aundering 8is&

'he perfor#ance of a (an& depends on #anaging all these ris& prudentl" and efficientl".

Cey Success factors for Southeast "an# $imited

*ffecti0e and efficient ris& #anage#ent s"ste# has contri(uted superior asset )ualit"and reduced the rate of non perfor#ing or classified loans

Prudent Asset ia(ilit" #anage#ent and #one" #ar&et operation and treasur"#anage#ent

'he d"na#ic top #anage#ent and )ualified e#plo"ees ha0e contri(uted for operational e4cellence, )ualit" ser0ice and re0enue gro%th

Adoption of Infor#ation 'echnolog" and 6nline (an&ing etc

Superior Custo#er ser0ice and #aintenance of relationship

8is& (ased co#petiti0e pricing and attracti0e product offering

+rand i#age

4.-. ompetencies

orporate (inancing

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60er the "ears (an& has de0eloped itself a (an& for corporate custo#ers in case of loandis(urse#ent. Corporate custo#ers i.e. large fir#s, %hile considered to (e a particular #ar&etniche, ha0e (een #ain source of earning of the (an& fro# financing acti0ities. 'he e#plo"eesof the (an& are %ell trained in ser0ing the needs of this group of custo#ers. 'heir needs are

fulfilled %ith ut#ost i#portance (oth fro# (ranch and head office le0el. Juic& processing of the loans %ith genuine assess#ent of the fund re)uire#ent has (een special e4pertise of the (an&.

'he genuine assess#ent of the fund re)uire#ent$, though heard si#pler, has not (een eas" for #an" of its co#petitors to e4ecute successfull" as apparent fro# the different recent sca#srelated to corporate custo#ers around the industr" %hereas Southeast +an& i#ited stoodreasona(l" fir# despite ha0ing a do#inated portfolio of corporate custo#ers that co0ers ? Fof its o0erall in0est#ent portfolio.

redit /dministration

oan #onitoring is one of the #ost crucial factors of an" (an&$s success. Southeast +an& i#ited has de0eloped a tea# co#prising officials %ho are e4perts in this field. 5hile recent"ears profita(ilit" of #an" (an&s %ere considera(l" higher than the (an&, in the current "ear #ost of the (an&s$ profita(ilit" are faltering after strict stance (" +angladesh +an& in respectof rescheduling due to non perfor#ing loans. Southeast +an& is sho%ing i#pressi0e

perfor#ance in the tur#oil situation due to its sound credit ad#inistration.

4.1,. alue hain

'he +an&$s pri#ar" acti0ities in the 0alue chain starts %ith deposit #o(iliBation and thenlending the deposit at a higher rate. +oth of these acti0ities are perfor#ed through #ar&etingof retail (an&ing di0ision and (ranch. 'he spread (et%een lending and deposit is (an&$s #aininco#e. 6ther pri#ar" acti0ities include non funded inco#e deri0ed fro# C and +an& uarantee (usiness along side fee (ased ancillar" ser0ices. 'hen ad#inistrati0e cost and

others costs related to #ar&eting and sales ha0e to (e deducted to get the profit (efore ta4esand depreciation.

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+rimary /ctivities

Supporting activities

=u#anresourcesManage#ent

7inancialControl andAccountsDi0ision

CreditAd#inistration

'reasur"6perations

eneralAd#inistration

6thers

(igure 4.1* alue hain of S&"$

Anal"Bing (an&sa(o0e 0alue chain, it has (een re0ealed that cost of deposit is its %ea& lin&.'he spread of the (an& co#pared to its co#petitor is 0er" lo% anne4ure I/. 'he +an& is

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Net

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falling (ehind in lo% cost deposit #o(iliBation. +ranches see# to concentrate on ter# deposit#o(iliBation rather than focusing on CD and S+ account. Although deposit #ar&eting is

perfor#ed (" (oth retail (an&ing di0ision, (ranches are under perfor#er here %ho rel"hea0il" on high cost ter# deposit. Interestingl" enough there is a #ajor flo% in (an&$s polic"

#a&ing %hich is the #ain dra%(ac& for lo% cost deposit #o(iliBation. Southeast (an& follo%s a polic" that encourages (ranch to #o(iliBe e0en high cost deposit as (ranches %illget .: F higher return that the #a4i#u# rate of 7D8 for idle deposit. 'his polic" should (ere0ersed so that (ranches do not ha0e an" incenti0es for high cost deposit #o(iliBation. If thiscritical acti0it" is #anaged %ell, (an&$s profita(ilit" %ill increase considera(l" and (an& %ould (e a(le to offer lo%er interest rates to its custo#ers.

7. Strategies of Southeast "an# $imited

7.1. "asic Strategy

7.1.1. (ocused differentiations

'he +an& focuses at Corporate +an&ing sectors for its asset portfolio. Southeast +an& i#ited has no% a net%or& of 9@ (ranches across the countr" offering a range of asset

products to ser0e the uni)ue needs of corporate custo#ers. 'he +an& e4tends different t"pesof 5or&ing Capital oans 60erdraft, 'i#e oan, 'er# oan, 8e0ol0ing De#and oan,+an& uarantee etc/H underta&es Project 7inance and S"ndicated 'er# oanH facilitatesinternational trade I#ports and e4ports etter of Credit, Acceptance of +ill, ocal and7oreign +ill Purchase and Discount, oan against 'rust 8eceipts etc/.

'he differentiations in product offerings and ser0ices are achie0ed through the follo%ingstrategies

1. 7le4i(ilit" in issuing loan facilities according to the (usiness de#and of the custo#er.Man" (an&s are reluctant to response to custo#ers$ e#ergenc" re)uire#ent of fundafter sanctioning a particular facilit" or facilities. +ut Southeast +an& tries to assistcusto#ers %hene0er there is a (usiness opportunit" for the custo#er or the" are introu(le.

2. Collateral is not a strong defense. Southeast +an& i#ited follo%s this polic" andoffers financing (ased on financial strengths and cash flo%s of the clients. +an&s offer

post i#port fiancL, project loans, 5or&ing capital etc %ithout collateral!. 7aster processing appro0al, )uic& docu#entation, s#ooth dis(urse#ent, #ini#u#

docu#ents handling

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;. Custo#ers ha0ing good credit rating are offered lo%er prices. 'he loan pricing is done (ased on the ris& of %eight

:. Con0enient ser0ice is pro0ided through 6nline and other infor#ation 'echnolog"related ser0ices

7.1.2. Overall lo! cost provider strategy

'he +an& follo%s o0erall lo% cost pro0ider strateg" for its lia(ilit" or deposit custo#ersespeciall" for collecting ter# deposit. o% cost for depositors #eans pro0iding the# higher return on their deposit. 'he +an& usuall" offers highest deposit rate a0aila(le in the #ar&et to#a&e a0aila(le re)uired deposit ratio.

60erall lo% cost pro0ider strateg" for lia(ilit" products is a co##on strateg" for do#esticPC+s #ost of %hich pro0ides si#ilar rates against ter# deposit. =o%e0er, the concept of

#eaningful lo%ercosts than ri0als- is difficult to appl" for the cases of PC+s due tostandardiBed deposit products across the industr". Despite this, (an&s that can #anage lo%cost deposit through its current and sa0ings account can do (etter than their ri0als follo%ingthis strateg". +ut Southeast +an& i#ited has sho%n little success for lo% cost deposit#o(iliBation o0er the "ears %hich is a #ajor %ea&ness for the (an&.

7.2. omplementary "usiness strategy

7.2.1 Strategic /lliance Southeast +an& i#ited has strategic alliance %ith Dutch +angla +an& i#ited and

+rac +an& i#ited for its card holders %ho can use the A'M (ooths of these 2 (an&s%ithout an" cost.

Alliance %ith 5estern Gnion, 8ia, *4press Mone" and other #one"changers for (ringing re#ittance fro# a(road.

Agenc" ser0ices are pro0ided for collection of (ills, su(scriptions for differentorganiBations li&e Mo(ile Phone co#panies, 5ASA, DPDC etc.

7.3. Strategy Ma#ing ;ierarchy

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strategic fit for the (an& since sa#e e#plo"ee can (e used for the operation through #oderatele0el of training.

Isla#ic +an&ing operation initiall" started fro# 2 ; through (" setting : Isla#ic +an&ing (ranches. +ut (an& too& anothers strategic #o0e in 2 12 %hen Isla#ic +an&ing Ser0ice Des& %as opened in e0er" con0entional (ranch for deposit #o(iliBation. 'he ai# %as to e4ploredepositors %ho are inclined to Isla#ic +an& across the countr".

8.2. +roduct diversification

As stated earlier, Southeast +an&ing i#ited initiall" started %ith Corporate +an&ing.+ut graduall", the +an& di0ersified its product lines (" introducing SM* products,consu#er and retail (an&ing products.

'he +an& also offers 6ffshore (an&ing ser0ices through its offshore unit

Southeast +an& Capital Ser0ices i#ited, %hich is a separate su(sidiar" of the (an&,carries on #erchant (an&ing operation.

Southeast 7inancial Ser0ices GK/ i#ited, Southeast 7inancial Ser0ices Australia/Pt" i#ited Southeast *4change Co#pan" South Africa/ Pt" i#ited ha0e (eenesta(lished to collect re#ittance fro# +angladeshi e4patiates for their (eneficiaries in+angladesh.

8.3. (urther scopes for diversification

+an& can ac)uire an Insurance co#pan" and conduct insurance (usiness

A full fledged Credit 8ating agenc" can (e for#ed as su(sidiar". 'his is an e#erging#ar&et %hich has good prospect

An accounting and Audit fir# can (e ac)uired to offer ser0ices to other +an&s and 7Is

B. Internal Operations and eDecution of Strategy

B.1. Staffing

=igher *4ecuti0es in the =ead 6ffice are recruited (ased on the trac& record, )ualificationetc. In the Manage#ent hierarch", (oth internal e#plo"ees and outside recruit#ents are

chosen to (uild up a core e4ecuti0e group capa(le of i#ple#enting +an&$s strateg"e4ecution.

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+oth of the (usiness strategies are perfor#ed #ainl" through (ranch (an&ing %here (ranchesare the #ain #ar&eting and operating force. 'he (an& has designed the (ranches toi#ple#ent these strategies %ith the follo%ings

Setting target for the branches* +ranches are gi0en target %ith special focuses ondeposit or loan. So#e of the (ranches are gi0en priorities for deposit #o(iliBation%hereas other (ranches are instructed to pursue loan dis(urse#ent. 'here are also fe%

(ranches that are gi0en e)ual priorities for #aintaining ade)uate loan and deposit portfolio depending on locations and perfor#ances.

+erformance measuring and re!ards* 'he +an& #easures perfor#ances of (oth (ranches and e#plo"ees. +ranch are ran&ed under categor" of Corporate, A, +, C, Daccording to their perfor#ance. *#plo"ee perfor#ance are also #easured (ased on Ke"Perfor#ance Indicators KPI/, a tool recentl" used discarding age old techni)ue of e0aluating perfor#ance through the su(jecti0e judg#ent of Managers.

B.3.3. 0etail ban#ing division to aid deposit mobili ation and consumer financing

'o aid lo% cost deposit #o(iliBation and consu#er financing, retail (an&ing di0ision has also (een set up. 'he #ar&eting force of the retail (an&ing is recruited on co##ission (asis %ithdis(urse#ent of salar" su(ject to fulfilling the targets. 'his di0ision has #ini#al staffingcost.

B.3.4. /iding strategy eDecution through different departments of ;ead Office

'here are nu#(er of depart#ents to aid o0erall operation of the (an&s. 'hese depart#ents pla"s &e" role in strateg" e4ecution of the (an& (" perfor#ing their assigned tas&s.

Internal ontrol and ompliance

'here is an Internal Control and Co#pliance Depart#ent ICCD/ headed (" an *4ecuti0eice president. 'he head of ICCD is responsi(le for co#pliance and control related tas&s%hich include co#pliance %ith la%s and regulations, audit and inspection, #onitoringacti0ities and ris& assess#ent.

)echnology and Innovation

'hrough its Infor#ation 'echnolog" Di0ision, Southeast +an& i#ited de0eloped online (an&ing, esta(lished A'M at different locations, introduced SMS and internet (an&ingser0ices in the (an&. 'his technolog" (ased ser0ices also pro0ide custo#er fund transfer through internet, De(it Credit Card facilit", free SMS ser0ice, and special t"pe facilit" of %ithdra%al fro# one$s account.

orporate "an#ing ivision

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'he +an& has de0eloped this di0ision to fulfill the needs of its corporate custo#ers. +esides,this di0ision ta&es decision regarding financing of corporate clients through loan proposal

processing. 'his di0ision also process loan proposal of i#portant SM* clients.

0is# Management

Southeast +an& i#ited ta&es a holistic approach to the ris& associated in its (an&ing (usiness &no%ing that one &ind of ris& can potentiall" affect others. +an& has identified so#ecore ris& areas that are ta&en special care through its different di0isions

)able B.1* 0is# Management of S&"$

)ype of 0is# Managed or encounteredEsupervised by

Credit 8is& Credit 8is& Manage#ent Depart#ent, CreditAd#inistration Depart#ent and 8eco0er" andegal Affairs Depart#ent.

Asset and ia(ilit" +alance Sheet 8is& Asset ia(ilit" Co##ittee A C6/

7oreign *4change 8is& International Di0ision and 'reasur" Di0ision

Mone" aundering 8is& Internal Control and Co#pliance Depart#entof =ead 6ffice and +AM* C6 +ranch AntiMone" aundering 6fficer/

. &thics ? S0

.1. ompliance approach to business ethics

'he (an& (elie0es that in its efforts to (eco#e a leading (an& in the pri0ate sector,#aintaining ethical standard is i#portant. Strictl" follo% ethical (an&ing practice is its #ainethical principles. It (elie0es in transparenc" in operations and go0ernance %ith fair treat#entto all of its custo#ers.

Despite (an&$s loft" ai# to follo% a ethical culture approach, its (usiness ethics are guided ("co#pliance approach. +an&ing industr" is highl" regulated industr" and an" unethicalapproach is punished se0erel" (" the (an&. 'he acti0ities of the officials are #onitored onregular inter0al through internal audit under internal control and co#pliance depart#ent%hich act as ethics co#pliance office$. 'he (an& e0en conducts ethics training for itse#plo"ees fro# ti#e to ti#e. So, its ethical practices fall under the categor" of co#plianceapproach.

.2. orporate Social 0esponsibility % S0'

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'he CS8 acti0ities of the (an& #ainl" include scholarship progra##e for school, college 3graduate le0el students #anaged (" Southeast (an& foundation. +esides, there is assistance in#edical treat#ent for indi0idual as %ell as in other fields. 'otal spending of the (an& in thesestated areas %as '&. 2.2 crore Details enclosed as anne4ure II/.

'he CS8 acti0it" of the (an& is done 0oluntaril" though it helps in (uilding (rand i#age of the (an&. =o%e0er, there is a traditional (elief (" #an" that (an&s CS8 acti0ities are directedto%ards gaining ta4 re(ate %hich is co#pletel" (aseless. Eone of the (an&s %ere a(le to getta4 re(ate in 2 12 1! due to cu#(erso#e la%s of E+8. Majorit" portion of the (an&$s CS8 acti0ities are spent on education and continue to (e sa#e as there %as directi0e ("+angladesh (an& to spent at least ! F of CS8 spending in this area.

-. orporate ulture and $eadership

-.1. orporate ulture

'he culture of Southeast +an& i#ited is partl" #anifested in its 0alues 3 (usiness principles. +eing a financial institution, it is #andator" for the (an& to pursue transparenc" ine0er" act. 'he (an& issues different circulars 3 guidelines for #oral practices in e0er"da"acti0ities of the e#plo"ees. 'he 0alues such as integrit", fairness, courtes", ser0ice e4cellenceare often tal&ed and preached (" the higher *4ecuti0es and +ranch Managers. 'here is aco##on preaching in the (an& that one can get a%a" %ith #ista&es (ut not %ith unfair #eansor financial sca#. So, e#plo"ees ha0e de#onstrated their honest" o0er the "ears.

'he co#pan" culture is tried to (e perpetuated through senior #anage#ent efforts toreinforce core 0alues %ith preaching and stor"telling. 'here are training progra##es held atthe training institute of the (an& on issues such as a0oiding #alpractices of the (an&.

'he focused differentiation %hich is the (usiness strateg" of the (an& re)uires ser0icee4cellence. So, a culture is (eing tried to (e de0eloped to enroot this 0alue into each ande0er" e#plo"ee of the (an&. 7ro# (ranch le0el, Managers tr" to re%ard e#plo"ees, %hodispla" cultural ideals, %ith pro#otion and incenti0e (onus.

'he +an& also (elie0es in gender e)ualit" and recruited large nu#(er of %o#an e#plo"eesin recent "ears though at the lo%er grade.

=o%e0er, one of the #ajor dra%(ac&s of the (an& is unfair recruit#ent in the earl" "ears of the (an&. 'he (an& (eing esta(lished (" directors %ho are #ostl" fro# 7eni regiongenerousl" e#plo"ed their relati0es in the (an& %ith little concern for )ualit" of therecruit#ent. 'hese recruit#ents are still pro0ing costl" for the (an&. It is ironical that (an&

(elie0es hu#an resource is its #ost precious asset and "et the" tinted this asset (" unfair recruit#ent polic". 'hese recruit#ents are also a threat for de0eloping a corporate culture inthe (an&. 'hough in recent "ears the (an& is follo%ing an i#personal recruit#ent polic", it%ould ta&e so#e ti#e to (alance the hu#an resource cost as %ell as align these e#plo"ees

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nepotis# (ased recruit#ent/ %ith its strateg" e4ecution %ith an ai# to achie0e ser0icee4cellence.

-.2. $eadership

'he Managing Director of Southeast +an& i#ited pla"s the role of corporate leader of the (an&. Present Managing Director is a d"na#ic person under %hose leadership the (an& isdispla"ing (etter perfor#ance e0en at this slo% gro%th phase for the industr". 6ne nota(lechange he (rought is participation of e#plo"ees to pro0ide infor#ation regarding pro(le#sof different le0els.

Different sets of )uestionnaires are pro0ided on regular inter0als for opinion of thee#plo"ees on different issues. 'here is )uarterl" (usiness #eeting in0ol0ing all head of

(ranches to re0ie% their perfor#ance. =e also reorganiBed the role of research and traininginstitute to strengthen e4isting co#petencies of the (an& as %ell as turning se0eral acti0itiesinto co#petencies (" enhancing &no%ledge le0el of the e#plo"ees. *thical practices areencouraged (" hi# and an" 0iolation of it is strictl" punished and circulated a#ongste#plo"ees through circular. Managing Director is aided (" one Additional ManagingDirector and : deput" Managing Directors.

=o%e0er, one (arrier still e4ists for effecti0e leadership. Eo dou(t the present (oard of directors are efficient and highl" )ualified in guiding the (usiness. +ut the" are too #uchin0ol0ed in decision #a&ing speciall" in financing related decisions %hich is a hindrance for the #anage#ent to %or& independentl". 'he +an&$s perfor#ance #a" not that (ad co#paredto its co#petitors, (ut things could ha0e (een #uch (etter %ithout interruptions of directorsin e0er"da" (an&ing.

onclusion and 0ecommendations

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Southeast +an& i#ited has the strength and opportunities to continue its success in future.=o%e0er, the +an& needs to respond to its %ea&nesses. 'he follo%ing strategic #o0es #a"

(e #ade

1. =igh cost deposit is a #ajor pro(le# for (an& to sustain co#petiti0eness. 'o o0erco#e thissituation, lo% cost deposit #a" (e #o(iliBed (" concentrating on the follo%ing

Salar" account of +ig 7ir#s 'eachers of near(" School, College, Gni0ersit" Doctors of near(" =ospital, Clinic, Diagnostic Center

8e#ittance generated accounts

Identif"ing lo% cost deposit (as&et 3 6pening of ne% accounts accordingl"

Cash Manage#ent Ser0ice of +ig 7ir#s Multinational Co#panies

8e0ersing e4isting polic" that (ranches %ill get .: F higher return that the#a4i#u# rate of 7D8 for idle deposit. 'he polic" should (e rectified to such that

(ranches %ould not ha0e an" incenti0es for high cost deposit #o(iliBation.

2. 'he +an& #ust continue to strengthen its capital (ase. 'he fi4ed assets of the (an& ha0eincreased considera(l". According to ne% directi0es of +angladesh +an&, (an& can #aintainfi4ed asset no #ore than ! F of its capital (ase. So, (an& cannot increase its asset unlesscapital (ase is increased.

!. Special attention to (e pro0ided so that e4isting e#plo"ees are not lost to the ri0als

;. Mar&eting acti0ities to (e conducted fro# corporate office as %ell as fro# (ranches. 'hecorporate assets to (e originated and nurtured pri#aril" fro# corporate office

:. 'raining Institute to (e de0eloped and e)uipped properl"

In short, the Strategic Manage#ent of S*+ should ai# at attaining long ter#co#petiti0eness in the industr" rather than focusing too #uch on current financial gain.

strategic management of southeast bank limited

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