Dhaka, Bangladesh (BBN)- Eastern Bank Ltd (EBL), a leading private commercial bank, has set up a concern in Hong Kong, in a bid to diversify its business amid sluggish demand at home.
The bank has recently opened a finance company named EBL Finance (HK) Ltd for LC advising and confirmation, bill discounting and exchange services.
“We have good prospects of doing business in Hong Kong as it is the third largest country, after China and India, in terms of outbound LCs from Bangladesh,” Ali Reza Iftekhar, managing director of EBL, was quoted by the Daily Star, as saying.
Every year, 15,000 Hong Kong-bound LCs (letters of credit) are issued on average by local banks.
In 2012, a total of 23,895 LCs worth $838 million was routed to Hong Kong from Bangladesh, with EBL alone issuing upwards of 1,100 LCs amounting to nearly $40 million.
“We have set up the company to grab the business from local banks who turn to foreign banks for those services,” Iftekhar said.
A foreign bank charges $250-$300 for advising on each LC, but EBL wants to render the services at much lower rates.
Last year, China and India accounted for nearly $10 billion of Bangladesh's imports, followed by Hong Kong at $1.0 billion.
EBL wants to go global, but the central bank's restriction on Bangladeshi companies' investments abroad is getting in the way.
“Local companies can be allowed to invest in foreign countries and the central bank can set criteria for that,” said the EBL managing director.
According to him, investing abroad and repatriating the money would be good for the economy.
BBN/SSR/AD-19Feb13-11:50 am (BST)
