Practical Case Study

Standard Chartered Bank Pakistan

CEO Mohsin Nathani Head office : Karachi Branches : 170

History
Standard Chartered was formed in 1969 through a merger of two banks: The Standard Bank of British South Africa, founded in 1863, and the Chartered Bank of India, Australia and China, founded in 1853. Both companies were keen to capitalize on the huge expansion of trade and to earn the handsome profits to be made from financing the movement of goods between Europe, Asia and Africa. INTRODUCTION Standard Chartered PLC, listed on both London and Hong Kong stock exchanges, ranks among the top 20 companies in the FTSE-100 by market capitalization. The London-headquartered Group has operated for over 150 years in some of the world's most dynamic markets, leading the way in Asia, Africa and the Middle East. We have produced seven years of record income and profit, primarily as a result of organic growth. Standard Chartered aspires to be the best international bank for its customers across its markets. The Group earns around 90 per cent of its income and profits in Asia, Africa and the Middle East, from its Wholesale and Consumer Banking businesses. The Group has 1700 branches and outlets located in 70 countries. The extraordinary growth of its markets and businesses creates exciting and challenging international career opportunities.

The Banks efforts have been recognized by independent and credible authorities; we won "Best Foreign Commercial Bank in Pakistan" award by Finance Asia; "Best International Trade Bank in Pakistan 2009" by Trade Finance Magazine, a publication of Euro money; "Best Foreign Exchange Provider" Award from the Global Finance Magazine for 2010;

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Investment Of SCB:
Mutual Fund Basics A Mutual Fund is a pool of money that gives small investors access to a welldiversified portfolio of equities, bonds, and other securities. Each shareholder participates in the gain or loss of the fund. Shares are issued and can be redeemed as needed (in the case of an open-ended fund). The fund's net asset value (NAV) is determined each day. Each mutual fund portfolio is invested to match the objective stated in its investment agenda. Equity Funds An equity fund is one that is invested mainly in company equity through the stock exchange and is exposed to the risk of volatility associated with the equity market. Although this fund is the riskiest within the genre of mutual funds, it is also known to yield the maximum yields and dividends.

Fixed Income Funds A Fixed Income Fund is one that invests in avenues which offer fixed returns over a set tenor. These funds are inherently linked to the general interest rate and are, therefore, unlike the stock market, safe from drastic fluctuation. The capital value is more easily sustainable while the returns are generally modest. However, active fund management can yield returns which are higher than most fixed income avenues in the market and therefore, it is an attractive investment avenue for investors with moderate risk appetites Money Market Funds A Money Market Fund is one that invests in liquid, short-term avenues which offer fixed returns over short periods. These funds are inherently linked to the general interest rate and are, therefore, unlike the stock market, safe from drastic fluctuation. Underlying investment may include securities issued by corporate bodies, spread transactions, reverse-repo transactions, selective exposure in the CFS market, Term Finance Certificates (TFCs) and commercial paper. Balanced Funds These funds maintain a mix within equity and fixed income markets. The inclination of this mix will be dictated by the funds strategic intent and mission statement. This fund offers more maneuvering room to its fund managers as they have the option to switch between market types i.e. fixed income avenues and capital markets. Effectively, the risk associated to this category lies somewhere

Practical Case Study between that of equity funds and fixed income funds and the returns also vacillate correspondingly between the ranges of the two. JS Investments Limited JS ABAMCO was incorporated on February 22, 1995 and registered as an investment adviser and an asset management company with the SECP (formerly the Corporate Law Authority) on February 27, 1995 and August 29, 1995 respectively. Last year its legal title changed to JS Investments Limited. National Investment Trust Limited The National Investment Unit Trust (NIUT) was established in 1962 under a Trust Deed executed between National Investment Trust Limited (NITL) and National Bank of Pakistan as Trustee. As at June 2000 the management company has been classified as an Asset Management Company. NIUT is an open-ended fund. Post 9/11 the stock market has shown a consistent upward trend; the remittances from overseas Pakistanis have doubled over the last year. Atlas Asset Management Limited Atlas Asset Management Limited is a member company of the Atlas Group. It was incorporated in 2002 as an asset management company and as an investment adviser in collaboration with ING Institutional & Government Advisory Services B.V., a company incorporated in Netherlands. Arif Habib Investment Management Limited Arif Habib Investment Management Limited is licensed by the Securities and Exchange Commission of Pakistan (SECP) for managing closed and open-end mutual funds. It is managing a range of mutual funds and investment plans designed to suit a variety of investor needs. The Company manages over PKR 15 billion of funds as of 10th October 2008 under eight funds (six open-end and two closed-end). The main Sponsor of the company is Arif Habib Securities Limited, one of the largest financial groups in the country. BMA Chundrigar Road Savings Fund BMA Funds launched its first onshore open end fund in August 2007 with Standard Chartered Bank (Pakistan) Limited as the exclusive distributor for one year (since August 2008, SCB is no longer the exclusive distributor). Investment Strategy The BCSF seeks to invest in a diversified pool of high quality assets with an average duration of less than one year. This strategy envisages investment in

Practical Case Study securities issued by corporate bodies, spread transactions, reverse-repo transactions, selective exposure in the CFS market, Term Finance Certificates (TFCs), commercial paper and securities issued by the Government of Pakistan. Exposure may also be taken as per relevant rules in off-shore investments provided that these investments provide attractive returns and minimize the risks of downside volatility in the funds performance. KASB Asset Management Limited KASB Funds Limited is the asset management arm of the KASB group and is regulated by the NBFC Rules 2003 and licensed by the Securities and Exchange Commission of Pakistan (SECP) to float and manage open and closed end funds as well as to provide investment advisory services in Pakistan. Black Rock Group (Formerly Merrill Lynch Investment Managers) is an institutional shareholder of KFL and provides expertise at all levels in the organization.

Following are the external factors which directly effect the investment decision of SCB

1. Rate of return: The main reason for people investing money is to earn a high return on the investment. An individual may have various investments. Some may be fixed investments and others may be high risk equity investments. If the rate of return is high then they will increase their investment to get maximum rate of return, but if the rate of return is low then it will cause in low investment. 2. Inflation: Inflation directly effect the investment decision of the bank. Inflation has a very bad impact on the investment decision of the bank. If the inflation is high in the country then the investment will be very low because the output would be low in the future. 4. Tax benefits: Tax benefits are a very important aspect to be considered when a person is investing. Tax can wipe away the return on investment if the investment is not done wisely. There are various investment options that are taxed highly. There are other investments for which the returns are either not taxed or have a low tax. The individual has to understand the tax laws of the land and invest accordingly to make high return on investment.

Practical Case Study 5 Macroeconomic Stability General macroeconomic conditions are very important in terms of the general climate under which investment decisions are made. Macroeconomic stability reduces the risks of investment and might therefore be seen as a necessary condition for growth. Fiscal balance ensures that there is less risk of inflation, because there will be less risk of governments printing money. 6 Government Policies It may be the case that governments are not well enough informed to make investment decisions which reflects market circumstances. However, some kinds of investment are subject to market failure and government provision may therefore be necessary. For example, the provision of infrastructure is difficult to achieve in a free market it has too much of a public good aspect to be provided effectively by private companies. There are also obvious positive externalities associated with an efficient, well maintained, and reliable infrastructure

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SWOT ANALYSIS
STRENGTHS Huge paid up capital Diversified Product range ISO Certifies office Good Credit Worth

WEAKNESSES: Limited Customer base Up gradation of technology in all branches not yet complete. A number of branches still have to be refurbished / upgraded, or automated, as these are not up to the standard OPPORTUNITIES: Introduction in new areas of investment Customer Banking Online Connectivity A leading commercial bank

THREATS: Private Banks Accumulated losses Increase in liabilities Economic Conditions of Pakistan Political situation of Pakistan

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RECOMMENDATIONS: They should introduce new ideas of investment. Also enhance their branches They should enhance their online banking system. They should reduce their accumulated losses.

Practical Case Study