Bangladesh-based Eastern Bank Limited (EBL) is to take advantage of the more liberalised Chinese economy and create an improved business cycle for itself by opening a subsidiary in Hong Kong, to acquire a more international presence.
Despite its relative youth – it was founded in 1992 – the commercial bank has big plans and is looking to open up another subsidiary closer to home in India.
“We chose Hong Kong for practical reasons," says Ali Reza Iftekhar, CEO of EBL. "Bangladesh sources much of its materials from Hong Kong and China to deliver to our largest exporters in Europe and America. Strategically, it will benefit us to open up offices in Hong Kong. We will be able to route our businesses through our Hong Kong branch, to Europe and America, making transactions faster and more efficient."
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| Ali Reza Iftekhar | |
| CEO of Eastern Bank Limited |
As a leading international trading and service hub, Hong Kong is the logical choice to expand into the East.
Hong Kong has become the financial gateway to China during the past couple of years, as China has taken a number of steps to liberalise its currency and create more access for foreign investors.
Indeed, EBL might be looking at broadening investment opportunities in China, as the company continues to grow. “EBL is a trend-setter," says Iftekhar. "In Bangladesh, we were the first online bank, the first to issue debit cards, and the first bank to launch a corporate card. We even did all these things before our international counterparts in Bangladesh. We are a talking point, and as a result people want to know more about EBL.”
EBL might also set a precedent for similar banks in South Asia.
The bank is traditionally known for its successful sustainable banking model and SME lending for entrepreneurs and women. The bank’s SME lending started five years ago with guidance from the World Bank. Through this, EBL gives relatively small loans to entrepreneurs to start up their own businesses. Loans are between £2,000 and £3,000, and are mainly used to start up handicraft businesses, beauty parlours and boutique shops.
“The principle that guides our behavior to deliver our brand is sustainable banking,” says Iftekhar. "Our purpose is to sustain and ensure growth by simply making profit for people and not over them."
Due to its success in the field, many eyes have turned towards EBL to broaden out into microfinance. However, EBL has no such plans yet.
“This would require radical changes in our infrastructure, which would be very costly for a bank like us, generally based in the cities of Bangladesh," says Iftekhar. "But we do give out loans to NGOs that offer microfinance lending. Global ambitions are much further down the pipeline."