SCB to play constructive role for New Nepal

Sujit Mundul is CEO of Standard Chartered Bank Nepal, one of the leading private sector banks in Nepal. He brings with him rich experience and knowledge of the banking sector of over 30 years. In an interview with Prem Khanal of The Kathmandu Post, Mundul talked about banking in general and the themed week "Blue & Green", which SCB is celebrating from June 22-27. Excerpts:

Would you please elaborate on the purpose of celebrating "Blue & Green" week and also clarify why SCB's focus is on the use of blue and green colors?

After a series of in-depth analyses, the Standard Chartered Group adopted five core values in 2001: Creative, responsive, international, courageous and trustworthy. Our values remain at the heart of our organization and underpin everything we do. It is interesting to note that when the values were launched in 2001, our global staff strength was around 30,000. Today, the number stands at more than 70,000. Our vision for 2011 is to increase our global strength to 120,000.

The main purpose of celebrating "Blue & Green" week is to reinforce our brand and values. It is not just about the colors; it's about what we stand for, about our people and our culture, about how we treat our customers and how we contribute to our communities. One might be surprised why blue and green. If you look carefully at our brand, you will find that the colors symbolize our logo. The colors are simple and they resonate and have many dimensions, e.g., environment, community, advertising, marathons and our business and behavior. Our vision for the brand is simple: We want to double the value of the brand by 2011. We rely on each and every one of our employees to live the brand everyday no matter what they do, and so reinforce it in the hearts and minds of our customers.

Your ambition is to become the world's best international bank leading the way in Asia, Africa and the Middle East. Could you please elaborate on what plans you have to achieve this goal?

We are focusing on quite a few things to achieve our strategic intent in becoming the world's best international bank leading the way in Asia, Africa and the Middle East. Our brand promise is to be the right partner - leading by example. We have defined commitments to our stakeholders, i.e., our customers, people, communities, investors and regulators. If you look at the Asian markets, we have a very strong presence in most of the countries here. We have been in the continent for more than 150 years. We have similar stories for Africa also. We are more focused on these markets than US and Europe. We want to be trusted, caring and dedicated to making a difference to the communities. We are committed to delivering outstanding performance and superior returns to our investors. We want to exhibit exemplary governance and ethics wherever we are and want to be partners to the regulators.

Talking about the domestic banking sector, do you think it is following healthy competitive rules of the game?

Only healthy competition is in the interest of a country which has a very small economic pie and is in the early stages of development. Nepal is not an exception to this. The pricing mechanism currently being adopted by a few players is neither convincing nor transparent as it does not emulate the risk-based pricing model. The secondary market is yet to develop. There aren't yield curves available for various maturities. Suppose you want to extend a long-term mortgage loan, you don't find a reference rate. If you look at our South Asian counterparts like Bangladesh and Sri Lanka, they have already started developing reference rates.

Banks in Nepal have been fixing interest rates for long-term assets on an ad hoc basis undermining the risk-reward principle. It is now time for the central bank to take the lead in formulating a policy to establish yield curves for various maturities in order to develop a proper market. I fear that the rapid increase in the number of players in the financial market may not be sustainable in the medium to long term. The big challenge for us is to focus on quality rather than quantity.

Could you please highlight some of your future plans and activities?

We are shortly going to open two new branches in Birgunj and Narayanghat. We do have an ambitious plan to grow keeping in mind our own vision for 2011. We will focus on expanding our ATM network and introducing various new products both under consumer and wholesale banking. In line with our global strategy, and if we find the right opportunities, we are prepared to grow inorganically through mergers and acquisitions. We aim at maintaining our status

as the best bank in the country.

What do you think Nepal's economy will be like in the future and which sectors do you think have good prospects?

Given the rapidly materializing peace and political stability, I am not only optimistic but also confident about the future and the growth of Nepal's economy. It might take a little longer than expected though. Apart from hydropower - which has a huge value to add - tourism, agriculture, education and health care related sectors have tremendous potential to make Nepal prosperous.

Even though the manufacturing sector has an important role to play, Nepal first needs to focus on developing a sound infrastructure to realize its full potential. Because of the lack of infrastructure, we have not been able to benefit from the Nepal-India trade treaty, which provides us duty and quota-free market access to India. The need of the hour is to develop a proper policy on capital formation either by attracting FDIs or by recouping the capital that flowed out in the past. SCB Nepal is keen to play a constructive role in accelerating the pace of development and rebuilding the economy towards forming a New Nepal.

Source: eKantipur