Citibank adds confirmation after saying 'no' initially

---

Shafiqul Islam Jibon
The foreign commercial bank, the Citibank NA, refused to 'add confirmation' to two LCs (Letter of Credit) issued by the state owned Sonali Bank Sunday, official sources have confirmed.
However, the Citibank later added its confirmation to the LCs in question after scrutinising the Sonali Bank's latest financial strength and getting approval from its headquarters in New York, USA.
'Add confirmation' is a bank guarantee to the effect that the corresponding bank will receive payment as per the terms of an L/C, regardless of the stability of the issuing bank and whatever the political risk in the issuing bank's country, a bank official said.
"Perhaps, the foreign bank primarily refused to add confirmation to two LCs worth several million US dollars on Sunday due to image crisis of the state-owned bank following the Hallmark scam," a top official of the Sonali Bank told the FE Tuesday.
The Sonali Bank is the largest state-owned commercial bank of the country.
"The refusal to add confirmation to our LCs by the Citibank was unexpected. However, the foreign bank issued certifications for the bank later as they have realised that the bank's financial position is healthy," he added.
The Deputy Managing Director (DMD) of Sonali Bank, Khondoker Md. Iqbal, explained the bank's overall financial strength to the FE on the day, saying that "the bank is still carrying out its day-to-day financial activities smoothly."
"Any depositor at any of our branches around the country has not yet said that they are going to withdraw their deposits from the bank," Mr Iqbal said.
All zonal heads and the branch managers were advised to provide better services and earn confidence of the depositors to help retrieve the image of the bank, he added.
While talking to the FE on the day, a top official of the Bangladesh Bank (BB) said, the state owned Sonali Bank was now facing an image crisis for the Hallmark loan scam. But their financial ability is still strong than other commercial banks in the country. They are in a position to settle any large financial transaction with foreign banks.
The central bank official said, "We are closely monitoring the Sonali Bank regarding its all types of important activities. As per a Memorandum of Understanding (MoU) signed between the Sonali Bank with the BB on March 14, 2011, we have strengthened our monitoring activities."
The memorandum embodies some specific conditions that need to be fulfilled regarding loans and advances, recovery of classified loans. Besides, it also contains a provision regarding finalisation of audited balance sheet within 3 months of the closing of the accounting year as per the Bank Company Act, 1991, the BB official further noted.
While talking to the FE, the chairman of the state owned specialised bank, the Bangladesh Krishi Bank (BKB), Khondoker Ibrahim Khaled said: "the Sonali Bank is a government owned bank. Its financial position is better. So its depositors and the foreign banks need not be concerned about transactions with the bank."