Commerce reporter:
The growing strength and expansion of domestic banks in Bangladesh are reshaping the country’s banking landscape, prompting international banks to reconsider their business strategies and focus increasingly on corporate banking, international trade finance and cross-border investment.
Banking experts say the changing strategies of foreign banks particularly their decisions to reduce or exit retail banking reflect both the increasing competitiveness of local financial institutions and a broader global shift in multinational banks’ business priorities.
Over the years, local banks have expanded their branch networks, customer bases, digital banking platforms, credit card services and financial products, strengthening their presence in the retail banking market.
As domestic banks have become more capable of serving individual customers and small businesses, international banks have found it increasingly challenging to maintain their competitive advantages in retail banking. Former Lead Economist at the World Bank’s Dhaka office Dr Zahid Hussain said the decisions by international banks to restructure their retail operations were part of their global strategies and were not specific to Bangladesh. He said Standard Chartered is exploring the sale of its retail banking business while maintaining its other operations in the country.
The move could indicate the bank’s intention to concentrate more on corporate banking, which could contribute positively to Bangladesh’s trade and investment.
He also urged local banks to strengthen transparency, integrity and service quality to build a stronger foundation of customer confidence.
Policy Exchange Bangladesh Chairman and CEO Dr M. Masrur Reaz said the continuation of correspondent banking relationships between international banks and local financial institutions would ensure that the proposed restructuring did not significantly disrupt the country’s financial sector or investment flows.
He described the move as part of a broader global banking strategy.
Association of Bankers, Bangladesh (ABB) Chairman Mashrur Arefin said domestic banks enjoy a distinct competitive advantage over foreign banks because of their ability to scale up operations nationwide, expand their customer base and offer retail banking services to a much broader segment of the population.
Foreign banks, in contrast, face greater challenges in achieving such extensive market penetration, making it difficult for them to compete effectively in the retail banking segment, he added. He said that the evolving business strategies of foreign banks are a natural development as domestic financial institutions continue to strengthen their market positions.
BGMEA Vice President (Finance) Md. Mizanur Rahman also said the restructuring of retail banking activities by international banks would not hamper Bangladesh’s trade and investment.
Standard Chartered Bank announced on October 8 that it was exploring the potential sale of its Wealth and Retail Banking business in Bangladesh.
The bank, however, reaffirmed its long-term commitment to the country, saying it would continue its corporate and investment banking operations, with particular emphasis on international trade, cross-border capital flows and infrastructure financing.
The proposed transfer is expected to take 18 to 24 months, subject to regulatory approval, while the bank’s regular operations will continue during the process.
HSBC has also announced plans to withdraw from retail banking in Bangladesh while retaining its Corporate and Institutional Banking operations.
These developments indicate that international banks are increasingly prioritising business segments where their global networks, specialised expertise and international financial connectivity provide greater competitive advantages.
Local banks gaining ground:
The expansion of domestic banks has changed the competitive environment in Bangladesh’s retail banking sector.
