This document summarizes a study on the liquidity management of Standard Bank Limited in Bangladesh. It discusses Standard Bank's liquidity position and ratios from 2013-2016. The bank maintained adequate reserves to meet regulatory requirements but faced some short-term liquidity gaps. The study recommends that Standard Bank improve its liquidity management strategies and policies to better deal with liquidity risks and disruptions. Diversifying funding sources and maintaining sufficient high-quality liquid assets were also suggested.

1. Liquidity Management of Standard Bank Limited:
A Study on CDA Avenue Branch, Chittagong
Prepared by:
Md. Erfanul Hoque
Matric ID: B-131478
Program: BBA
Semester: Autumn 2016

2. Introduction
Liquidity is about how long & what cost it take to convert assets or
investments into cash. Liquidity is essential in all banks for its well
functioning. A bank is considered to be liquid if it has ready access
to immediately spendable funds at reasonable cost precisely by
borrowing or selling assets at the time those funds are needed.
One of the most important task of the management of any bank is
ensuring adequate liquidity at all times. Liquidity management can
reduce the probability of an adverse situation. It is the basis of
successful cash management. There are risk involved in having too
much or too little liquidity. Approximately 90% of the bankruptcies
occur due to liquidity crisis. Efficient liquidity management ensures
having the appropriate amount of liquidity.

3. Objective of the Study
01
To examine the liquidity products and Services of
Standard Bank Limited.
02
03
04
05
To highlight the liquidity markets of Standard Bank
Limited.
To identify risk involved in liquidity management of
Standard Bank Limited.
To examine the liquidity position and management of
Standard Bank Limited.
To suggest some measures for improving the liquidity
problems of the Standard Bank Limited.

4. Methodology of the Study
Primary Sources
►Practical desk work.
►Face to face conversation with the officers.
►Direct question and observation.
►Group discussion.
Secondary sources
►Annual reports of Standard Bank Limited.
►Audited Financial Statement for the year ended
31.12.2016.
►Published documents of Standard Bank Limited.
►Periodicals Published by Bangladesh Bank.
►Different publications regarding Banking functions and
liquidity management policies.
►Internet was also used as a theoretical source of
information.
►Websites and Newsletters were also major sources.
Data Analysis
As the research is based on liquidity management, the relevant data are represented through: (1)Pie Chart, (2)Bar
Chart, (3)Line Chart, (4)Table, (5)Ratios & (6)Percentage; which will help use to understand the data visually.

5. CRR Requirement Followed by SBL
4,644.86
5,972.23
6,085.13
6,845.50
4,769.57
5,993.45
6,117.35
7,079.10
124.71
21.22
32.22
233.60
0.00 2,000.00 4,000.00 6,000.00 8,000.00
2013
2014
2015
2016
Cash Reserve Ratio
(Amount in Million)
Surplus/Deficit (S/D)
Actual Reserve Maintained (ARM)
Required Reserve (RR)
Year
Required
Reserve
(RR)
Actual
Reserve
Maintained
(ARM)
Surplus/Deficit
(S/D)
2013 4,644.86 4,769.57 124.71
2014 5,972.23 5,993.45 21.22
2015 6,085.13 6,117.35 32.22
2016 6,845.50 7,079.10 233.60
Amount in Million
CRR Requirement Prescribed by Bangladesh
Bank: 6.5%

6. SLR Requirement Followed by SBL
16,018.3
11,944.5
12,170.3
13,691.0
22,084.9
18,078.4
17,170.6
23,704.4
6,066.6
6,133.9
5,000.4
10,013.4
0.0 10,000.0 20,000.0 30,000.0
2013
2014
2015
2016
Statutory Liquidity Reserve
(Amount in Million)
Surplus/ Deficit (S/D)
Actual Reserve Maintained (ARM)
Required Reserve (RR)
Year
Required
Reserve
(RR)
Actual Reserve
Maintained
(ARM)
Surplus/
Deficit (S/D)
2013 16,018.3 22,084.9 6,066.6
2014 11,944.5 18,078.4 6,133.9
2015 12,170.3 17,170.6 5,000.4
2016 13,691.0 23,704.4 10,013.4
Amount in Million
SLR Requirement Prescribed by Bangladesh
Bank: 19.5% (CRR 6/5% included)

7. Investment Portfolio Mix- 2016
Investment Portfolio Mix- 2016
Bangladesh Bank Bill
(6943.73 Million BDT)
Quoted Shares
(168.11 Million BDT)
Government Bond
(14,589.34 Million
BDT)
Govt. Islamic Bonds
(17 Million BDT)
Treasury Bill
(1089.66 Million BDT)
Subordinated Bonds
(279.48 Million BDT)
Preference Share
(203.33 Million BDT)
56.33%
26.81
%
.016
%
.065
%
.8%
10.05%
1.08%
4.21%
.65% Prize Bonds
(4.06 Million BDT)
Unquoted Shares
(2602.54 Million BDT)

8. Net Liquidity Gap
0.00
2,000.00
4,000.00
6,000.00
8,000.00
10,000.00
12,000.00
14,000.00
2013 2014 2015 2016 Average
Short Term Liquidity Gap Long Term Liquidity Gap
Total Net Liquidity Gap
Year
Short
Term
Liquidity
Gap
Long Term
Liquidity
Gap
Total Net
Liquidity
Gap
2013 4,164.79 4,059.60 8,224,39
2014 2,671.65 7,056.07 9,727.72
2015 4,870.01 6,467.84 11,337.85
2016 8,123.44 4,402.27 12,525.71
Average 4,792.98 5,496.44 10,453.92
Amount in Million
Maturity Buckets
Upto 1 Month Short- Term
Liquidity
1-3 Months
3-12 Months
1-5 Years Long- Term
Liquidity
More than 5 Years
18.28%
16.55%
10.48%
0.00%
5.00%
10.00%
15.00%
20.00%
2014 2015 2016
Growth Rate in Net Liquidity Gap

9. Cash and Due from Balances Held at Other Depository
Institution to Total Assets Ratio
6.3
7.3 7.3
7.8
0
1
2
3
4
5
6
7
8
9
2013 2014 2015 2016
Year-wise Cash & Due from Balances Held at Other Depository
Institution to Total Assets Ratio
Year Ratio
2013 6.3
2014 7.3
2015 7.3
2016 7.8

10. Cash Assets and Government Securities to Total Assets
Ratio
21.16
20.51
16.44 15.81
0
5
10
15
20
25
2013 2014 2015 2016
Year-wise Cash assets and government securities to total
assets ratio
Year Ratio
2013 21.16
2014 20.51
2015 16.44
2016 15.81

11. Cash-Deposit Ratio
6.91
6.74
7.53
7.44
6.2
6.4
6.6
6.8
7
7.2
7.4
7.6
2013 2014 2015 2016
Year-wise Cash-Deposit Ratio
Year Ratio
2013 6.91
2014 6.74
2015 7.53
2016 7.44

12. Capacity Ratio
0.679
0.671
0.691
0.687
0.660
0.665
0.670
0.675
0.680
0.685
0.690
0.695
2013 2014 2015 2016
Year-wise Capacity ratio
Year Ratio
2013 0.679
2014 0.671
2015 0.691
2016 0.687

13. Advance-Deposit Ratio
84.33%
82.68%
85.56%
85.71%
81.00%
81.50%
82.00%
82.50%
83.00%
83.50%
84.00%
84.50%
85.00%
85.50%
86.00%
2013 2014 2015 2016
Year-wise Advance-Deposit Ratio
Year Ratio
2013 84.33%
2014 82.68%
2015 85.56%
2016 85.71%

14. Current Ratio
2.27
2.07 2.07
1.75
0
0.5
1
1.5
2
2.5
2013 2014 2015 2016
Year-wise Current Ratio
Year Ratio
2013 2.27
2014 2.07
2015 2.07
2016 1.75

15. Summary of Findings
The bank needs to reserve huge amount of money with the Bangladesh Bank as it is
mandatory for them to maintain the CRR and SLR. BB has recently increased the rate of
CRR and SLR (6.5% & 19.5% respectively) as a result the problem of liquidity crisis has
been aggravated recently for Standard Bank Ltd.
From 2013-2016, on average Standard Bank Ltd.’s short term liquidity gap was
4,792.977 million BDT and long term liquidity gap was 5,496.439 million BDT.
Therefore, the bank is facing some short-term liquidity gap.
In the recent years, our country has experienced a decline in the value of Tk. against US
currency which has created huge liquidity crisis in the banking sector leading to failure
of Financial Institutions like Standard Bank Ltd. to collect maximum amount of US dollar
required to open letter of credit (LC) for local businessmen to import essential
commodities.
As the percentage of CRR and SLR increased (6.5% & 19.5%), the commercial bank is
facing liquidity problem and for this reason to get rid of the problem the bank is
concentrated to generate more deposits.
Net Liquidity Gap for Standard Bank Ltd increased each year from 2013-2016, but rate
of growth decreased in a steady way. It indicates that during the study, Standard Bank
got sufficient assets to satisfy the liabilities, but yet the rate of growth in Net Liquidity
Gap is decreasing.
If the bank does not abide by the norms of the central bank and lend out money
injudiciously, there arises the problem with liquidity and abnormal long-term finance
and unsatisfactory recovery positions of short-medium-and long-term loans will
adversely affect the liquidity situation of the bank.

16. Summary of Findings
Standard Bank Ltd. had 17,098.39 million BDT investment in Government securities in
2014, which dropped to 14,541.005 million BDT in 2015. Although the Bank again
increased the portion of Government securities to 15,700.06 million BDT in its
Investment Portfolio.
The reason of liquidity crisis, if any persisting in Standard Bank Ltd. may be the non-
recovery of loans. The non-performing loans of the Bank stood at Tk. 3,799 million at
the end of 2016 compared to Tk. 2,959 million in 2015 i.e. 3.64% increase from
previous year.
Government credit from banking sector that would create extra burden to the
country’s banking sector and it creates more liquidity crisis in that sector. The
government has already borrowed Tk. 2787.3 crore during July-January of FY’17 from
the country’s banking and non-banking sector. In the recent future the commercial
banks like Standard Bank Ltd. will be unable to provide loan to the private sector.
The liquidity crisis of the banking sector has been accelerated by the increased
amount of inflation (5.4% at present); thus increasing the price of overall commodities
for the general people. To keep pace with this inflationary effect, people withdraw
their savings from the banks and use this funds for their transaction expenditure.
There is no developed strategy, policies & practices to manage liquidity risk in
accordance with the risk tolerance & to ensure that the bank maintains sufficient
liquidity. The policy, which is now somehow followed by Standard Bank Ltd., is not
sufficient for maintaining its goodwill in the market.

17. Recommendations
Standard Bank Ltd. is maintaining a good reserve (CRR= 7079.104 million BDT & SLR=
23,704.41 million BDT in 2016) with the Bangladesh Bank. They should keep it up.
The bank is facing some short-term liquidity gap so they have to have clear cut idea
to face the problem and should take proper actions on that.
The bank should increase its level of foreign currency reserve to collect maximum
amount of foreign currency especially US dollar required by local businessmen to
import essential commodities for the country.
The Standard Bank Limited have to launch fund collection campaigns by offering new
savings schemes with higher interest rates in bid to tackle the prevailing liquidity crisis.
The bank should possess well diversified funding sources including customers current
accounts credit balances, savings and retail deposits and inter-bank deposits.
The bank should lend out more short term & medium term loans after properly
examining underlying securities and in reliable industries and companies to be able to
hold a good liquidity position.
Standard Bank Ltd. Should maintain higher liquidity position in Government Securities,
as they are issued by the Bangladesh Government & Bangladesh Bank, they are safer
than investment in private sectors.

18. Recommendations
In 2016, Standard Bank Ltd. maintained the highest amount investment in assets other
than Government Securities between 2013-2016 equal to 10,197.19 million BDT
(Greater than 5045.33 mil, 3545.013 mil, 3281.35 mil BDT respectively in 2015, 2014,
2013). The Bank should keep increasing investment in such assets to keep hold of its
good liquidity position.
The bank has to maintain a broad portfolio of highly liquid or marketable assets that
can be easily used to obtain cash in order to diversify liquidity risk. These assets can
provide liquidity through repurchase agreement or through sale.
Standard Bank Ltd. Should Set up well designed strategies, policies and clear crisis
organization structure, tasted and up to date contingency funding plan: the
contingency plans should address temporary and long term liquidity disruptions
caused by a crisis
The branch needs to create new marketing strategy which will attract more clients
including priority customer.

19. Conclusion
Liquidity management is undoubtedly one of the most crucial
task of a bank. Though the Standard Bank Ltd. showed
comparatively lower volatility in short-term liquidity management
but in long-term liquidity management the Standard Bank Ltd.
showed better performance.
To this end, the Bank have to maintain diversified and stable
funding comprising of core retail and corporate deposits and
institution balances & Government Securities and also have to
ensure that Asset Liability Committee (ALCO) monitors the
liquidity management on a regular basis.

20. References
• Standard Bank Website: www.standardbankbd.com
• Bangladesh Bank Website: www.bb.org.bd
• Annual Report, Standard Bank Limited, 2013-2016
• “Recent Monetary Policy Statement of Bangladesh Bank: An Analytical Commentary”, July 2011,
page 9-10
• Bangladesh Bank Monetary Policy Review, Vol VI, No. 1, October 2011
• Bangladesh Bank, “Monetary Policy Statement”, January-June 2017
• Managing Core Risks of Financial Institutions. Asset Liability Management, Industry Best Practices.
Bangladesh Bank 2005: page-6
• Chowdhury A.H. & Islam M.M. “A Comparative Study of Liquidity Management of an Islamic Bank
and a Conventional Bank: The Evidence from Bangladesh”, page-2
• Financial Institution Supervision, “Bank of Thailand Audit Manual for Liquidity Risk Assessment and
Information and Technology System Department”, December 2003, page-6
• Nikolaou Kleopetra, “Liquidity (risk) Concepts definitions and interactions”, Working Paper Series
no 1008/ February 2012, page 12-50.
• Liquidity Risk Analysis: Canadian Banks, June 27,2010, page-5
• Zealand Bulletin Articles, “Evaluation of the Reserve Bank’s liquidity facilities”. Vol-71, no 4,
December 2011, page 7-9
• Palombini, E. “Monetary and Liquidity in the Italian Money Market”, Working Paper No 6, Marzo,
2010
• Arzu Tekats A. and Gokhan Gunnay “Asset and liabilities management in financial crisis”. The
Journal of Risk Finance, (2005), Vol-6, No.2 PP 135-149
• Rose S Peter, Hudgins, C Sylvia: Bank Management & Financial Service

21. Thank You