Bhutan’s fourth commercial bank opens Thimphu branch
|Banking On Customer Service: Small and medium sized businesses to be initial niche market|
14 March, 2010 – T-Bank, Bhutan’s fourth commercial bank, which opened its Thimphu office for business yesterday, will target small and medium scale businesses, according to one of its promoters.
“We can’t run after the big clients initially,” said Wangchuk Dorji, vice chairman of the Tashi group, who owns 20 percent of the Nu 220 mn bank. Maximum lending capacity to an individual client is determined by the capital base and reserves, which in T-Bank’s case comes to about Nu 64 mn.
The bank will also try and give highly personalised and faster service, with every client assigned a credit officer to take care of the paperwork and running around, rather than setting off a pricing war. “Competing with the established banks isn’t going to be easy, so we want to focus on service,” said T-Bank’s chief executive officer (CEO), Tshering Dorji, who worked with the Bank of Bhutan, the country’s oldest and largest bank, for 39 years and retired as its CEO a few years ago.
Tshering Dorji said that T-Bank decided to launch yesterday, even though the office needs a bit of finishing work, a day after getting the operational license from the royal monetary authority, because the coming (Bhutanese) month is dhana, an inauspicious month.
The promoters of T—Bank were the first in Bhutan to apply for a banking license in 2004, after the government indicated that it would liberalise banking. “We were even issued a letter of intent and we did a Rabney to start the project in December 2005,” said Wangchuk Dorji. “With major changes coming to Bhutan in the following years, there were delays and we had to refocus.”
|TCC complex, near hotel Taj Tashi|
Three promoters – Wangchuk Dorji, Tobgay Dorji and Savitri Dorji, who are members of the same family – hold 20 percent each in T-Bank. The remaining 40 percent, Nu 88 mn, is to be raised from the public through shares.
Although the promoters held 60 percent and were the owners of the Tashi group of companies, it did not make T-Bank a subsidiary of the Tashi group, said RMA’s Eden Dema, who heads the financial institutions services division. “The 20 percent by each promoter is being held on an individual basis, not as a company,” she said. “Regulations require T-Bank to be a public limited company.” The bank was initially proposed to be called Tashi Bank, but RMA objected and it changed to T Bank.
Eden Dema also said that there were restrictions on T-Bank financing Tashi group companies. “It must be within the limits of related party transaction regulations, which is 10 percent of the capital fund,” she added.
The CEO of Bhutan National Bank, Kipchu Tshering, welcomed the new bank and said that they would have to be little more alert and careful. He said that, at the moment, BNB had excess liquidity, mainly from corporate deposits, which would probably take off after Bhutan had more power to set up new industries.
BoB CEO’s Kinga Tshering said that the new bank would service a segment of customers that require financial services but, as the market matures, each one would try and find their own niche. “We’ll need to shift strategy and think of competing in the corporate sector as well,” he said.
T-Bank has to raise to raise its share capital to Nu 300 mn, as required by RMA regulations. Source: Kuenselonline