Dhaka:The growing strength and expansion of domestic banks in Bangladesh are reshaping the country's banking landscape, prompting international banks to redraw their business strategies and focus increasingly on corporate banking, international trade finance, and cross-border investment.
According to Bangladesh Sangbad Sangstha, 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, noted that decisions by international banks to restructure their retail operations were part of their global strategies and not specific to Bangladesh. He mentioned that Standard Chartered is exploring the sale of its retail banking business while maintaining its other operations in the country. This move could indicate the bank's intention to concentrate more on corporate banking, which might contribute positively to Bangladesh's trade and investment.
Policy Exchange Bangladesh Chairman and CEO Dr. M. Masrur Reaz emphasized the importance of continuing correspondent banking relationships between international banks and local financial institutions to ensure the proposed restructuring does not significantly disrupt the country's financial sector or investment flows. Meanwhile, Association of Bankers, Bangladesh (ABB) Chairman Mashrur Arefin highlighted the distinct competitive advantage domestic banks have over foreign banks due to their ability to scale up operations nationwide.
In the context of retail banking changes, 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 reaffirmed its long-term commitment to the country, emphasizing its continuation in corporate and investment banking operations. Similarly, HSBC has announced plans to withdraw from retail banking in Bangladesh while retaining its Corporate and Institutional Banking operations.
The expansion of domestic banks has altered the competitive environment in Bangladesh's retail banking sector, as they have developed extensive branch networks and strengthened their digital services. Experts believe that while local banks have gained ground, they must improve corporate governance, transparency, risk management, regulatory compliance, and customer service to sustain their growth.
Economists assert that the restructuring of foreign banks' retail operations does not necessarily mean a reduction in their commitment to Bangladesh's economy. International banks remain important for export-import financing, letters of credit, foreign exchange transactions, and cross-border investment, maintaining financial connections between Bangladesh and global markets.