Category: Banking Professional Examination

Banking Professional Examination has attracted huge attention in media, social media and among banking professionals in Bangladesh in recent months over its being mandatory for promotion.

It has become a buzzword and concern with huge implications in the days to come for banking sector officials. This article will shed light on all the facts and factors relating to Banking Professional Examination or Banking Diploma.

The Institute of Bankers, Bangladesh (IBB)

The Institute of Bankers, Bangladesh (IBB) is a professional body for banks and financial institutions in Bangladesh. It was established in 1973 and registered as an association under the Societies Registration Act. The IBB’s vision is to become the premier institute in the banking and financial sector, developing competent and skilled professionals of international standard and repute. Its mission is to develop a professionally sound human resource base through continuous education, training, and orientation processes for the financial sector.

The IBB has several objectives, including developing professionally qualified and competent bankers through training, examinations, and professional development programs. It also designs, organizes, and conducts examinations to test the proficiency of employees of banks and financial institutions in various banking-related subjects. Successful candidates receive certificates, memoranda, and diplomas. The IBB provides necessary educational support services such as organizing coaching classes, imparting training, and supplying textbooks and reading materials. Additionally, it disseminates knowledge on banking and financial services through the publication of journals, newsletters, dialogues, lectures, and seminars.

The IBB conducts the Banking Diploma Examination, JAIBB (Junior Associate of the Institute of Bankers, Bangladesh) and AIBB (Associate of the Institute of Bankers, Bangladesh) usually held twice a year. The JAIBB examination provides basic and fundamental knowledge of banking, while the AIBB examination(Previously DAIBB) updates advanced knowledge in the field of banking and allied matters to enable better decision-making by bankers.

The IBB modifies and updates the syllabi of the Banking Professiona (Diploma) Examination from time to time to keep up with changes and developments in the banking arena, both domestically and internationally. The syllabi cover almost all theoretical and practical aspects of banking that a banker comes across in day-to-day work.

Overall, the IBB plays a crucial role in developing competent and skilled professionals in the banking and financial sector in Bangladesh, and its objectives and activities are geared towards achieving this goal.

JAIBB

JAIBB stands for “Junior Associate of the Institute of Bankers, Bangladesh”. It is a professional certification program offered by the Institute of Bankers, Bangladesh (IBB) for individuals who are interested in pursuing a career in the banking industry.

The JAIBB program covers various aspects of banking, including banking laws and regulations, accounting, economics, management, and marketing. The program is designed to provide participants with a comprehensive understanding of the banking industry and prepare them for a career in banking.

To be eligible for the JAIBB program, candidates must have a minimum of a bachelor’s degree from a recognized university or institution with banking experience.

Upon successful completion of the JAIBB program, candidates are awarded the Junior Associate of the Institute of Bankers, Bangladesh (JAIBB) certification, which is recognized by banks and financial institutions in Bangladesh. This certification is a valuable asset for individuals who are interested in pursuing a career in the banking industry in Bangladesh.

AIBB

AIBB, or “Associate of the Institute of Bankers, Bangladesh”, is a professional certification program offered by The Institute of Bankers, Bangladesh (IBB). This program is designed for banking professionals who are seeking to further their knowledge and skills in the banking industry. BB has changed the name to Banking Professional Examination from Banking Diploma.

The program covers a broad range of topics related to the banking industry, including banking operations, management, accounting, economics, and finance. This program is designed to provide participants with a comprehensive understanding of the banking industry and equip them with the knowledge and skills required to succeed in their roles as banking professionals.

To be eligible for the AIBB program, candidates must have a minimum of a bachelor’s degree from a recognized university or institution with banking experience and JAIBB certification.

Upon successful completion of the AIBB program, candidates are awarded the Associate of the Institute of Bankers, Bangladesh (AIBB) certification, which is recognized by banks and financial institutions in Bangladesh. This certification is a valuable asset for banking professionals who are seeking to advance their careers in the industry.

Syllabus for JAIBB and AIBB

The Junior Associate of the Institute of Bankers, Bangladesh (JAIBB) and the Associate of the Institute of Bankers, Bangladesh (AIBB) are two professional diploma courses offered by the Institute of Bankers, Bangladesh (IBB). These courses aim to develop professionally qualified and competent bankers primarily through a process of training, examinations, and professional development programs.

The syllabi for JAIBB and AIBB examinations cover almost all theoretical and practical aspects of banking and finance that a banker comes across in his or her day-to-day work. The syllabus is designed to ensure that the candidates have a comprehensive understanding of the banking and financial system in Bangladesh and internationally.

The syllabus of both courses is regularly updated to keep up with the changing trends and developments in the banking and financial sector. The IBB aims to provide quality education and training to candidates to ensure the development of competent and skilled professionals in the banking and financial sector of Bangladesh.

As there has been a huge reshuffle in the examination system, IBB has offered the following waiver for the professionals who have already passed partially:

JAIBB

The IBB conducts the Banking Diploma Examination, JAIBB (Junior Associate of the Institute of Bankers, Bangladesh) usually held twice a year at the such center as may be determined by the Council of the IBB from time to time. JAIBB Examination aims at giving basic and fundamental knowledge of banking. The syllabus for JAIBB includes six basic subjects incorporating Economics, Business Communication, Banking Regulations and Laws, Organization and Management, Governance in Financial Institutions, etc.

Subject List

1. Monetary and Financial System
2. Governance in Financial Institutions
3. Principles of Economics
4. Laws and Practice of General Banking
5. Organization & Management
6. Business Communication in Financial Institutions

AIBB

The IBB conducts the Banking Professional Examination, AIBB (Associate of the Institute of Bankers, Bangladesh) usually held twice a year at the such center as may be determined by the Council of the IBB from time to time. AIBB Examination is designed to update the advanced knowledge in the field of banking and allied matters to enable better decision-making by bankers. The syllabus for AIBB includes five mandatory subjects and one optional subject chosen from 8 subjects.

Subject List

1. Risk Management in Financial Institutions
2. Credit Operations and Management
3. Trade Finance and Foreign Exchange
4. Information and Communication Technology in Financial Institutions
5. Treasury Management in Financial Institutions

Optional Subjects:

In addition to the aforesaid advanced/applied subjects, any 01 (one) of the following optional subjects
shall be chosen by a candidate for passing AIBB :

1. Accounting for Financial Institutions
2. Agriculture & Microfinance
3. Sustainable Finance
4. Shariah Based Banking
5. Investment Banking
6. Management Accounting
7. Marketing and Branding in Financial Services
8. Financial Crime and Compliance

Course Fee

The fees for JAIBB and AIBB are relatively affordable compared to other professional courses in the financial sector. The IBB aims to provide quality education and training to candidates at a reasonable cost to ensure the development of competent and skilled professionals in the banking and financial sector of Bangladesh.

Application Fee For JAIBB & DAIBB: BDT 1800. The fee is only BDT 300 for a single subject.

PBE Recent Hype

Very recently, PBE has received tons of attention for some of the below reasons:

Compulsory for Bank Promotions

BRPD of BB on February 08, 2023 issues circular making Banking Diploma both the two parts compulsory for promotions in the positions of Officer to General Manager and equivalent in the banking sector.

Compulsory for NBFI Promotions

DFIM of BB on February 22, 2023, issued a circular making the Banking Diploma both two parts compulsory for promotions in the positions of Senior Officer equivalent and higher for the NBFI officials.

Compulsory for Central Bankers

BB on April 25, 2023, issued a circular making Banking Diploma both two parts compulsory for promotions in 9 grade and above for general and cash sides.

Rebranding Diploma

After mandatory circulars from the central bank, lots of chaos, discussions, and reactions came out from the communities. BB then took some major steps to rebrand the diploma exams. Some steps are as follows:

1. Changing the minimum pass mark from 50% to 45%
2. Changing the name from banking diploma to Banking Professional Examination
3. Changing the name DAIBB to AIBB
4. Making Accounting two parts optional
5. Introducing a few timely subjects
6. Renaming some subjects

Bangladesh’s investment banking industry has experienced significant growth over the years, with a number of domestic and international firms operating in the market. The following are the key areas of the investment banking structure in Bangladesh.

Structure

The investment banking industry in Bangladesh comprises a range of players, including local and international banks, brokerage firms, asset management companies, and insurance companies. The major players in the market include:

• Local banks: Commercial banks in Bangladesh offer investment banking services, including underwriting, M&A advisory, and securities trading.
• International banks: A number of global investment banks, such as Citigroup, JP Morgan, and Standard Chartered, have a presence in Bangladesh.
• Brokerage firms: These firms offer services related to securities trading, including buying and selling of stocks, bonds, and other financial instruments.
• Asset management companies: These firms manage investment portfolios on behalf of clients, including institutional investors and high net worth individuals.
• Insurance companies: Some insurance companies in Bangladesh offer investment-linked insurance products, which enable policyholders to invest in securities.

SEC Structure:

The Securities and Exchange Commission (SEC) is the regulatory body for the capital market in Bangladesh. It is an autonomous organization that operates under the Ministry of Finance. The SEC is responsible for regulating and supervising the activities of the capital market, including issuing licenses, monitoring the activities of market participants, and enforcing regulations. The structure of the SEC is as follows:

• Chairman
• Four Commissioners
• Executive Directors
• Directors
• Deputy Directors
• Assistant Directors

Legal Framework:

The Securities and Exchange Commission (SEC) is the primary regulatory body overseeing the investment banking industry in Bangladesh. The SEC is responsible for enforcing securities laws, ensuring market integrity, and protecting investors’ interests. The following are some key legal frameworks in Bangladesh’s investment banking industry:

• Securities and Exchange Commission Act, 1993: This act provides the legal framework for the establishment of the SEC and outlines its functions and powers.
• Securities and Exchange Ordinance, 1969: This ordinance governs the issue, transfer, and registration of securities in Bangladesh.
• Companies Act, 1994: This act provides the legal framework for the incorporation and regulation of companies in Bangladesh.

Performance:

The performance of the SEC is measured by its ability to regulate and supervise the activities of the capital market. The SEC’s performance is evaluated based on the following criteria:

• The number of licenses issued to market participants
• The number of market participants that comply with SEC regulations
• The number of violations detected and actions taken against violators
• The level of investor confidence in the capital market

Role of SEC:

The SEC plays a vital role in ensuring the stability and growth of the capital market in Bangladesh. The SEC’s primary responsibilities include:

• Prevention of insider lending: The SEC ensures that insider trading is prevented by enforcing regulations that prohibit the misuse of insider information. This helps to maintain a level playing field for all investors in the market.
• Investor protection: The SEC takes measures to protect investors from fraudulent activities and other forms of financial misconduct. This includes monitoring the activities of market participants, investigating complaints, and taking action against violators.
• Regulation of market participants: The SEC regulates the activities of market participants, including stock exchanges, securities dealers, brokers, and investment bankers. This helps to ensure that market participants operate in compliance with SEC regulations and maintain transparency and accountability.
• Development of the capital market: The SEC takes measures to promote the growth and development of the capital market in Bangladesh. This includes introducing new financial products, improving the regulatory framework, and encouraging investment in the capital market.

Examples from Bangladesh:

• In 2021, the SEC introduced a new rule requiring companies to disclose their carbon emissions and other environmental, social, and governance (ESG) metrics. This helps to promote transparency and accountability in the market and encourages companies to adopt sustainable practices.
• The SEC has taken action against several market participants for violations of SEC regulations, including insider trading, market manipulation, and other forms of financial misconduct. This helps to maintain investor confidence in the market and ensures that market participants operate in compliance with SEC regulations.
• The SEC has taken measures to promote the growth and development of the capital market in Bangladesh. This includes introducing new financial products, such as green bonds and Islamic bonds, and improving the regulatory framework to attract foreign investment.

Performance

The investment banking industry in Bangladesh has been performing well in recent years, driven by factors such as:

• Strong economic growth: Bangladesh has been one of the fastest-growing economies in the world, which has led to increased demand for investment banking services.
• Government initiatives: The government has taken a number of initiatives to promote capital market development, including the launch of the Bangladesh Electronic Fund Transfer Network and the introduction of a book-building mechanism for IPOs.
• Increasing foreign investment: The country has been attracting increasing levels of foreign investment, which has led to increased demand for investment banking services.

Role of SEC (Prevention of Insider Lending and Investor Protection)

The SEC plays a crucial role in ensuring the integrity of the investment banking industry in Bangladesh. Some key functions of the SEC include:

• Enforcement of securities laws: The SEC is responsible for enforcing securities laws and regulations to ensure market integrity.
• Protection of investors: The SEC is responsible for protecting investors from fraudulent activities and ensuring that companies disclose accurate and timely information to investors.
• Prevention of insider trading: The SEC is responsible for preventing insider trading, which is the use of non-public information to gain an unfair advantage in securities trading.

ICB (Institutional Investor)

The Investment Corporation of Bangladesh (ICB) is a state-owned financial institution that plays a significant role in the investment banking industry in Bangladesh. Some key functions of the ICB include:

• Investment management: The ICB manages investment portfolios on behalf of clients, including institutional investors and high-net-worth individuals.
• Underwriting of securities: The ICB acts as an underwriter for securities issuances in Bangladesh, including IPOs and bond issuances.
• Investment in infrastructure: The ICB also invests in infrastructure projects in Bangladesh, including power plants, ports, and highways.

Restructuring

Restructuring is a key service offered by investment banks in Bangladesh. This involves the reorganization of a company’s operations or ownership structure to improve its financial performance. Some examples of restructuring services offered by investment banks in Bangladesh include:

• Debt restructuring: This involves the renegotiation of a company’s debt obligations to make them more manageable.
• Mergers and acquisitions: Investment banks in Bangladesh help companies to identify potential merger or acquisition targets and advise on the structuring of these transactions.
• Divestitures: Investment banks also advise companies on the sale of non-core assets to raise funds.

Acquisition

Acquisition is another key service offered by investment banks in Bangladesh. This involves the purchase of one company by another. Some examples of acquisition services offered by investment banks in Bangladesh include:

• Due diligence: Investment banks help acquirers to conduct due diligence on target companies to assess their financial and operational performance.
• Valuation: Investment banks help acquirers to value target companies and negotiate the price of the acquisition.
• Financing: Investment banks help acquirers to arrange financing for the acquisition, including debt and equity financing.

Corporate Advisory

Corporate advisory is a broad term that encompasses a range of services offered by investment banks to companies. Some examples of corporate advisory services offered by investment banks in Bangladesh include:

• Capital raising: Investment banks help companies to raise capital through the issuance of securities, including equity and debt securities.
• Strategic planning: Investment banks advise companies on their long-term strategic plans, including mergers and acquisitions, divestitures, and restructuring.
• Risk management: Investment banks help companies to identify and manage financial risks, including currency risk, interest rate risk, and commodity price risk.

Legal, Ethical and Governance Issues in Investment Banking

Legal, ethical, and governance issues are critical considerations in the investment banking industry in Bangladesh. Some key issues include:

• Insider trading: The SEC is responsible for preventing insider trading, which is the use of non-public information to gain an unfair advantage in securities trading.
• Conflict of interest: Investment banks must manage conflicts of interest, such as advising on a transaction where the bank has a financial interest in the outcome.
• Compliance: Investment banks must comply with applicable laws and regulations, including anti-money laundering and anti-corruption laws.

Growth of Investment Banking in Bangladesh

The investment banking industry in Bangladesh has experienced significant growth in recent years. Some key factors driving this growth include:

• Strong economic growth: Bangladesh has been one of the fastest-growing economies in the world, which has led to increased demand for investment banking services.
• Capital market development: The government has taken a number of initiatives to promote capital market development, including the launch of the Bangladesh Electronic Fund Transfer Network and the introduction of a book-building mechanism for IPOs.
• Increasing foreign investment: Bangladesh has been attracting increasing levels of foreign investment, which has led to increased demand for investment banking services.

Tier II Bonds, ZCB, Sukuk, Sustainable Bonds

Investment banks in Bangladesh offer a range of debt instruments, including tier II bonds, zero-coupon bonds (ZCBs), sukuk, and sustainable bonds. These instruments offer different benefits to issuers and investors, as summarized below:

• Tier II Bonds: These are debt instruments issued by banks to raise capital that can be used to absorb losses in the event of a financial crisis. Tier II bonds are subordinated to senior debt and are therefore riskier for investors. However, they typically offer higher yields to compensate for this increased risk.
• Zero-Coupon Bonds (ZCBs): These are bonds that do not pay periodic interest payments but are sold at a discount to their face value. Investors earn a return on ZCBs by holding them until maturity, at which point they receive the face value of the bond. ZCBs are useful for issuers that do not want to make periodic interest payments but still need to raise funds.
• Sukuk: These are Islamic bonds that comply with Shariah law. Sukuk do not pay interest but instead offer investors a share of the profits generated by the underlying assets. Sukuk are popular in Bangladesh, where the majority of the population is Muslim and Shariah-compliant investments are in high demand.
• Sustainable Bonds: These are bonds that are issued to finance projects with environmental or social benefits. Sustainable bonds are becoming increasingly popular in Bangladesh as companies seek to demonstrate their commitment to sustainability and attract socially responsible investors.

In conclusion, the investment banking industry in Bangladesh is evolving rapidly, driven by strong economic growth, capital market development, and increasing foreign investment. Investment banks in Bangladesh offer a range of services, including corporate advisory, debt and equity underwriting, and mergers and acquisitions. However, legal, ethical, and governance issues must be carefully managed to maintain investor confidence in the industry. Investment banks in Bangladesh also offer a range of debt instruments, including tier II bonds, ZCBs, sukuk, and sustainable bonds, to meet the needs of issuers and investors.

Portfolio management is the process of creating and managing a portfolio of assets, such as stocks, bonds, and real estate, to achieve specific investment objectives. It involves selecting assets that are expected to perform well and balancing risk and return to optimize portfolio performance.

In Bangladesh, portfolio management is an important aspect of the financial industry, with a growing number of investors seeking to diversify their investments and manage their risk exposure.

Assumptions to Portfolio Management:

Before engaging in portfolio management, it is important to understand several key assumptions:

1. Investors are rational and seek to maximize their utility or satisfaction.
2. Investors are risk-averse and prefer to avoid unnecessary risk.
3. Investors have access to all relevant information about assets and markets.

Asset Pricing Models:

Asset pricing models are used to determine the fair value of assets and to make investment decisions. Some commonly used asset pricing models include:

1. Capital Asset Pricing Model (CAPM): This model measures the expected return of an asset based on its risk, as measured by its beta, and the expected return of the market.
2. Arbitrage Pricing Theory (APT): This model takes into account multiple factors that can affect an asset’s return, such as inflation and interest rates.

Efficient Capital Markets:

Efficient capital markets are markets where asset prices fully reflect all available information. In an efficient market, it is difficult to earn abnormal returns through investment analysis or trading strategies.

In Bangladesh, the efficiency of capital markets is a topic of debate, with some experts arguing that market inefficiencies create opportunities for savvy investors to earn above-average returns.

Financial Statement Analysis:

Financial statement analysis involves examining a company’s financial statements, such as the income statement, balance sheet, and cash flow statement, to evaluate its financial health and performance. This analysis can be used to make investment decisions or to assess the creditworthiness of a company.

Financial Ratios:

Financial ratios are used to evaluate a company’s financial performance and health. Some commonly used financial ratios include:

1. Profitability ratios, such as return on equity (ROE) and return on assets (ROA).
2. Liquidity ratios, such as the current ratio and the quick ratio.
3. Debt ratios, such as the debt-to-equity ratio and the interest coverage ratio.

Economic Analysis:

Economic analysis involves examining macroeconomic factors, such as interest rates, inflation, and GDP growth, to make investment decisions. In Bangladesh, economic analysis is particularly important, as the country is experiencing rapid economic growth and development.

In summary, portfolio management involves creating and managing a portfolio of assets to achieve specific investment objectives. Asset pricing models, efficient capital markets, financial statement analysis, financial ratios, and economic analysis are all important concepts in portfolio management. By understanding these concepts, investors can make informed investment decisions and optimize portfolio performance.

Economic Analysis to Efficient Market

Efficient market theory states that market prices fully reflect all available information at any point in time. Therefore, investors cannot achieve above-average returns through any form of analysis. However, economic analysis can be used to predict changes in market conditions, which may help investors make better-informed investment decisions. Examples of how economic analysis can be used to relate to an efficient market in Bangladesh are:

• Analysis of the country’s GDP growth rate, inflation rate, and interest rates to determine the overall state of the economy and potential future market conditions.
• Analysis of political and regulatory changes in Bangladesh that may affect market conditions and investment opportunities.

Forecasting Tools

Forecasting tools are used to predict future market conditions and help investors make informed decisions. Some common forecasting tools used in portfolio management include:

• Technical analysis: This involves analyzing market trends, patterns, and price movements to predict future market conditions.
• Fundamental analysis: This involves analyzing a company’s financial statements, industry trends, and economic conditions to predict future performance and potential investment opportunities.
• Quantitative analysis: This involves using mathematical models and statistical analysis to predict future market conditions.

In Bangladesh, investors use a variety of forecasting tools, including technical analysis and fundamental analysis, to predict market trends and make investment decisions.

The Nature of Effective Economic Forecast

Effective economic forecasts must be accurate, timely, and relevant to investment decisions. They should also consider macroeconomic factors, such as GDP growth rates, inflation rates, and interest rates, as well as microeconomic factors, such as industry trends and company-specific data. Effective economic forecasts should also consider historical data and market trends to make informed predictions about future market conditions.

In Bangladesh, effective economic forecasts are used to inform investment decisions by considering the following factors:

• GDP growth rates and inflation rates to predict future market conditions and interest rates.
• Industry trends and company-specific data to identify potential investment opportunities.

Industry Analysis

Industry analysis involves evaluating the overall performance and potential of a particular industry to determine the potential for investment opportunities. Some key factors to consider in industry analysis include market size, growth rate, competition, and regulatory environment. In Bangladesh, investors may consider the following factors in industry analysis:

• The size and growth rate of industries such as textiles, pharmaceuticals, and IT services.
• Competition within these industries and the regulatory environment affecting their performance.

Company Analysis

Company analysis involves evaluating the financial performance, management, and overall potential of a particular company to determine the potential for investment opportunities. Some key factors to consider in company analysis include financial statements, management effectiveness, and competitive advantages. In Bangladesh, investors may consider the following factors in company analysis:

• Financial statements, such as income statements and balance sheets, to evaluate a company’s performance and financial health.
• Management effectiveness and experience in their industry.
• Competitive advantages, such as proprietary technology or market dominance.