Participation of Citibank, N.A. in the Call Money Market of Bangladesh

Abstract

This internship report is based on the twelve weeks long internship program that I have successfully completed in Citibank, N.A. under Treasury Operations Division from 30th November, 2011 to 29th February, 2012. It is a requirement for the BBA program in BRAC University. I worked in the FICC Unit. My faculty advisor and the on-site supervisor helped me choose the topic-“Participation of Citibank,N.A. in the Call Money Market of Bangladesh”. It is a very important mechanism for the money market and as well as for banks. The value of the knowledge attracted me the most. The call money market offers a means of securing finance for credit needs to the large financial institutions, such as banks, mutual funds and corporations. It allows banks to adjust their liquidities. In our country, a good number of players from the banking as well as the non-bank financial sector actively participate in the Call money market on a regular basis. Citibank, N.A. is one of the participants in the Call Money Market of Bangladesh. It borrows and lend at call in the money market to maintain the cash reserve ratio. In recent years, call money rate rose abnormally due to high demand for cash by some banks and financial institutions. In the beginning of 2005, the interest rate in the call money market has suddenly jumped to abnormal level reflecting high demand for cash of the banks and financial institutions. To ensure its secured participation in the market, Citibank, N.A. go through a flow of actions, like generating and regularly revising the regarding reports, maintaining all the required documentation, reconciling the process etc. To analyze the participation of the bank in the call money market I emphasized on the data of 2011 only. While analyzing the quarterly performance of Citi only, in the market, I found that, Citibank, N.A. made its best performance in the first quarter of the year, when it made highest lending, although the rate was not the highest; the second quarter was at the lowest point, when the maximum borrowing was made and lowest amount of lending was made as the rate was a bit higher than that of first quarter. The third quarter positioned in between of these two. Comparing Citibank, N.A.’s participation in the form of lending with the other multinational banks in the country, it was found that Citi performed the best among all the banks in the first quarter of the year, when Citi made the highest amount of lending of the quarter, although it could not manage to get the highest WAR. The bank could not perform that well, as it did in the first quarter, comparing to other banks in the second quarter but in the third quarter Citi made the highest amount of lending and experienced higher WAR. For the borrowing purpose, Citi made greater percentages of borrowings and had to pay at a higher rate throughout the year, compared to the other banks. In the recent years, the call money market of our country is fluctuating with an abnormal trend for both the transaction volume and transaction rates. The market should be well taken care of by the government and other relevant authority for the betterment of the country’s economy.