Main part

Correspondent Banking Products of American Express Bank Ltd.

PART 1: ORGANIZATIONAL OVERVIEW 1.1 American Express: Branding Financial Services American Express is known worldwide for its charge cards, travelers’ services, and financial services. It is one of the best-known and most-respected global brands. As it grew from a nineteenth-expressN company into a travel services expert by the mid-1900s, American Express (AMEX) became associated in the minds of consumers with prestige, security, service, international acceptability, and leisure. Advertising for the company, which began in earnest in the 1960s, reinforced these associations. For example, the now-famous tag line “Don’t leave home without it” was created to convey the essentiality of owning an American Express Card. As the company grew, it expanded into a variety of financial categories, including brokerages, banking, and insurance, and by the late 1980s, American Express was the largest diversified financial services firm in the world.

The difficulty the company encountered integrating these broad financial services, combined with increased competition from Visa and MasterCard, compelled AMEX to divest many of its financial holdings in the early 1990s and focus on its core competencies of travel and cards. The company weathered a decrease in cardholders at this time by greatly increasing the number of merchants that accepted American Express Cards and developing new card offerings, including co-branded cards and a genuine credit card that allowed customers to carry over the monthly balance. By the end of the 1990s, American Express was again seeking to broaden its brand to include select financial services in order to

achieve growth. Beyond the challenge of integrating these services, American Express faced a number of issues in the 2000s, including a highly competitive credit card industry, a slowing economy, and a subdued travel industry.

1.2 American Express Builds a Financial Empire 1.2.1 Early History of American Express The American Express Company was formed in 1850 when two competing express companies merged. The express business, which was less than two decades old, specialized in shipping packages that were smaller than the bulk freight that railroads handled but were over the U.S. Postal Service size limits. Before express companies began operating, stagecoach drivers and even civilian travelers were recruited to deliver packages. Express companies also carried packages that required special handling or were particularly valuable. Bank transactions involving cash, securities, and Gold gave express companies much of their business.

In response to losing business to express companies, the U.S. Postal Service created the money order, which allowed people to send a cash equivalent through the mail that could be cashed only by a specified recipient. The cash delivery service was traditionally the domain of express companies, because postal workers would often steal cash sent through regular mail. To counter the Postal Service’s move into financial services, American Express created its own money order in 1881. The American Express money orders were easier to use than the Post Office money orders, and AMEX extended the line to include orders in foreign currency that could be cashed internationally. The money order was a great success, selling 250,000 in its first year and more than half a million the next.

In the late 1880s, AMEX president J.C. Fargo returned from a trip complaining about how difficult it was to use his letter of credit, used to obtain cash abroad, at foreign banks. To solve the problem of obtaining credit abroad, in 1890 American Express employee Marcellus F. Berry designed the “Travelers Cheque,� intentionally using the British spelling

of check to give it an international flair. The Travelers Cheque used the same signature security system still in use today and had exchange rates guaranteed by AMEX printed on the front. AMEX also gave foreign merchants commissions to encourage them to accept the check. Aided by the network of international financial relationships established for support of the AMEX money order, sales of the Travelers Cheque quickly took off. From 1882 to 1896, Travelers Cheque sales quadrupled as travelers all over the world were using AMEX products more and more to make their journeys easier. In the meantime, AMEX’s express business was growing overseas.

Federal antitrust regulation led to the separation American Express’s express business from its financial services and tourism businesses. By that time, however, AMEX was already booking tours, hotel stays, and steamship and railway tickets. Money orders were still popular and Travelers Cheque sales were constantly increasing. AMEX had also been investing the float—the money that remains in the company’s account during the interval between when Travelers Cheques are bought and when they are cashed—and earning millions of dollars in interest. The Travelers Cheque was AMEX’s flagship product. The Travelers Cheque fees and its float investments were responsible for most of AMEX’s earnings and almost all of their profits.

1.2.2 AMEX Success Due to the acquisition-based growth and cross-marketing concepts, which were fashionable corporate strategies in the 1980s, Robinson was hailed as a savvy CEO in building AMEX in this fashion. By the end of 1984, AMEX had developed $61 billion in assets and posted annual revenues of $13 million. The TRS division, which supplied AMEX with almost threequarters of its earnings, was selling $13 billion worth of Travelers Cheques, while 20 million cards were generating $45 billion in charges. AMEX had name recognition of 75 percent and its services were used by 14 percent of the population, more than any other financial company.

Success continued through the late 1980s. Revenue and profits grew in every division and earnings topped the $1 billion mark in 1986. In 1989 AMEX grossed more than $26 billion and netted $1.2 billion with a Travelers Cheque float of more than $4 billion to invest.

Compounded earnings and sales over the last decade had risen 9 percent and 13 percent every year, and AMEX had a return on shareholder equity of more than 15 percent a year.

Their direct marketing department was the fifth largest in the nation selling electronics, furniture, jewelry, luggage, mutual funds, and insurance. AMEX’s publishing arm included Travel & Leisure and Food & Wine magazines, with a combined circulation of more than 2 million, and they planned on acquiring or creating more than ten more magazine titles.

Overall, analysts were recommending AMEX stock, saying it was undervalued based on its future earnings potential with AMEX being called “one of the great success stories of the last twenty years.”

American Express had made many changes during the past two decades, but as a new century dawned, the company could still be considered a “work in progress.” Their marketing, branding, and advertising strategies would clearly play an important role in their ultimate ability to succeed in making their desired transformation.

PART 2: TOPIC ANALYSIS AND DISCUSSION 2.1 Background of the study Banks are very vital in an economy for safe transactions. Without banks business becomes difficult and in some case impossible. The whole world is moving because of banks. So, in the business world, bank is regarded as a media through which we have an acquaintance with the real world.

This Report discusses about all the products of correspondent banking department of the American Express Bank Ltd. Dhaka. This Report will contain a description of all the processes and all the benefits and the risks that are involved with each product. This will allow us to

get an understanding as to how difficult and how risky each of the products that are dealt with here.

At the end of the report is a section that gives certain suggestions as to how the processes of the department can be made more efficient.

2.2 Objective of the report The objective of the report is to make the people understand about Financial Institution Groups, how the products are processed and how the bank makes money and how risky the goods are in the department.

2.3 Data and Methodology The Data was collected through different kinds of observations and different interviews were taken of the employees who actually work in the Correspondent banking department of the American Express Bank Ltd, Dhaka.

2.4 Overview of Correspondent banking Department The Financial institutional Group Bills department or Correspondent banking is under the FIG department of the American Express bank Ltd Dhaka. The American Express Bank works as an intermediary bank for the local banks and other National banks that are present in the country. This happens because the local banks and the National banks do not have the capacity or the systems for the foreign transactions with foreign currencies. Even though some of the banks do have the necessary means to do these transactions they prefer to use American Express Bank Ltd for these transactions as it is a internationally acknowledged bank. There is a higher level of trust among all the banks between which all the transactions take place. The Correspondent banking department deals with different products such as Payment Instructions, Reimbursement Authorities, Cheque collection, Export Bills, Allocation, 103 payments, Telex pre processing etc. The department deals with different currencies but the main currencies that are dealt here with are the US dollars, The Euro Dollars, and the Japanese Yen.

The transactions that are dealt with here may range from a few hundred dollars to a several million dollars. These payments can be A/C to A/C transfer, or a transfer to a different branch of another bank etc. Hence the risk involved here is great and for each error made, the stakes increase for the department. For instance a payment made to a different branch may cause serious problems and the Correspondent banking department will be held responsible. The American Express Bank Ltd may even have to compensate its clients. The hassle required to solve such problems are extremely complex and time consuming which cannot be afforded from time to time.

There are four employees currently employed in the Correspondent banking department, including the Unit Head. The amount of errors made in the department is quite small because of the efficiency of the Employees and the process that goes through the department. However there are errors made in the department, but it is usually rectified before the problem reaches a level that is out of control. Since the department works in shifts the workload is divided quite evenly and therefore the errors are kept at a minimum level. The papers that are being processed in the Correspondent banking are thoroughly checked and rechecked by the employees present in the department. As observed the department is the only department that stays in the office late at night as most of the paperwork comes in after 5 PM. This is because all the banks finish their paperwork and then send it to the American Express Bank Ltd. for further processing.

2.5 Details Analysis of Correspondent banking Products 2.5.1 Payment Instructions Description • The Payments Instructions are sent by the Client banks to the American Express Bank Ltd. Dhaka Correspondent banking office for processing. • Upon receiving the PI s it is logged in a register, by officers. • It is the passed onto the Correspondent banking officers for checking vital information.

• The date and the value date of the PI is checked.

• To check whether the L/C # is correct.

• The Account # of the bank is verified and whether the Beneficiary bank has an A/C with the American Express Bank Ltd. • To check if the bank has a CBAR account.

• Another thing to check is whether the bank has a swift ID number by which the payment process is made easier.

• Before being sent to the Unit heads table however if there is something wrong then the PI is sent back to the Clients.

• After checking all this the PI is sent to the Unit Heads or the officers table where the PI is checked whether it is somehow related to any of the sanctioned individuals or any of the sanctioned countries announced by the United states Government.

• If it is ok the PI is processed further but if it is not ok then the PI is reported to the Local Compliance officer who then reports the matter to the NY office.

• As soon as this is cleared from the table of the Unit Head the PI data is entered into the database by the entry operator in this case it is the officers of Correspondent banking.

• The PI’s are the checked in the 330 screen on the IDMS system whether there are any claims pending for the L/C previously.

• If the input is ok then it is rechecked by the officers or the Unit Head and then release the authorization. If there are however any mistakes involved in the input it is corrected right away.

• The PI is then reconciled with the CBAR and the SBS to check if the bank has a file with the swift release copy.

• Finally two copies of confirmation are sent to the clients, one for receiving the PI and the second for sending it.

Benefits to the Bank:  The Payment Instructions are the main source of revenue for the Correspondent banking department. It earns more revenue than any other product that they have in their possession.

 A fairly large fee is charged on the client for every PI that is processed through the American Express Bank Ltd.  The process of clearing a PI is very reliable because it is checked and rechecked by the Unit Head so the chances for making mistakes is minimized.

Different types of risks involved • Since there are more information to check there will be more hassle to check the information and hence take a longer time frame than most products.

• As inputting the data is so critical the officer has to check the information very careful and so the process takes a comparatively longer time.

• If the information entered about the PI is wrong and the Payment is made to the wrong branch then there will be extra charges made on American Express Bank Ltd. • If there is an error on the part of the Client then the client will be charged the interest for every day that passes will may be come out to be a large amount and maybe unaffordable at times or cause a lot of problems for the clients.

• The chances of errors in processing the PI is great because there is a lot of numbers to input and so the chance of error is higher in Processing PI. • The chances if inputting the wrong L/C number is great and the consequences of this mistake will be undertaken by the bank.

• It is specified by the client bank as to whether the charges will be paid by the beneficiary bank or the Client bank and so they may skip that part so it has to be confirmed which takes up extra time to process.

• If the reference # of the beneficiary bank is wrong then there will be a lot of hassle involved in the Processing of the PI. • There might be a misquoted beneficiary bank reference, which will cause the banks to go through lot of trouble.

• Overall the Correspondent banking department has not made a major error for which it had to compensate a large amount.

2.5.2 Reimbursement Authority

Description • The Reimbursement Authorities are sent from the Client banks of American Express Bank Ltd. • The RA’s are received by Courier service or by mail • When the mail comes into the bank they are sorted out and registered by the officers of the Correspondent banking.

• If there are flaws in the signatures then the RA’s are sent to the RM’s office for clarification on the matter.

• If everything is ok with the RA’s then they are sent to the officers table for verification as to whether the RA’s are somehow related to the SDN sanctioned countries made by the US government.

• If it is then it is sent to the LCO who then reports it to the NY office.

• If the RA is cleared by the officers then the RA is checked as to whether the RA’s contain all the information that are mandatory under the UR 525 rules.

• Once that is done the RA’s information is entered into the IDMS system which is a standard operating system for the American Express bank’s FIG department. This system is also used by most other Banks who gets updated automatically by the inputting of the data by the Dhaka office.

• Once all this has been done the original Reimbursement Authorities are filled for the bank’s record.

• Each Reimbursement Authority takes about 4 minutes to complete by the Bangladesh FIG department.

How bank is benefited? 

The American Express bank charges a certain fee for the processing of each RA from its clients. This fee may be paid by the Beneficiary bank or the Client bank. For some cases the bank does not charge any fee and processes the RA free of charge.

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The American Express Bank Ltd. has not made too many mistakes in the past by which its customers have been dissatisfied and so the business has grown very rapidly and this

particular product of the Correspondent banking department has been a major contributor towards bringing in the revenue for the bank. 

The bank will charge an interest fee if the processing of the RA is made long for every day that passes a day after a certain allocated time frame.

Risk factors •

There are not too many pieces of information that are given in the RA’s so there are not too many chances of errors to occur.

•

One of the main risks involved in the Reimbursement process is the misquoting of currency. The Dollar account RA’s and the rest of the dealing currency RA’s are dealt with differently and these can be misplaced very easily. This takes a long time and can be a very lengthy process and can create a lot of hassle.

•

Another risk involved in this process is the misquoted location and destination. Basically in this case the RA gets sent to the wrong destination and the Beneficiary bank does not receive the funds and as a result American Express Bank Ltd. has to compensate the risks.

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Full amounts of the RA may not be received by the beneficiary bank if the officers miss a single digit or add an extra digit while entering the data into the system.

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Yet another error that is likely to occur is the input of the wrong L/C and the wrong account number which can put a lot of pressure on the Officers who deal with the RA’s to solve the problem.

•

Finally the last sort of error that is more likely to occur than others is that the name of the bank is entered wrong by the officers. This will force American Express Bank Ltd. to compensate both the client banks, the beneficiary bank in terms of interest earned for each day that passes by.

2.5.3 Telex Pre Payments (TPP) Processing What is TPP all about ? 

The TPP is a Payment process. American Express Bank Ltd. deals with the TPP as a product of the Correspondent banking department.

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This is a process that the local banks cannot handle without an intermediary bank.

Therefore American Express Bank Ltd. serves as an intermediary bank.

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The TPP instructions are sent by the local banks to the American Express Bank Ltd. through courier services but due to different technological innovations it is not sent by telex anymore to the American Express Bank Ltd. It is collected manually by the delivery services of the American Express Bank, this is done due to the nearness of the Head offices of the local banks.

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Once this enters the premises its logged into a register by the officers of the Correspondent banking Dept.

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Things to check;

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Verifying signatures and authenticating them

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Date and value date

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Account numbers and reference numbers and branch names

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destination of the payment with details have to checked.

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The TPPs are sent to the unit heads desk to be checked for sanction countries and individuals published by the US Govt.

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If it is somehow related it is sent back to the clients and if its not its processed further

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After all the initial checking is one the data is entered into a data base by the entry operator

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It is re-verified by the unit head or the FIG officers

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The TTP is verified and the authorization to release is given by the verifying operator in this case the unit head of FIG BILL Dept.

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The TPP is reconciled with CBAR and SBS system and the swift ID number and other relevant information is checked to verify whether the payment has been made to the right destination.

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The conformation is sent to clients and ends the process.

Benefits enjoyed by AMEX 

Once the TPP is processed through AMEX Bank, a greater market is established

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Greater customer satisfaction is achieved as there is no fee charged for processing TPPs or transferring funds

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A good amount of revenue is earned when client banks deposit funds with the AmEx Bank and as a result AmEx earns interest for everyday that passes by.

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There is no fee charged on the student money transfers which makes a lot of students studying abroad make their payments through American Express Bank Ltd. This as a result makes other clients come to AMEX for student transfer which makes the market ever bigger for American Express bank and hence revenues in all areas.

Risks involved 

Any error on the part of the officers will delay the payment to the beneficiary, which will dissatisfy the customers and not serve the main goal of the bank, which is to make the bank the respected brand in the world.

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Since TPP is a product of Correspondent banking department it is suppose to bring in revenue, so any delay or inquiries by the clients for any errors or for any other reason will cost the bank an interest. This interest will have to be paid by the bank as a repair cost.

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Once there are errors or any other problems there will be a lot hassle involved in rectifying the problem, which in some cases the bank cannot afford to keep up with.

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The risk involved here is a greater workload to bring the funds back and put it in the right A/C’s.

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The TPP is a completely fund management process. In other words if a certain payment does not go to the intended destination then a lot of payments will be held up and as result will create a TID for the operations and bring about an even bigger problem to the employees working there. This will create inefficiency in the workforce dealing with all these products.

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An example to prove the amount of risk involved was an incident that occurred a few years ago where the bank had to compensate about $3,600 to the client for an error that was made by the employees of the Correspondent banking department. The error

was that the name of the beneficiary bank resembled a different bank so the payment was made to a different bank.

2.5.6 Cheque Collection How cheques are processed ? 

Different Cheques are sent from different client banks to the American Express Bank Ltd. for processing.

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When the cheques are received by the American Express bank, the items are logged into a register which serves as proof of being received. The registering job is performed by the officers of the Correspondent banking department

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The Cheques are then forwarded to the officers or the Unit head’s table for reviewing the documents.

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This is very crucial to the processing of the cheque because there is a lot of forgery that takes place. So basically the work of the officers and the Units Head is to check whether the cheques signed at all.

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A very important factor to check is whether the check is mutilated or if the cheque is damaged or not or torn in parts.

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The reference # is another element that is to be checked and verified if the cheque is original.

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The date of the cheque is an important element in the cheque and is recorded.

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The currency if the cheque is an important element to be noted in the sorting of the cheques, as the bank only deals with cheques in US dollars, Canadian Dollars and occasionally Euro dollars. The Euro Dollar cheques are sent to Frankfurt for processing.

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Whether the banks have designated accounts with the American Express bank is another thing that is checked.

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One of the basic but probably the most important element is the amount of money that is mentioned in the cheque.

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After the checking has been completed, the cheques are sent to the Unit heads table where it is verified if the cheques are somehow related to the Sanctioned countries or individuals. This checking can also performed by the officers of the FIG department.

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If the cheques are somehow related to the sanctioned countries then they are sent to the Local compliance officer who then reports it to the NY office.

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If there is no involvement with the Sanctioned nations or individuals the cheques are processed even further.

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The processing includes the entry of the relevant data of the cheque into the American Express system network, which the NY office receives and processes it further. The mail is received by the NY office collection department.

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Finally the Dispatch document is registered into the Amex office for record keeping.

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If there are any unsent mails then the unit head will have possession of the mail which he will keep in a vault and then send them with the next lot.

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If there are any inquiries about any uncollected items, then there is a correspondence with NY office and if it is lost then the Bangladesh office will contact the client banks and send an indemnity form which upon filling will forward it to the NY office where it will be followed up. The indemnity forms will contain all the relevant information about the lost or misplaced cheques.

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A single cheque takes about 5 minutes to be processed in the Dhaka Correspondent banking department before it is dispatched to New York.

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An incident that caused a lot of problems for the American Express Bank Ltd. in recent years was incident of september 11 th, 2001 when the World Trade centers was brought down by terrorist attacks. This was a big problem because the American Express Bank’s Cheque clearing house was in one of the World Trade centers. This was solved by sending indemnities to each and every client for the processing of the cheques that were lost that day.

Bank’s benefit in doing so. 

One of the advantages for the Amex bank is that they charge a certain fee for processing each cheque that goes through it which is a good source of income for the bank. This is usually done to enhance the other products of the Business related to the American Express Bank Ltd.

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Since Cheque collection is a not a very lengthy process, therefore the bank doesn’t earn too much revenue but for every cheque that is processed through American Express bank the brand name of the American Express Bank Ltd. is publicized and the confidence that clients have on the bank influences new clients to use the services of American Express Bank Ltd. This will eventually increase the revenues of the bank.

Risks: 

The whole process that Amex undertakes is very simple but the risk involved in the process is great.

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If the information that is inputted is incorrect then the payment will be made only when the cheque information cleared after receiving the information. This may take a while so the time lost for each client is sometimes very harmful for the clients.

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If there are many errors made by the American Express Bank Ltd, then the brand name of the bank is effected and can hamper the marketing abilities for the bank.

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If there is any sort of misplacement with the cheques while it is being sent to the NY office, the cheque will not be cleared and will take a long time to process and the longer it takes for the cheque to clear the more harmful it is for both the clients and the bank.

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If there is a claim made by the issuer of the cheque after the money has been drawn by the client the claiming bank is entitled to debit the money from the corresponding banks even after months of the actual date of the payment.

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There has not been a single incident from the Dhaka Correspondent banking department for which the American Express Bank Ltd. had to compensate its clients because of the very few number of errors on the part of the Officers and Unit Head of the Correspondent banking Department, Dhaka.

2.5.7 Export Bills Description: 

The Export Bills are created by the client banks, mostly local banks. The Client banks sends these export bills to American Express bank’s Correspondent banking department for processing.

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When the Bills are received by the American Express bank, the items are logged into a register which serves as proof of being received.

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The Bills are then forwarded to the officers or the Unit head’s table for reviewing the documents. The Items that are reviewed are as follows: -

The Names of the bank.

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Whether the banks have designated accounts with the American Express bank.

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Whether the Bills are related with any of the Sanctioned countries or even individuals those who have been given sanctions by the United States Government.

If they are, then the bills are forwarded to the local compliance officer who reports to the NY office.

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If the officer or the unit head wants they can return the Bills to the client without any transactions made.

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If there is any required information is missing (a/c#, name of the branch etc) then the relevant info is obtained and then forwarded to the desk of a colleague.

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The shipping documents are then checked if the documents are in any way related to the routes or destined to any of the sanctioned countries.

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After the checking is complete the Bills are sent to the officers table where the officer inputs the data into the Doctrac program.

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As soon as the data is inputted another officer or the units head rechecks the data to make sure that there are no errors made.

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After the recheck is complete the inputted data is sent to Amex NY to be uploaded into the NY. DOCTRAC system.

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In the meantime the Export Bills are sent to Drawee bank, through DHL. At the same time a copy of the DHL dispatch document is sent to the clients as a proof of dispatch.

Finally the Dispatch document is registered into the Amex office for record keeping.

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The Amex office here received the credits from the Drawee bank on a daily basis which is credited Export Bills account to NY for further processing.

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The NY office then debits it’s Export Bills account and debits the Drawee banks account.

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If there are inquiries about any Export Bills then the NY office reconciles the bills over in NY.

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The NY office receives the Money in about 15days and it takes about 20days for the Drawee banks to receive the funds.

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It takes approximately 10 minutes for a single Export Bill to be processed from the Dhaka Correspondent banking Department before its is dispatched to the Clients.

Benefits 

The American Express bank acts an intermediary bank which basically forwards the Export bills to the designated destinations and ensures that the payment is made smoothly and in a timely fashion.

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One of the greatest advantages for the Amex bank is that they charge a certain fee for processing each Export Bill that goes through it which is a good source of income for the bank.

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Another advantage is that the transaction takes a whole day to be completed and the whole amount that is transacted is floated for an extra day by the NY, so for each day that the Bill is floated Amex bank receives interest and helps the bank receive revenues.

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Different L/C payments are made and even more revenue is earned if the money is floated for an additional day.

Risks 

The whole process that Amex undertakes is very simple but the risk involved in the process is great.

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If the information that is inputted is incorrect then the payment will be incomplete and then it takes a long while to reprocess the Bills again and the amount of hassle involved is unaffordable by the bank.

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An error can be fixed with the help of a little hassle but an error in the manner of writing the name of the wrong branch or the wrong Account number will send the money to a different destination and the exporter will bear a huge loss depending on the amount sent. The bank will therefore be responsible for the money lost by the client and so the

bank will have to compensate the amount lost in the transaction, and the employee will who made the error will be held responsible. 

If however the documents are lost or misplaced by the delivery service in this case DHL, then DHL will held responsible and DHL will have to compensate the client.

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Once a transaction is incomplete then the Amex will not receive any fees or any other charge fee that they would received had they have completed the transaction. This brings down the revenue tremendously.

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However the American Express Bank Ltd. Dhaka has not had to compensate any of its Clients. This was because there were very few errors on the part of the Officers and the Unit Head of the Correspondent banking Department, Dhaka.

2.5.8 Customer Transfer payments (103 Payments) These are payments, which are not related to any of the major products processed by the Correspondent banking department. These payments include Foreign Embassy payments, Government payments, and Student fund transfer etc.

Embassy Payments All Bangladesh Embassies based in foreign Countries have employees who are of Bangladeshi Nationals. Their payments are paid in US Dollars and so since American Express Bank deals with the US dollar for Bangladesh local government banks their payments are made through the American Express Bank. Payments are made through their personal accounts in the foreign countries.

Student Fund Transfer Bangladeshi students who live in foreign countries receive their money in US Dollars. They receive the money form their relatives or whatever source through the American Express Bank. This is because the American Express Bank deals with all the US Dollar payments. If the student requires any amount in any other currency like for example in Euro Dollars or in Japanese Yen the American Express Bank will still process the payment because the American Express Bank deals with other foreign currencies as well.

Government Payments

The Bangladesh Government has to make lots of foreign payments to different companies or even to other governments. Like for instance foreign companies building roads and highways in Bangladesh requires payments to be made in foreign currencies and so this is where the American Express Bank comes in. Since the payments are to be made in foreign currency American Express Bank makes all these payments possible. An example of a government payment is the payment that is made to the companies building and maintaining the Jamuna Bridge, these payments are processed through the American Express Bank.

Benefits: 

The Brand name of American Express Bank Ltd is enhanced as no fees are charged against all these payments certainly not student transfers and not Embassy payments.

When clients see that there are no charges involved in making all these payments they get encouraged in dealing more with American Express Bank Ltd. This brings in more new clients to the bank and increases the volume of the business.

Risks: 

The risks involved for the 103 payments are the highest among all the products that the Correspondent banking department deals with.

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The first risk involved is the amount that these payments involve. These amounts can range from a few thousand dollars to a few million dollars. So any errors by the workers of the Correspondent banking department can cause a lot of problems for the bank and its clients.

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The chances of not retrieving the money incase of an error is very high because if there are any error and the money is sent to the wrong place then the it is virtually impossible to get the money back from the beneficiary. In that case the Bank will be held responsible, which will create a lot of hassle for the bank.

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If the payments are made to the wrong place the time required to bring the money back and re-send it to the correct place requires a few days which the bank cannot afford. For each extra day that passes there will be interest charged and each day interest will be amount to a huge amount at the end of the day.

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These payments are also checked for the SDN individuals and countries. If there is an error made involving an SDN country and the payment is cleared then the bank has to face lot problems like reporting to the New York office and other forms of similar hassle.

3.0 RECOMMENDATIONS As observed, the number of errors that occur in the Correspondent banking department is quite small due to the efficiency of the employees of the department. The number of errors that still occur can be minimized by the following the ways mentioned: 

The Correspondent banking department needs a better working environment, which

can be achieved by attaining a bigger office space. As observed the space available for the employees for the Correspondent banking department is quite small. There are five employees working for the Correspondent banking including the manager of the department but there are just four computers available for processing the papers. This reduces efficiency of the workers. 

The Correspondent banking department usually receives most of its paperwork after the

working hours that is after 5 PM. By the time the papers are received the incentive to work by a normal human being diminishes after staying and working the whole day. So the chances of error occurring increases. So to reduce the risk of errors there has to be a better, trained workforce who will collect the documents at an earlier time. Due to the different forms of protocol involved in the local banks the employees over there delay the dispatching of these documents to American Express Bank Ltd. 

It is very important to inform the clients of the American Express Bank Ltd. so that there

is a clear line of communication between the clients and the Intermediary bank. In other words there should be a code of process which the 

Client banks should follow in order to send the papers on time and more efficiently.

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The heads of different departments should make regular rounds to their departments in

order to motivate the employees and encourage them. This will motivate the employees and make them feel more important.

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The Correspondent banking operations department operates in shifts because it is

virtually impossible for employees to work for two three hours straight especially when there is so much risk involved. This way, errors are more likely to occur. So working in different shifts keeps the employees more focused on the job in hand and makes them more efficient. This also reduces crowding in the workplace, which creates a better working environment.

4.0 CONCLUSION The Correspondent banking Department is under the Trade Finance department, which deals with the foreign transactions of the bank. The Correspondent banking department works on behalf of the local banks, which are not too familiar with the systems of the banks abroad. American Express Bank Ltd. being an International bank works as an intermediary bank between the client banks that are the local banks here and the foreign banks who are the beneficiary banks or vice versa. This department being the highest earning revenue department in the American Express Bank Ltd. also bears the maximum amount of risk that goes with a job. A single error on behalf of the employees can have major consequences for the bank not to mention the employees.