SECTION # 1

CHAPTER – 1
INTRODUCTION OF THE STUDY

1.1 BACKGROUND OF STUDY:

Institute of Management Studies requires its students of Business Administration to

undergo as eight – week internship program. Students can select organizations of their own
interest. This practical experience is then documented by the students in the form of an
“Internship Report”.

This study is focused around the financial products and general banking operations of
ABN AMRO Bank, Islamabad Branch. The report is based on the financial products, banking
operations and banking environment.

1.2 PURPOSE OF THE STUDY:

The purpose of this study is to review and analyze the functions being performed by the
ABN AMRO Bank, Islamabad Branch.

This study is conducted to give an insight to the students into hour to analyze the
operational efficiency of an organization.

Along with being a course requirement, the purpose of this study is to understand the
general banking procedures, critically analyze them and suggest recommendations. The
recommendations backed by an action plan will further accelerate the empowerment process.

1.3 SCOPE OF WORK:

ABN AMRO Bank ahs only one branch in Islamabad. It has many departments that
cannot be covered in detail in this section. Therefore this report is limited to only the financial
products and general banking operations of the bank. However the financial analysis is based on
the national operations.

1.4 METHODOLOGY OF REPORT:

All the required data for the report was obtained from two sources.

Primary Data:
 ♦ Personal observations.

♦ Discussions with bank employees.

Secondary Data:

♦ Manuals of departments of the Bank.

♦ Brochures of the Bank.

♦ ABN AMRO website.

1.5 SCHEME OF THE REPORT:

This report is arranged in the following sequence.

Section # 1I

Chapter – 1

This section consists of one chapter describing the background, purpose, scope,
methodology and scheme of the report.

Section # 2

This section consists of the review of the organization.

Chapter – 2

This chapter includes the historical background of ABN AMRO Bank its standing in the
international financial market, its standing in Pakistan, vision statement and values of ABN
AMRO Bank.

Chapter – 3

This chapter introduces the ABN AMRO Islamabad Branch. Organizational chart and
functions performed by various departments of ABN AMRO Bank, Islamabad Branch are
explained is this chapter.

Chapter – 4

This chapter describes all the HR policies related to Recruitment, Training, Promotions,
Performance Appraisal etc. adopted by ABN AMRO.

Chapter – 5

This chapter focuses on the financial products and services offered by ABN AMRO
Bank, Islamabad Branch, to its customers.

Section # 3

Chapter – 6

This chapter describes the general banking operations. Various banking instruments like
cheque, pay order, D.D, T.T. have been explained and other areas of the banking operations like
Hold Mail, Mandate, account opening requirement and documentation, instructions by customers
etc. have also been addressed in this chapter.

Section # 4

This sections consists of the financial analysis of ABN AMRO Bank.

Chapter – 7

In this chapter all the financial ratios are calculated. These ratios are explained with the
help of graphs.

Section # 5
Chapter – 8

Some recommendations and suggestions are given in this chapter.

 CHAPTER – 2
HISTORICAL BACKGROUND OF ABN AMRO BANK

On 29 March 1824 King Willem I issued a royal decree creating the Neder Landsche
Handel – Maatschappij with the aim of reviewing trade between the Netherlands and the Dutch
East Indies. In 1964 NHM merged with De Twentsche Bank to form Algemene Bank Nederland
(ABN) while Amsterdamsche Bank and Rotterdamsche Bank joined to (AMRO) Bank. An ABN
Bank and AMRO Bank it was increasingly obvious that future growth was limited. The two rivals
were determined to back through these limitations. Merger was the ultimate solution.

2.2 ABN AMRO WORLD WIDE:

ABN AMRO Bank, a 100% owned subsidiary of ABN AMRO Holding N.V.
incorporated in the Netherlands, was formed in 1991 as a result of the merger of Algemene Bank
Netherland N.V. (ABN) and Amsterdam-Rotterdam Bank (AMRO). ABN AMRO is the largest
bank in the Netherlands, the sixth largest in Europe and ranks among the top 15 banks in the
world.

The bank has total assets of EURO 597.4 billion. It has a network of over 3400 branches
in more than 60 countries and a staff of 110,000 employees.

As one of the world’s largest financial institutions, ABN AMRO is a major lender to
corporations, institutions and government world wide. In addition, the bank is an international
lender in trade finance and foreign exchange.

ABN AMRO strategy aims to maximize value creation for their shareholders, clients and
staff. In this regard the bank has organized three autonomous strategic business units (SBU’s)
each serving distinctive client groups: Consumer and commercial clients, wholesale clients and
private clients and Asset Management. The bank has established and organized these SBU’s in
order to meet the increasingly sophisticated needs of its clients in a professional manner.

2.3 ABN AMRO BANK IN PAKISTAN:

ABN AMRO Bank Pakistan was established in 1948 and was the first foreign bank to be
granted a license by the government of Pakistan. The main branch in Karachi has been in
operation since that time, while the Lahore Branch was opened in 1994 and the Islamabad Branch
was opened in 1996. Over the last 4 years, ABN AMRO has significantly enhanced its profile in
Pakistan and is comfortably ranked amongst the top 3 foreign banks in the domestic market. The
bank offers a full range of commercial and retail banking products as well as several specialized
product lines. ABN AMRO’s extensive experience in these product lines allows the bank to
maintain a dominant position as a international bank within the Pakistani market place.

ABN AMRO has a prestigious portfolio of corporate clients which includes multinational
companies, blue chip local corporates and public sector institutions. ABN AMRO lives up to its
claim of being a “Network Bank” by organizing large cross-border deals which involve ABN
AMRO staff from all over the world. Main business activities of the bank includes;

♦ Corporate Banking.

♦ Consumer Banking.

♦ International Trade Finance.

♦ Treasury and Foreign Exchange Operations.

♦ Structured Finance/Project Finance.

♦ Islamic Banking.

VISION STATEMENT:

Vision Statement:

To be the benchmark service provider in the banking industry. We will ensure that our
customers get quality and unparalleled service to satisfy their banking needs. This will be
achieved through investment in terms of both money and effort – through distribution, products
and the people who have the necessary skills to deliver our promise. The organization will also
abide by all legal and ethical norms of the industry and individual countries while striving to
stand out from the competition through effective external and internal communication. ABN
AMRO Bank is the brand which can be trusted for delivering high quality service valued by
customers. The brand promises peace of mind as the key emotional benefit and promises each
customer contact to be uniquely ABN AMRO.

CORPORATE CULTURE:

Integrity:
 Above all, we are committed to integrity in all that we do, always, everywhere.

Respect:

We respect every individual. We draw strength from equal opportunity and diversity, at
the same time supporting personal growth and development. We value and we all benefit from
the entrepreneurial spirit of each individual.

Teamwork:

Teamwork is the essence of our ability to succeed as a universal and international

network bank. Our overriding loyalty is to the good of the whole organization, requiring us all to
learn from each other and to share our skills and resources worldwide for our customers benefit.

Professionalism:

In the service of our customers we are committed to the highest standards of

professionalism, pursuing innovation, deploying imagination, being open to new ideas and acting
decisively and consistently. We are determined to deliver outstanding quality so that our
relationships with our customers be long lasting and close.
 CHAPTER – 3
DEPARTMENTATION

ORGANIZATION CHART:

Branch Manager

Corporate Deptt. Consumer Head Operation Head Admin Head Automation Head Credit Economics

ACD L.P.G E.C.P Trade Corporate

Remittances
R.M R.M R.M Finance Service Desk

Consumer Floor HNul Asset Sales

Manager Manager Manager

BTF PIL Mortgages

DEPARTMENTATION:

The various departments of ABN AMRO Islamabad Branch are listed below;

• Corporate Banking

• Consumer Banking

• Operations Department

• Administration Department

• Credit Department

• Economics Department

Corporate Banking:

Corporate department provides services to corporate clients which ijncludes multinational

companies, blue chip local corporate and public sector institutions. The major functions of the
corporate department includes revenue generation from corporate clients target market
identification, identification of corporate client needs initiating and monitoring credit facilities
and ensuring smooth delivery of products and services to corporate clients.

Corporate department offers all the basic financial building blocks for any organization
including.

• Overdraft facilities.

• Medium term loans and capital expenditure financing

• Trade finance

Consumer Banking:

ABN AMRO’s personal and consumer banking division os one of the most dynamic is
the country. The Bank believes in developing long term relationships and is providing customers
with innovative, value – added solutions and unmatched service standards very few financial
institutions is Pakistan can match the scope and quality of services that ABN AMRO extends to
its clients. Consumer Banking division basically providees services to individuals and small to
medium sized enterprises.

The major functions of the consumer banking department includes expanding deposit
base attracting clients, maximizing relationship with the customer and multiplying the
profitability of the organization by maintaining cost efficient operations.

Operations Department:

Operations department basically focuses on the gen5ral banking operations. Operations

department processes the requests of consumer and corporate clients. Major functions of the
operations department includes.

• Account opening requirement and documentation.

• Issuance and processing of pay orders and drafts.

• Cash and transfer

• Processing customer instructions.

Admin. Department:

The Islamabad branch of ABN AMRO focuses on administrative as well as human

resources related matter. As there is no separate department of Human Resources therefore, the
Admin. Department deals all the HR related areas. Major functions of the admin department
includes.

• Deals HR related matters.

• Provides stationery to various departments.

• Day to day administration of the branch and logistics.

• Expense budgeting and forecasting.

• Maintenance of the premises, staff houses and office equipment

• Security.

Automation Department:
 The objective of automation deptt. is to provide right information to right people at the
right time.

Automation department also provides support for the computer network. the automation
department makes sure that all communication between branches is maintained throughout the
day. The ultimate objective of Automation department is to provide solutions for all technology
related services to various departments.

Economics Department:

The objective is to provide overview of the Pakistan’s Economy to the senior

management in order to guide the senior management in making future policies, plans and
strategies for the bank.

Economics Department gathers data from Bureau of statistics, Newspapers and different
agencies. After obtaining the data the job of economics department is to analyze the data
available and pinpoint the current and future economic trends.

Functions:

• Monthly bulletin/economy watch.

• To prepare reports and updates on Pakistan’s economy.

• To keep the senior management aware of the current and future economic trends.
 CHAPTER – 5

FINANCIAL PRODUCTS AND SERVICES

ABN AMRO’s thoughtful and personalized service, combined with a long term
commitment to client’s financial well being has established ABN, AMRO as a “Relationship
Bank” the world over. ABN AMRO offers a range of financial products and services to its
clients, which are summarized below:

1. Local currency account.

2. Multi-currency accounts.

3. Overdraft facilities and other working capital financing.

4. Medium term loans and capital. Expenditure financing.

5. Trade finance.

6. ABN AMRO Home Buyer.

7. ABNAMRO Home Lender.

8. ABN AMRO Personal Loan.

9. Balance Transfer Facility.

10. Balance transfer facility.

11. ABN AMRO and Islamic Banking.

12. Relationship Cards.

13. Non-stop banking.

14. ABN SMRO ATM’s.

1. ABN AMRO LOCAL CURRENCY ACCOUNTS:

• AMB AMRO Rupee Current Accounts:

The ABN AMRO Rupee current allows the facility of unlimited withdrawals up to the
extent of the balance is the account. There will be no tax deducted on the funds that customers
choose to keep in these accounts.

• ABN AMRO Rupee Saving Account:

The ABN AMRO Rupee Savings Account allows the facility of unlimited withdrawals,
while accruing profit on the deposit everyday. Customers can choose the option of lowing the
profit credited to their accounts on monthly, quarterly, bi-annually and annually basis.

Tier 1 – PKR 0 – 99, 999

Interest Payment Frequency

Monthly 0.50% Qtrly 0.50% Half year 0.50% Annually 0.50%

Tier 2 – PKR 100,000 – 499,999

1% 1% 1% 1%

Tier 3 – PRK 500,000 – 9,999,999

4.95% 4.97% 5% 5.06%

Notes:

1. These rates are effective April 02,2002.

2. These rates are not applicable to Financial Ins.

3. Treasury department gives deposit rates of PKR 10,000 and above.

ABN AMRO Rupee Term Deposits:

The ABN AMRO Rupee Term deposits offer the dual benefit of attractive returns with
high liquidity. The range of fixed deposits allows the customers to invest money for tenures up to
5 years with profits paid monthly, quarterly, semi-annually, annually or at the maturity of deposit.

• There is no penalty for premature encashment. However in case of an early encashment

the rate applicable to the previous term will be applied.
• Customers have the option of partial liquidity, which allows customers to withdraw a
portion of fixed deposit without disturbing the remaining deposit.

• An automatic rollover option allows term deposit to be automatically re-invested at the

prevailing rate.

Tier 1 – PKR 0 – 99,

7 days 0.00% 30 days 0.00%
Interest Payment Frequency

Tenor Monthly Qtrly Half year Annually

3 moths 0.00% 0.00% - -
6 months 0.00% 0.00% 0.00% -
1 year 0.00% 0.00% 0.00% 0.00%
2 years 0.00% 0.00% 0.00% 0.00%
3 years 0.00% 0.00% 0.00% 0.00%

Tier 2 – PKR 100,000 – 499,999

7 days 0.50% 30 days 4.00%
Interest Payment Frequency

Tenor Monthly Qtrly Half year Annually

3 moths 5.23% 5.25% - -
6 months 5.23% 5.25% - -
1 year 5.84% 5.87% 5.91% 6.00%
2 years 6.31% 6.35% 6.40% 6.50%
3 years 6.78% 6.82% 6.88% 7.00%
5 years 7.72% 7.77% 7.85% 8.00%

Notes:

1. These rates are effective April 02.2002.

2. These rates are not applicable to Financial Institutions.

3. Treasury department gives deposit rates for PKR 10,000,000 and above.

2. MULTI-CURRENCY ACCOUNTS:
 As per State Bank of Pakistan regulation the ABN AMRO Multi-currency account gives
the customer one cheque book through which customers can transact in Japanese, yes, Pound
sterling, US dollars and the Euro. Multi-currency Accounts the extensions for different currencies
is different. The prominent features of multi-currency accounts are as follows;

• Profit is accrued on a daily basis and is credited to the account semi-annually or at the
maturity of the deposit.

• Unlimited deposit/withdrawal facilities.

• Automatic rollover of time deposits.

• Partial liquidity of time deposit.

3 OVERDRAFT FACILITIES AND OTHER WORKING CAPITAL FINACING:

ABN AMRO offers export refinance for clients with export – based business. These
facilities include both pre-shipment and post-shipment financing and are tailored to suit the
client’s specific needs. ABN AMRO also offers various types of short term loans and facilities
which provide maximum value t clients is terms of financial packages.

4. MEDIUM TERM LOANS AND CAPITAL EXPENDITURE FINANCE:

The bank provides financing for its corporate clients capital expenditure and other long
term needs. By sharing the risk associated with such long term investments, the bank expedites
client’s attempt to upgrade and expand their operations, thereby making possible the fulfillment
of client’s vision. This type of long term financing proves the bank’s belief in its client.

5. TRADE FINANCE:

The bank provides a wide range of trade related services for clients with international
dealings. These facilities encompass the entire scope of import and export activities including
issuing and confirming letters of Credit (L/Cs) purchasing of export documents, providing
guarantees and other support services.

6. HOME FINANCE:

The bank has introduce Home Finance for those customers who wants to buy, construct
or renovate wants to buy, construct or renovate a house. There are further 3 products under Home
Finance Program.
ABN AMRO Home Buyer:

Under this product customers can borrow upto 60% of the appraised value of new
property or upto Rs. 6 million, which ever is lower. Easy installments allow customers to repay
the loan over a period ranging between 3 and 15 years. The main features of Home Finance are;

• Customers can avail financing against residential properly which they own and live in.

• Customers may apply for financing for a minimum period of 3 years and a maximum of
15 years.

• Property must be located is approved residential areas of approved cities i.e. Karachi
Lahore and Islamabad.

• Customer spouse’s income (upto 50%) may be combined for determination of the loan
amount.

• Customers must have been continuously employed for 2 years (or more) with current
employer, or continuously employed for 3 years (or more) overall.

• Customers may apply for financing from Rs. 500,000 upto Rs. 6,000,000.

ABN AMRO Home Builder:

Customers can borrower upto 50% of the appraised value of the property or upto Rs. 6
million which ever is lower. Appraised value is the market value of the land plus estimated cost
of construction. Easy installments allow customers to repay the loan over a period ranging
between 2 and 15 years. The main features of Home Builder are:

• Construction must begin within two months of the loan approval, which is communicated
to the customer via an “Offer Letter”. The two month period is required for the customer
to select a constructor.

• Construction time to be determined by approved appraiser. This is not to exceed a

maximum period of 2 years.