For years, corporate banking in Bangladesh has been built not simply on lending but also on stewardship. Branch managers and, later, relationship managers (RM) used to be trusted advisers who understood industries, warned against reckless expansion, and often served as an informal early warning system for entrepreneurs carried away by growth. They also supported businesses through the cycle’s ups and downs.
That culture is now, unfortunately, fading. Corporate banking has become increasingly transactional, profit-driven, and incentive-obsessed. In many banks, RMs are judged less on the quality of their judgement than on loan book growth, fee income, and balance sheet expansion. The result is a culture in which caution is often punished, aggressive lending is rewarded until stress emerges, and the relationship is treated as secondary.
Bangladesh’s recent corporate distress stories reveal an uncomfortable truth: many large business groups, excluding those that deliberately syphoned money from the system, did not run into trouble overnight. Their vulnerabilities were visible for years. Yet, banks continued to finance expansion, refinance obligations, syndicate facilities, and compete for exposure without the moral courage to say “no.” One reason may be the large number of banks chasing a limited pool of major corporate names.
As a recent example, the difficulties surrounding parts of the City Group ecosystem should prompt industry-wide introspection. Debt-fuelled diversification and ambitious capital expenditure don’t happen in isolation; they are enabled and repeatedly financed by banks. During the boom years, many lenders participated enthusiastically because no one wanted to lose market share or relationship prestige. Some senior bankers built reputations, and even careers, on this relationship. But when stress emerged, the same system shifted into self-preservation mode. Instead of coordinated rehabilitation, many lenders shortened tenors, restricted fresh facilities, intensified recovery pressure, and distanced themselves from clients they had once celebrated. That may protect individual balance sheets in the short term, but it can also deepen broader economic instability. There have been exceptions when relationship banks worked together to help a sound business through a difficult phase. That should be the rule, not the exception.
This is not how relationship banking was meant to function. Strong banking systems are built on the idea that banks remain partners through cycles, not merely financiers during prosperity. After the Asian financial crisis of 1997, several East Asian systems learnt hard lessons about indiscriminate lending and weak advisory oversight. Many also recognised the importance of restructuring viable businesses rather than abandoning them during temporary distress. Japan’s experience, despite criticism over “evergreening,” showed that coordinated lender support can sometimes prevent wider industrial damage during fragile periods. After the 2008 global financial crisis, many international banks similarly reassessed their relationship model. Institutions such as Standard Chartered and Bank of America Merrill Lynch openly emphasised that corporate banking could not remain merely product-selling oriented; advisory capability, industry understanding, and long-term partnership had to move back to the centre.
Bangladesh once had bankers who embodied that philosophy. Veteran bankers from foreign and leading local banks often played mentor-like roles for the first generation of entrepreneurs after independence. They advised clients against unrelated diversification, cautioned against excessive leverage, and sometimes refused financing for projects that lacked strategic rationale. As banker Mamun Rashid has observed, relationship managers once “went the extra mile” not merely to disburse loans, but to help clients run businesses prudently with an eye on the future.That culture mattered because the country’s corporate sector has long depended far more on bank financing than on deep capital markets. In such an environment, banks are not passive lenders; they are gatekeepers of economic discipline, with responsibilities that extend beyond credit approval and collateral documentation.
More than three decades ago, when I began my banking career at ANZ Grindlays Bank as a young RM, we were trained to evaluate conglomerates by looking at sector cyclicality, foreign exchange exposure, governance quality, succession risks, concentration risk, and debt sustainability. If a business group was expanding rapidly into unrelated sectors with rising leverage, it was the RM’s duty to flag that concern internally, even if doing so slowed the bank’s revenue growth.
Unfortunately, incentive structures often encourage the opposite. Aggressive loan growth wins immediate recognition; prudence rarely does. In many banks today, RMs are treated as sophisticated sales personnel rather than strategic financial partners. Credit risk teams are too often reduced to procedural gatekeepers instead of empowered institutional counterbalances. Meanwhile, the race to capture marquee corporate names weakens underwriting discipline across the sector. The cost is visible not only in rising stressed assets but also in the erosion of trust between banks and corporates.
Therefore, the banking sector in Bangladesh needs to rediscover the original meaning of relationship management. RM performance metrics must be redesigned so that evaluations reflect long-term asset quality, sustainability of financed projects, client governance standards, and early risk identification, not just annual business growth. Banks should also build sector-specialised advisory capability so that those covering textiles, power, FMCG, infrastructure, or commodities bring real industry understanding rather than only sales skills. During periods of corporate stress, lenders should pursue coordinated restructuring where viable businesses exist; disorderly withdrawal by all lenders at once often destroys value for everyone.
The Bangladesh Bank and bank boards must also recognise that banking is not merely a profit-maximising business. It is a public trust institution central to economic stability. The collapse of a large corporate borrower affects not just one balance sheet, but suppliers, employees, SMEs, export flows, investor confidence, and the wider economy.
Relationship managers carry responsibilities that are not only commercial but moral. The industry needs to remember that again.
Rahel Ahmed is a banker and banking industry analyst.
Views expressed in this article are the author’s own.
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