The Coop Program in Samba Bank: A Financial Analysis

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Having worked with Samba Financial Group in the treasury department as an intern employee from 25th June 2011 to 18th January 2011, the following information was obtained about the bank. Founded in 1980, Samba Financial Group has developed to be one of the leading financial institutions in Saudi Arabia. The formation of Samba Financial Group was subject to a royal decree that required all the foreign banks to sell majority equity interest to the native Saudis. Citibank later sold its part of equity to Saudi national groups and retained 30% of the total share. Samba is one of the largest financial groups in the region comprising of 66 branches.

Consequently, Samba Bank has 28 branches distributed in the major cities of Pakistan. Here, the bank offers a range of services to its customers. Among the services offered include mobile banking, cash deposits through automated teller machines, speed cash remittance services, and saving linked insurance. In addition to these services, Samba Bank became the first bank to offer priority banking. Priority banking involves accepting deposits in terms of gold and diamonds from their customers within the kingdom. Samba Bank also became the first bank in the region to establish an effective and efficient investment department dedicated to providing the customers with the best services possible. Samba Bank has introduced a local equity fund and provided opportunities to foreign investors listed in the London security exchange.

Nature of Position Held concerning the Company

Working in the treasury department provided knowledge on how Samba Bank operated. Coop students in the Samba Bank do not hold a single defined position in the treasury department, instead, they are subjected to various activities in the department. Participation in these activities enables the coop students to horn their skills in the different working areas. Samba Bank is dedicated to hiring competent students who can provide additional value to the company’s team and enhance the bank’s mission of providing the best financial services while adhering to the law. A coop student should provide the company with an extra set of skills to enhance the working experience while gaining personal experience. Samba Bank is an equal opportunity employer and is highly committed to training coop students to a level of excellence that may provide the future market with highly skilled labor.

All coop participants are hired via the human resource department and assigned to their relevant department. The position held in the company should be able to provide the intern with the set of skills prescribed by his or her course requirements. As a financial student, the position bestowed to me was that in the treasury department. The reason behind this logic was to ensure that knowledge gained from personal studies could be applied in enhancing the organization while gaining experience from real-world working conditions. Samba Bank work under several compliance statements that must be adhered to at all times. The bank is must adhere to the law of anti-money laundering to ensure it mitigates the risks of laundering. This law also ensures they do not run a risk of financing terrorism activities. All coop participants must be aware of the rules and regulations governing the bank activities to ensure they operate according to standards set by the company.

Bank Organizational Structure (links between desks)

After working for over six months with Samba Bank Limited, the following organizational system was deduced. The bank is under the leadership of the board of directors who are headed by the board chair. This board is usually subjected to audits by the audit committee to ensure they remain relevant over time. Under the board is the president of the bank who is supported by an executive vice president. Under the executive vice presidents are the department heads. The Department of the treasury is one of the departments and is equipped with the following desks: Foreign exchange desk that is concerned with trading in foreign currencies, equity desk, quantitative analytic desk, and money market desk. The links between these are seen in the report

Challenges facing the employer and how they are mitigated

The key objective of the bank is to be the best at providing financial services to the available market. The bank also aims at maximizing profits by ensuring they are very competitive in the market. However, the bank is faced with several challenges that are keeping it from attaining all the goals and objectives as outlined. The challenges include:

  1. Competition: The bank is faced with tight completion from other financial institutions. Several financial institutions in the region provide equally competitive financial services to those offered by Samba Bank. Even though Samba has been the best foreign exchange bank in Saudi Arabia for the last six years, other banks are quickly picking and trying to overtake samba as the main bank in the region. Banks such as the Al Rajhi, Arab National bank, and The Saudi British Bank are giving Samba a run for their money. These banks are among the major competitors trying to overtake samba as a leading bank in the region. Nevertheless, Samba Bank has established a competitive team that ensures the bank maintains its competitive edge in the market.
  2. Rules and regulations/legislation: Samba is one of the biggest banks in the Arabian region. However, the bank is well connected in South Arabia, a region that has been alleged to have the highest terrorism association. Therefore, the bank is subjected to lots of legislation that would ensure the bank is not connected with financing terrorist activities. This is a challenge to the bank since the time involved in ensuring the rules and regulations are in order would have been used to generate profits. The regulations are also inhibiting the progress of the bank internationally. Some countries have set tight rules and regulations that limit the operation of the bank across the borders. The bank, for example, has to adhere to the United States of America Patriot Act issued by the US Department of the treasury. However, the bank has managed to overcome this challenge adhere to all the compliance issued by the law, and compete at an international level.
  3. Technological challenges: Technology is changing rapidly. The banking industry on the other hand has to adapt to the changes in technology and incorporate them into their day-to-day working activities. Samba Bank has embraced technology fully but the speed of technology changes poses a challenge on how the company will incorporate the changes into their system. It has become difficult to incorporate the newest technology in the market since the old technology is outdated before it has yielded the expected results. Nevertheless, Samba Bank has ensured it provides the best in terms of technology by offering services such as ATM banking and withdrawal, mobile banking, and internet banking. The bank’s internal operations have adopted the use of current financial software that enhances the productivity of the staff and simplifies work in the organization.

Personal Duties and Tasks

Foreign Exchange DeskTwo tasks were to be completed in the foreign exchange department. The first one was paper trading. It involved simulated trading that investors use to practice trading in the stock markets without actually entering into any monetary transactions. This practice is considered good for a trainer before doing any trading. It enables them to see how they are doing in the currency market without risking any money. Another task was to buy and sell in euro/USD which is the most common pairs currency traded in the currency market, by using paper trading it is considered buying and selling by the ‘bid’ and the ‘ask’ price. From knowledge obtained in Fin410, the ‘bid’ is the price at which one is willing to buy and the ‘ask’ is the price at which one is willing to sell. This task was accomplished in the foreign exchange desk between June 25th, 2011, and august 25th 2011.

Activities at the foreign exchange desk began from Monday to Friday every week. During the month, the bank provided an account and logged me into the system. I searched on matters tied to the currency market and main currencies trading in the market. The major currencies tradings were the US dollar (USD), Japanese yen (JPY), Euro (EUR), British pound (GBP), Canadian dollar (CAD), Australian dollar (AUD), and Swiss franc (CHF). On matters of the exchange rate, a good example can be seen in the case of the euro and US dollar. The exchange rate between the euro and the dollar is EUR/USD= 1.6. This means that to get one euro 1.6 us dollars must be paid; the euro is considered a base currency while the us dollar is considered a quote currency. The good thing about the foreign exchange desk was that there were no secrets in the market, unlike the stock market.

The second assignment was to analyze a report about Midyear economic review and forecast in 2011-2013. The report talks about oil prices specially released after the outage of Libyan crude and OPEC has failed to agree on an increase in quotas. It also talks about the eurozone that is doing better than expected. The performance of the euro can be attributed to the economic improvement in Germany. Since the levels of unemployment decreased in Germany, the euro has gained ground and has improved greatly in the foreign exchange market. However, the debt situation in Greece has weakened this point. Economists have anticipated that the escalating debts in Greece will put the eurozone economy in danger. This may lead to a fall in demand for the Euro thus weakening the currency in the long run.

Equity Desk

After two months in the foreign exchange department, I moved to the equity desk. On the private equity desk, there was a task of defining private equity explaining how equity flowed in the current economy. After working in the equity department from 26th August 2011 to 25th September 2011, the following knowledge was acquired about equity. Private equity is defined as an asset set that has equity securities of private companies. The equities are important in the stock market exchange. Equities target providing capital or reorganization of a company’s operation. The inflow of private equities into the country is a result of the plans that are underway to improve infrastructure in the country. Private equity firms invest their capital in the market to improve the management of firms that take contracts of improving the roads and other social amenities. Foreign private equities get access to the small and family enterprises through the foreign exchange offices. The foreign exchange desk acted as a link between the internal firms and the foreign private equity providers.

The reason behind foreign firms flocking into the country was the government’s change in strategy. The strategy had changed from the 60-70% of GDP on the infrastructure to a 50% of the total GDP on educating the people. The reason for the sudden change of attitude was attributed to the dynamism in the price of oil and the decline in the number of oil reserves in the country. The government had to reconsider its priorities to suit changing economic times. The situation attracted foreign investors who are expected to improve the current economic conditions. The families that have links with foreign firms help them to get into the market. However, the foreign firms were hesitant to enter the country without a local business to get them into the local market. An example of such a firm is the Amwal Al-Khaleej, a private equity firm that penetrated the market through family ties.

Quantitative Analytic Desk

From September 26th to October 25th, I was transferred to the quantitative analytics desk where I also worked for five days a week. The duty in this department was to study the foreign market to understand the way other countries generated revenue. The Samba Bank treasury team was also making recommendations to the local investors on what they were supposed to do up to keep up with other countries. Work at the quantitative analytic desk involved interacting with people from different countries who were looking for advice on the Saudi Arabian market. The academic assignment in this department was to recommend the best solution to the current instability in the oil prices, and what alternatives exist for the government and investors. The outcomes of the assignment in this department were as follows:

Most of the Saudi Arabians were selling their assets and liquefying their family businesses because they were not sure about the future of their businesses. This uncertainty has been attributed to unstable oil prices. Therefore, most Saudis are leaving the task of management to professionals or private equities. Quantitative analytics enables people to know about the market, and plan the right time to make their investments. Working in this department requires one to be up to date and know current affairs in the business world. This is because the department requires sufficient information on current finance conditions to achieve its goals. For instance, the economy of a nation is a union that determined the fate of others in the union. Current information is also important in making recommendations on how to solve the problems associated with the problems.

Money market desk

From the 25th of October to December 25th, 2011, I worked in the money market desk both the foreign and local currency. The work to be fulfilled in this desk was to advise people on the market trends and monitor changes in the economy of the other countries. The educational assignment was to monitor trends in the money market by trying to find out, the objectives of the money market, the investment policies in the money market, and the risk profile of the money market. This assignment was completed by first determining the objective of the money markets. The main objective of the money markets is to achieve a stable capital improvement in the market. The markets achieve this objective by preserving the capital factors in the market. The difference between the local money market and the foreign money market is the daily liquidities it provides as capital. The foreign money market has a fixed maturity rate. This aims at increasing the chances of people getting capital to use in investments.

The other task to be completed was to determine the investment policies of the money market. After working at the market desk for two months the following information was deduced. The market invests in short and medium market policies; they rely on interest-bearing deals. The securities that the governments put up for the money market include bonds, floating rates, and interest-bearing securities. The other form of securities they invest in is the currency exchange and private investments. They rely on the exchange rates of the local and foreign currencies to make profits. They sometimes go into deals with foreign money markets and swap their currencies. The money market is designed in such a way that it attracts both local and foreign investors. However, the money market is more interested in investors who have short or medium investment plans. They do this to protect themselves from losses that can be diverse in the case of a long-term investment. This makes the risk they anticipate minimal as they only watch out for the interest rate fluctuation in the market.

Evaluating Performance of the Bank

The bank’s performance can be evaluated using various methods. Evaluation can be done by comparing the previous balance sheet year balance sheet and coming up with ratios to analyze the performance. Another method of analyzing performance is by use of the cash flow statement. The cash flow statement shows the inflows and outflows of cash into the company in a given financial year. Samba financial group releases its financial every quarter. For the year, ended 31/12/2011 the net profit figure released for the last quarter was SAR 944 million. This figure represented a 4.9% increase in the net profit of the company in comparison to a similar time in 2010. However, the net profit figure of the last quarter in 2011 represents a 16.8 percent drop in profit when compared with the SAR 1135 million in the previous quarter of 2011. The total net profit for the whole financial ended 31/12/2011 was SAR 4,305 million. In comparison to the previous year’s figure of SAR 4,432, it represents a decrease of 2.9%. On the other hand, the total operating income for the last quarter was SAR 1,514 million. This represented a 2.9% decrease in the company’s operating income when compared to the same period in the previous year.

The operating income is a useful tool in gauging the general performance. A company experiencing a decline in its gross profit tends to have a decline in less cash to reduce its liabilities. Lenders watch such a company closely since the operating income is used to calculate the interest coverage ratio. This ratio determines the number of times a company can pay interest on the loans. It is therefore useful to investors and shareholders in determining the viability of a company’s activities.


Samba Financial Group was formed in 1980 after taking over Citibank branches in Riyadh and Jeddah. The coop program in Samba Bank was undertaken in the treasury department. In this department, five desks were visited and the academic assignments on each desk were completed. A financial analysis of Samba Bank shows a decrease in operating profits from the previous years.

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