Sonali Bank's UK operations at stake

Plagued by business stagnation, corruption by authorities and fine slapped by regulatory body, the Sonali Bank UK's activities and investments are now at risk, admit some officials concerned.

Despite closure of the bank's branches one after another, the government and the Sonali Bank have taken an initiative to inject Tk 3.5 billion capital into the bank to continue its operations in the United Kingdom.

Bangladesh Bank's senior management team, at a meeting chaired by governor Fazle Kabir, expressed concern at the declining state of the Sonali Bank UK and decided to send a three-member team next month to take stock of the situation and investigate allegations.
The bank's main branch and Birmingham branch will remain open after closure of branches in Oldham, Luton and Camden. The Bradford branch is also set to be closed by next December.
The bank incurred losses amounting to £1.7 million in 2015, after making profit for a number of years -- £0.4 million in 2011, £0.766 million in 2012, £3.023 million in 2013 and £2.015 million in 2014.

With shriking activities day by day, financial sector leaders raised questions about justification of keeping the bank operational in the UK at the expense of taypayers' money.
"Weakness in Sonali Bank's top management has been exposed in the London case," Bangladesh Bank’s former governor Salehuddin Ahmed told Prothom Alo.
He pointed out that the bank officials used to go there to hold meetings and return home but could not ensure how the bank was being run.
“Those who were assigned to run it have failed to serve properly. The expatriates (Bangladeshis), too, have lost their confidence in the bank,” he said emphasising the need for a prudent decision on the fate of the bank by the government.

The initiative for capital injection has been taken at a time when Sonali Bank's investments equivalent to Tk 13.30 billion in the UK entity are already at risk, said informed officials.
The Sonali Bank UK was launched in December 2001 to provide non-resident Bangladesh living in the UK with banking services. The government of Bangladesh owns 51 per cent shares and Sonali Bank 49 per cent shares.

However, in 2013, an amount of £0.250 million dollar was withdrawn from the Oldham branch through use of fake SWIFT code. Former manager of the branch Iqbal Ahmed was allegedly involved in the swindling scheme but the money could not yet be recovered even though the London police was informed of the matter.
Sonali Bank's managing director Md Obayed Ullah Al Masud told Prothom Alo that initiative has been taken to catch the former official, taking over the properties he has in the UK.
Sonali Bank UK witnessed the highest level of corruption when Ataur Rahman Prodhan was its chief executive between 11 April 2012 and 8 May 2015. Rahman, who has already been made state-owned Rupali Bank's managing director, could not be reached for he was in Malaysia.

The volume of remittances that were transferred through the bank declined over the recent years. The amount it remitted back home was $4.1 million in 2012, $4.4 million in 2013 and $4 million in 2014.

But, the amount of remittances transferred by the Sonali Bnak UK came down to only $1.6 million in 2015, the year when it made loss.
Sonali Bank MD Al Masud attributed this decline to anti-money laundering act. "Expatriates cannot deposit money smoothly due to stringent laws. That is why the branches are being shut down. There is no connection between corruption and closure of bank branches," he claimed.
Sonali UK is running business with the money of foreign currency reserve of Sonali Bank, former Sonali Bank MD Pradip Kumar Dutta informed the central bank. If this fund is withdrawn, Sonali Bank UK will not be able to run its business much longer, he cautioned.

Meanwhile, the Sonali Bank UK has been fined £5.5 million by UK's Financial Conduct Authority (FCA) and Prudential Regulatory Authority (PRA) for violating prevention of money laundering act. The regulatory bodies also imposed certain terms and conditions to run the banking business.
Sonali Bank MD Al Masud termed the fine "not very unusual" and said the authorities would fix a way to pay the fine through negotiation.
Sonali Bank UK chairman and secretary at the bank and financial institutions division of the finance ministry Md Yunusur Rahman declined to comment on this at this stage. He just informed Prothom Alo that he would reflect on the matter later this month.