Wednesday, October 18, 2017 | ePaper

Sonali Bank UK in deep trouble

FCA launches probe against CEO

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Senior Special Correspondent :
Sonali Bank (UK) Ltd has plunged into deep trouble grappling with bad governance and persistent operating losses.
The situation forced it to outline a 'restructuring plan', which sparks annoyance among the bank officials who apprehend the bank will face challenge to hold its footprint in the UK once the plan is implemented.
As part of the plan, the national flag carrier bank has moved for carrying out a 'redundancy exercise' and hold off further business development. Financial and legal advisors have been hired for negotiating the plan, sources said.
"The move will directly affect dozens of Bangladeshi and local officials, who have been serving the bank for years. It will also trim down business of the bank that was growing consistently over the years," a Senior Executive of a public bank, told The New Nation yesterday on condition of anonymity.
Quoting a bank letter, he said, the bank authorities have already entailed a suspension on taking on and handling new business and transaction as part of the plan. Their move will affect corresponding local banks, which used to maintain wholesale banking relationship with the Sonali Bank (UK) Ltd (SBUK).      
"As part of the restructuring and implementation of new system and control process and to be satisfied these will pose no operational risk to its partners and customers, the Sonali Bank (UK) Limited has decided to suspend taking on and handling any new business and / or transaction for the time being and with effect from 5th September 2017," read the bank's letter which sent to local corresponding banks recently.
SBUK was established in 2001 with a paid up capital of £11.57 million. The paid up capital was increased to £ 25 million in early 2012.
The government of Bangladesh holds 51 per cent of the shares of UK Sonali Bank and 49 per cent by Sonali Bank Ltd, Bangladesh.
The principal aim of the bank is to provide wholesale banking to the Bangladeshi banks and retail banking services (very limited) to the Bangladeshi community living in the UK.
"The bank plunges into deep crisis due to inefficiency of the top officials. They are more active to implement personal agenda rather than increasing business of the bank forcing it to incur huge losses in the last two years," said the official who served the Sonali Bank UK earlier.
The bank's net loss before tax stood at £296,006 in 2016 and  £1,532,910 in 2015.
"The bank will have to count huge compensation for enforcing the redundancy exercise which may further weaken its financial health," he added.
Sources said the SBUK authorities are now pursuing an unfair recruitment process in which they prioritizing recruitment of foreign staffs declaring Bangladeshi and local staffs redundant.
The bank's Chief Executive Officer (CEO) Sarwar Hossain introduced the process as he is holding the position as a foreign staff. Recently, a Pakistani national also joined the bank as a foreign staff.
The policy of the bank was to recruit Bangladeshi and local (British) people. But the CEO is recruiting foreign nationals going beyond the bank policy. The immigrant staff is less qualified and their salary is also higher than the local people. The practice could make the bank's future uncertain, sources said.
The crisis further deepened in the bank when Britain's Financial Conduct Authority (FCA) launched a probe against the CEO in connection with a loan scam in Bangladesh and the Nat West/RBS in a letter to the SBUK asked to wind up its accounts (USD, GBP and Euro) holds with it (Nat West/RBS) by serving 60 days notice to SBUK.
The Nat West/RBS was acting as a clearing bank in favour of the SBUK. It came up with the move due to Anti-Money Laundering and Risk Management loopholes in the SBUK.
Sources said Anti-Corruption Commission (ACC) is investigating the case filed against Sarwar Hossain by the authorities of Jagoroni Textile Ltd with Siddhirgonj Police Station.
If he found guilty, the FCA can impose big penalty on the bank or can cancel its registration. Earlier, it slapped £3.25 million ($4.04 million) fine on Sonali Bank (UK) Ltd for its failures in anti-money laundering controls.
The board of directors of Sonali Bank, Bangladesh in its 514th meeting held on 10th April 2017 decided to withdraw the CEO and take him back in Bangladesh. However, he still holds his post and managing to stay in London wondering many.
Bank and Financial Institutions Division (BFID) Secretary Eunusur Rahman and Sonali Bank Bangladesh Ltd's Managing Director Md Obayed Ullah Al Masud could not be reached for comments despite several attempts on their cell phones.

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