Sonali Bank to inject Tk 171cr into UK arm



Sonali Bank requested the consent of the central bank to transfer Tk 171 crore to its operation in the United Kingdom suffering financial crisis.

The bank's board approved the transfer of money to increase the capital of Sonali Bank (UK) to 40 million pounds, after the capital base fell to 28 million pounds in 2015 , Which was insufficient to manage its affairs.

The Bank of Bangladesh examines the proposal and can give its approval, officials told the Bank of Bangladesh and Bank Sonali.

Sonali Bank (United Kingdom) was created jointly by the government and public commercial bank in 2001 with a capital of 11.57 million pounds. The government holds 51 percent stake while the rest is held by Sonali Bank.

The government transferred Tk 178.41 crore to the British operation last July in proportion to its share. Md Obayed Ullah Al Masud, CEO of Sonali, declined to comment, but said that their operation in the UK is profitable now.

In 2011, Bank Sonali was allowed to transfer 6.58 million pounds to increase its capital to 25 million pounds.

According to Sonali Bank, the UK operation has not been able to increase its trade exposure to more than 25% of its capital since December 2014 because of its status as "third country jurisdiction"

.

In addition, the operation faced an annual loss of 15 million pounds in retail businesses and remittances. In these circumstances, it needs more capital to carry out its activities.

According to a BB report, Sonali Bank (UK) held foreign currencies above the authorized limit due to the liquidity crisis facing the company

.

The currency position of the UK operation was $ 90.84 million in May 2016, 12 percent more than the authorized ceiling of $ 76.15 million

.

BB found that a large part of the foreign currency of Sonali Bank is kept with the Sonali Bank (United Kingdom), which carried the foreign currency above the allowed limit

.

Despite repeated warnings from BB, the British operation failed to reduce foreign currency holdings to the allowed limit.

The central bank asked why the UK operation was not able to reduce the holding of foreign currencies. In response, Sonali Bank said the British operation needs enormous amounts of foreign currency to deal with international trade.

Sonali Bank will have to count the losses due to the possession of so many foreign currencies.

For example, if Sonali Bank retains between $ 160 million and $ 170 million in reserves in its operation in the UK, it lacks business opportunities worth Tk 100 crore per year in Bangladesh

.

At present, Sonali Bank (UK) has two branches in the United Kingdom – one in London and another in Birmingham. Two of its branches were closed last year due to irregularities and financial losses.



Source link