United News of Bangladesh

Finance Adviser Dr Salehuddin Ahmed on Tuesday said the auditors of five banks whose shares have recently been reduced to zero would face action, as the government is examining the context in which shareholders had purchased those shares. The banks are First Security Islami Bank, Social Islami Bank Limited (SIBL), EXIM Bank, Global Islami Bank and Union Bank. Talking to reporters after a meeting of the Advisory Committee on Government Purchase and Economic Affairs at the Secretariat, Dr Salehuddin said the authorities are scrutinising the circumstances under which shareholders invested in these banks. “We are examining in what context the shareholders bought the shares. And yes, action will be taken against the auditors of these five banks. That process is under review,” he said. Responding to a question about compensation for general shareholders, the finance adviser acknowledged that the issue is complicated. Earlier, before the merger of the five banks, the government had indicated that the matter of compensating ordinary shareholders would be considered. However, the shares of the five banks have already been written down to zero as part of the restructuring process that led to the formation of a new bank. “The issue of shareholders is complicated. You cannot just demand and expect a decision. These things cannot be decided so easily,” he said. Bangladesh Bank rolls out risk-based supervision to rebuild depositor confidence Dr Salehuddin emphasised that the government’s priority is to protect depositors, making it clear that their money will be returned in full. “What we are saying is very simple—depositors will get their money. Anyone who has deposits will get their money back.” He drew a distinction between depositors and shareholders, noting that shareholders voluntarily invest in banks with the intention of ownership and with an understanding of market risks. “Shareholders bought shares in a certain context—whether at market price or otherwise. Shareholders wanted to be owners. They understand that this is voluntary,” he said. Journalists pointed out that many shareholders claim they purchased shares after reviewing audited financial statements, which showed profits in the period before August 5, 2024. In response, the finance adviser said that this issue is precisely what the authorities are now investigating. “That is exactly what we are examining—under what context the shares were bought. We will see what can be done,” he said. When asked whether action would be taken against the auditors who approved the financial statements of these banks before August 5, Dr Salehuddin replied in the affirmative, though he refrained from giving further details. “Action will definitely be taken. It is under consideration. However, everything cannot be disclosed at this moment,” he said. The government has recently undertaken major restructuring measures in the banking sector, including the merger of several weak banks, as part of broader efforts to restore stability, improve governance and protect depositors’ interests.  

Bangladesh Bank (BB) from now on will maintain a database of Ultimate Beneficial Ownership (UBO) information of banks to enhance transparency in ownership structures. This initiative has taken cautious measures from past abuses of the banking system that aim to foster accountability and protect the financial system from similar risks in the future. The Banking Regulation and Policy Department (BRPD) of the central bank issued a guideline in this regard on Monday, instructing all banks to identify and verify their ultimate beneficial owners. For the first time, the central bank has issued guidelines on "Ultimate Beneficial Owners and Disclosure of Ownership Structure of Banks", detailing the reporting format and procedures for identifying ultimate beneficial owners. The first dataset must be submitted to the Bangladesh Bank by 31 March 2025. Additionally, any changes in beneficial ownership must be reported to the central bank as soon as the entity, and thereby the bank, becomes aware of the change, according to the circular. IMF suggests upward policy rate in 2025 to restrain inflation: BB Banks will have to ensure utmost accuracy and reliability in the identification of ownership structure through an appropriate review process, where applicable. Banks have to maintain a database of UBO information as well as preserve detailed records of all identification procedures and decisions. The BB may conduct regular and special or surprise inspections when warranted. The managing director/chief executive officer, head of the Share Department, and company secretary of the banks will be held responsible for compliance with this circular and reporting all the required UBO information to the central bank.