Southeast Bank lent Tk 200cr to BLI Capital breaching rules: BB

A Bangladesh Bank inspection team has found that Southeast Bank has given BLI Capital Tk 200 crore in loans violating rules.

The loan was given without prior approval of the central bank and its board of directors. 

Any related party loan must be covered by 100 per cent security as per the bank company act, but the private commercial bank lent the money without keeping security.

The inspection team also found that the listed private bank holds shares of National Life Insurance Company, a related company of the bank’s chairman Alamgir Kabir, in violation of rules. Kabir has been leading the bank for the last 17 years. 

Bay Leasing and Investment holds 99.99 per cent of BLI Capital shares, the said the findings. The BB also found that Alamgir’s son Raiyan Kabir holds shares in Bay Leasing.

Meanwhile, the bank held 1.4 crore Bay Leasing shares till July this year, said the report. 

Southeast Bank has bought 40.99 lakh Asia Insurance shares violating rules.

Alamgir holds 13.99 lakh Asia Insurance shares while Raiyan, also the bank’s director, owns 55,125. 

The bank bought pre-IPO placement shares of several companies, including Venture Investment Partners Bangladesh in 2007, according to the central bank inspection report. Alamgir could not be reached for comments over the phone.

The Bangladesh Bank has fined Southeast Bank Tk 10 lakh for breaching rules. The bank parked 22.05 per cent of its paid-up capital in National Life Insurance in clear violation of the bank company act. 

A bank is allowed to invest a maximum of 10 per cent of its paid-up capital and 5 per cent of the total capital in a company.

The bank was listed in the capital market in 2000.

On Tuesday, the bank’s share increased by 0.63 per cent to Tk 15.9 on the Dhaka Stock Exchange.

Its market capitalisation was more than Tk 1,878 crore on Tuesday.

Besides, its paid-up capital is Tk 1,189 crore and authorised capital Tk 1,500 crore.

It has Tk 1,781 crore in surplus reserve. Last year, it distributed 10 per cent cash dividend.

Sponsors held 30.42 per cent of the bank’s shares till September 30 while institutional investors owned 38.70 per cent, foreign investors 1.16 per cent, and the public 29.72 per cent.

Its profit fell in the third quarter of this year. In the July-September period, it made a profit Tk 67.88 crore, down from Tk 87.25 crore in the same period last year.