Bank MD, a risky proposition?

Becoming a managing director or chief executive officer is the ultimate career goal for most bankers, but this career path has become somewhat of a risky proposition in Bangladesh, quite evident by the recent trend of top level resignations at a number of banks.

Mehmood Husain, an experienced banker, recently resigned from his position of MD and CEO at the National Bank. He however returned to his previous post after a week due to the Bangladesh Bank governor’s intervention.

Not everyone is as fortunate as Husain, because a dozen managing directors and CEOs at private commercial banks were forced to resign or left willingly in the last few years. This is a matter of serious concern as the industry already lacks skilled and eligible MDs and CEOs.

On the issue, former chairman of the Association of Bankers, Bangladesh (ABB) Anis A Khan said, “Basically, the managing directors and CEO positions have become risky and vulnerable in problem-hit banks.

“Almost all the banks, excluding Mutual Trust Bank, Brac Bank, Trust Bank and two-three others – are suffering a lack of corporate governance, which is the key reason behind the ongoing situation.”

Before Mehmood Husain’s resignation, the then managing director of National Bank Shah Syed Abdul Bari stepped down from his post in November 2021.

Khondoker Rashed Maqsood left Standard Bank Ltd after completing his three-year contract as managing director and CEO this January. He recently told The Business Post that he has no immediate plans to join another organisation.

In the last few years, Mohammad Abdul Mannan was forced to resign from Islami Bank Bangladesh, Mohammed Nurul Amin resigned from Meghna Bank, Tariqul Islam Chowdhury and Md Golam Faruque resigned from South Bangla Agriculture and Commerce (SBAC) Bank before completing their tenure.

Most of them cited personal reasons or deteriorating health conditions for their resignations.

Some left the post of bank MD and later became entrepreneurs. One of them is Arfan Ali, who quit his banking job in August last year. He had served as the managing director of Bank Asia since 2016.

Arfan was well known for his active involvement in agent banking since its inception. Now, he is a chairman of Zaytoon Business Solutions.

Ali plans to bring the hard-to-reach people in remote regions of the country under tech-based financial services by establishing digital booths in different villages through his organisation.

Speaking to the Business Post, Ali said he likes to work independently, and that is why he turned from a banker to an entrepreneur.

Rahel Ahmed resigned from Prime Bank as managing director and CEO in December of 2020 and then joined Digital Financial Service Provider-Nagad as CEO.

He left that post in August last year and finally launched a startup – Ogreem, which aims to offer salary on-demand against earned ones for employees across multiple industries, to address any of their immediate financial needs. Social Islami Bank Ltd’s (SIBL) Md Mahbub ul Alam and Abu Reza Md Yeahia resigned from their chairman and additional managing director positions on January 26 this year. They then left Bangladesh, which is now a much talked about issue.

Anis A Khan, also the former managing director of Mutual Trust Bank, said, “When a bank’s board of directors and chairman get involved in unethical practices, a managing director can no longer work independently.

“Nowadays, we are noticing that some board members of private banks are getting involved in management activities such as banking operations, procurement and recruitment.”

He continued, “Such board of directors continues to exert their influence on the management in terms of loans approval and other major issues. As a result, senior bankers who have local and foreign experience feel pressured, and quit their jobs in the end.

“Bringing corporate governance is essential in the banking sector. The number of independent directors in a bank’s board must be increased and empowered to raise their voice in favour of good governance.”

Policy Research Institute of Bangladesh Executive Director Ahsan H Mansur said, “The managing directors and CEOs who resigned in recent times had worked in problem-hit banks. The MDs and CEO are safe in banks where good corporate governance is maintained diligently.

“The central bank is also partly responsible for the trend, because the regulator should have protected those bankers, but it did not do so.”

The Business Post had reached out to Bangladesh Bank Executive Director and Spokesperson Md Mezbaul Haque for comments on the issue, but he declined to comment.

The Bangladesh Bank had issued a circular in 2014 to protect MDs and CEOs, which states that if a MD wants to resign before tenure, they should submit an application to the chairman of respective bank and the central bank one month in advance with the reason for resignation.

Most of the banks did not follow this particular central bank rule, and the regulator also did not make any inquiries in this regard, industry insiders say.