ONE Bank rejoinder and our reply

ONE Bank has sent a rejoinder to a report published in The Business Standard on 3 August 2021 with the headline "ONE Bank cooks the books to siphon cash to owners".  

Following is the full unedited text of the rejoinder:

1. The finalization of accounts of a bank begins with the Department of Banking Inspection (DBI) of Bangladesh Bank and External Auditors' inspecting & auditing of the affairs of books of accounts of a bank;

2. On the basis of the inspection findings of the DBI of Bangladesh Bank and the External Auditors, a tripartite Meeting amongst Bangladesh Bank, External Auditors & ONE Bank Limited was held on 4th March 202I and after satisfactory explanations/clarifications provided to the queries/observations, a consensus regarding the finalization of accounts of ONE Bank was reached;

3. Thereafter, the DBI of Bangladesh Bank being fully satisfied with the OBL's accounts issued the NOC to ONE Bank Limited on 10th March 2021 for finalization of its Annual Accounts 2020, to which the Bank strictly complied. ONE Bank declared dividend in accordance with the Dividend Declaration Policy issued by the Department of Offsite Supervision (DOS) of Bangladesh Bank as advised by the DBI of Bangladesh Bank;

4. After review by the Board's Audit Committee, the Board of Directors of ONE Bank Limited recommended the Annual Accounts and Dividends on 28th March, 2021 to the ensuing AGM reflecting instructions contained in the NOC given by the DBI;

5. On the same day, as required as per BSEC's regulations, Price Sensitive Information, the key information sensitive to the Capital Market, was submitted/circulated to all the regulatory authorities i.e., BSEC, Dhaka and Chattogram Stock Exchanges immediately after the recommendation of the Board of Directors on 28th March, 2021 to the AGM. The same was also published in widely circulated national daily newspapers for information of the Shareholders and other stakeholders of the Company i.e. the Bank;

6. We also sent the approved audited financial statements 2020 to Bangladesh Bank and BSEC within the prescribed time frame;

7. Subsequently, the Shareholders approved Dividends and Audited Accounts of the Bank in the AGM on 24th June 2021 and later the approved Dividends were credited to the Shareholders' Accounts as per prescribed rules;

From above, it is obvious that the process of finalization of Annual Accounts requires active & hands-on involvement/approval of several regulators/authorities i.e., Bangladesh Bank & BSEC, as well as professionals like the External Auditors along with full disclosure through the publication of the Accounts for the General Shareholders. It is, therefore, next to impossible for a bank, in the present circumstances ONE Bank Limited, to cook any information and figures on its own and smoke-screen the sight of the regulators, auditors & stock exchanges and honourable Shareholders of the Bank.

Subsequently,  when on  12th  April 2021 after the publication of the Price  Sensitive Information on 28th March 2021, the Department of Off-Site Supervision (DOS) of Bangladesh Bank belatedly advised to re-arrange the numbers,  with all the good intentions,  we approached the other regulatory authority BSEC for permission to bring about the changes but BSEC through a letter dated  6th  May  2021  strictly instructed us not to proceed with the  Bangladesh  Bank's latest advised changes, understandably for the reasons of its price sensitivities.  This letter was also officially copied to Bangladesh Bank. It may be mentioned that there happen to be two (2) regulatory bodies for commercial banks operating in Bangladesh.

Our reply 

In paragraphs 1, 2, and 3, ONE Bank referred to a tripartite meeting where the Bangladesh Bank allowed it to defer provision forbearance of Tk80.52 crore against loan loss. 

However, the bank did not mention the full instruction given at the meeting. 

Following the meeting, the bank was given a no-objection certificate (NOC) for finalising the account through a letter sent by the Bangladesh Bank on 10 March 2021. 

However, in the letter, the bank was asked to take approval from the Bangladesh Bank's Department of Off-site Supervision in case it decides to give dividend. 

Also, if any different instruction comes from that department, the bank will have to comply with that, according to the letter. 

Consent for dividend from the off-site department is required because if the bank takes provision deferral from the central bank, it cannot declare cash dividend according to the banking law. 

But the bank did not take consent from that department before recommending dividend. 

In the third paragraph, the bank mentioned that it declared dividend following the dividend policy. 

However, it is half of the story. The bank declared dividend as allowed by the dividend policy, but it did not follow the basic instruction of the policy about taking consent from the Bangladesh Bank. 

If the bank went for consent from the off-site department for dividend, it would not get permission for cash dividend as per the law. 

As a result, what the bank claimed in its fourth paragraph is not correct. Because the bank recommended dividend on 28 March without following the instruction of the previous letter of 10 March. 

The Bangladesh Bank, in a letter sent to the bank on 12 April, objected to the dividend decision, saying the recommended dividend is not consistent with the bank's health. 

Moreover, the board of the bank recommended dividend without prior approval from the Bangladesh Bank. 

In this case, considering the price-sensitive information, the bank was asked to keep dividend unchanged, subject to adjusting the deferred provision shortfall of Tk80.52 crore. 

In the letter, the bank was clearly instructed to bring necessary changes in the balance sheet after adjusting provision shortfall. 

Also, in the same letter, the bank was advised to be more careful about complying with the Bangladesh Bank's instructions in the future. 

Even after getting the instruction, the bank approved the balance sheet in its annual general meeting (AGM) held on 24 June without bringing changes in its financial numbers. 

If the bank complied with the instruction given on 12 April, all key financial indicators, including net profit, retained earnings, capital adequacy ratio, earning per share, and net asset value, would have deteriorated. 

This is how the bank cooked its financial numbers in its balance sheet. 

So, we stand by our report.