The Bangladesh Bank approved foreign investments to Padma Bank after maintaining required rules and standards, claimed an official of the private bank protesting a statement by the Transparency International Bangladesh (TIB).
"The central bank paved the way for measures undertaken by the bank authorities aimed at better banking performances. The process maintained transparency as there had been no unethical advantage for us," Ehsan Khasru, managing director of Padma Bank, mentioned in a media statement Sunday.
TIB Saturday expressed concern over providing unethical advantages to Padma Bank following media reports that suggest the Bangladesh Bank approved a proposal of restructuring Padma Bank's balance sheet by cleaning its accumulated loss of Tk803 crore, helping the troubled lender get foreign investment for its survival.
Protesting the statement by TIB, Ehsan Khasru said, "I am shocked that an international organisation has called such a transparent move a 'fraudulent advantage'. without any research, proper analysis and verification, it is a strange for TIB to make such a statement solely based on media reports. I call it an obscure statement by a transparent organization"
The Padma Bank managing director said the support the central bank gave to Padma Bank as the regulator is nothing new in Bangladesh. The central bank previously allowed Sonali Bank, Agrani Bank, Rupali Bank and Janata Bank to restructure the balance sheet.
He said DelMorgan & Co, a USA-based global investment bank, has proposed to Padma Bank that it would arrange Tk6,000 crore – half of the investment as capital and the remaining as bonds or in other forms.
The government approved the Farmers Bank in 2013. It later changed the name to Padma Bank after massive lending anomalies. In 2018, four state-owned banks and Investment Corporation of Bangladesh came up with a Tk715 crore bailout.
The state-owned banks also invested more around Tk1,000 crore in the bank in other forms, such as subordinate bonds and fixed deposits.
The total investment of public money could not stop capital erosion of the bank as it could not recover money from defaulters. The capital shortfall of the bank stood at Tk 540 crore at the end of September last year. The default loan of the bank was 62% as of September last year, according to the Bangladesh Bank data.
However, Ehsan Khasru claimed, "The future of Padma Bank is bright, and they [DelMorgan & Co] will get good profit from the deal."