Sonali Bangladesh UK seeks $100m low-cost credit line from BB
SBUK said its business model has been severely constrained since the staged withdrawal of earlier credit facilities, including a full $60 million line previously provided by the parent company
Highlights:
- SBUK seeks $100 million low-interest credit line from Bangladesh Bank
- Says funding needed to maintain liquidity and serve foreign banks
- Loss of prior $60 million facility constrained operations severely
- Lacks deposit licence, depends on central bank for financing support
- Bangladesh Bank yet to receive or decide on the request
- SBUK restructured after UK licence loss, now focuses on trade finance
Sonali Bangladesh UK (SBUK) Limited has formally requested Bangladesh Bank for a $100 million low-interest — ideally zero-cost — credit line, saying the support is essential to sustain growth, maintain liquidity, and meet rising demand from Bangladeshi banks abroad.
On 1 October, SBUK Managing Director Masum Billah sent a letter to the finance ministry secretary. The ministry is expected to forward the request to the Bangladesh Bank governor for consideration.
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SBUK said its business model has been severely constrained since the staged withdrawal of earlier credit facilities, including a full $60 million line previously provided by the parent company.
The firm explained that as a non-bank financial institution without a deposit-taking licence or access to wholesale markets, it has no conventional funding sources and needs central bank support to operate effectively.
"Banks in Southeast Asia often benefit from central bank policy rates ranging from 2% to 6%, giving them a competitive edge in trade financing," it said.
"Without similar backing," SBUK warned, "we cannot compete on equal terms, serve Bangladeshi banks at scale, or progress toward full regulatory compliance in the UK."
The company said it has sought funding from multiple sources — including a £20 million line with Crown Agents Bank, risk-participation deals with UK banks, and talks with development finance institutions. However, high costs, collateral requirements, and Bangladesh-related risk premiums have made those options unviable without central bank-backed low-cost credit.
Bangladesh Bank spokesperson Arif Hossain Khan told TBS, "We have not yet received SBUK's $100 million credit request. Once we do, we will review it in light of the company's past record and current realities before taking any decision."
A senior official of Sonali Bank told TBS, "Although Sonali Bank has been in losses for a long time, last year Sonali Bangladesh UK turned a profit and even sent us dividends."
He added, "Profit alone is not the goal. Considering Bangladesh's representation abroad, it would be wise to keep the institution profitable. They want to regain their previous banking position."
However, an official of Bangladesh Bank's relevant department said, "The institution lost its banking licence after years of losses. Sonali Bank provided capital and loans for support, but it still could not return to profitability. Now they are again seeking $100 million — there is no justification for this. We have not received any letter from the finance ministry either."
He added, "Last year they sent part of what they called profit, but in reality it was not from that year's earnings. When the company had actually made profits in earlier years, it did not remit them to Bangladesh — the amount was retained earnings that they sent last year."
Sonali Bank's journey in the UK
Sonali Bank began its UK operations in 1999 with the registration of Sonali Trade & Finance (UK) Ltd in London. In December 2001, it was renamed Sonali Bank (UK) Ltd and started operating as a full-fledged bank, providing accounts, remittance, and trade finance services to expatriate Bangladeshis and business clients.
Though initially popular, the bank soon faced a series of regulatory challenges. In 2016, the UK's Financial Conduct Authority (FCA) fined it for weaknesses in anti-money laundering (AML) systems, while financial losses and irregularities also mounted.
In 2017, customers' personal accounts were closed and funds placed under trusteeship. Under increasing regulatory pressure, the UK's Prudential Regulation Authority (PRA) cancelled the bank's licence in August 2022.
Following the licence loss, the entity was restructured and renamed Sonali Bangladesh (UK) Ltd (SBUK) on the same day, taking over the liabilities of the former company. The new entity no longer offers retail banking; instead, it focuses on trade finance, correspondent banking, and institutional transactions. A separate remittance company, Sonali Pay UK Ltd, is being planned.
From loss-making bank to trade finance firm
The government and Sonali Bank have injected capital into the UK operation several times. After Sonali Bank (UK) Ltd closed, its total equity in the UK stood at around Tk823 crore, now intended for trade finance activities. Of this, £1 million (about Tk13.23 crore) was provided to Sonali Pay UK Ltd.
According to Sonali Bank's annual reports, its pre-tax losses were £2,96,000 in 2016 and £1,25,000 in 2017. It returned to profitability in 2018 with a pre-tax profit of £68,973 but fell into losses again in 2021, posting a £571,389 deficit. The bank's licence was revoked in 2022.
