BSEC asks Bank Asia to explain 'vanished' investment in UFS

Infographics: TBS

The Bangladesh Securities and Exchange Commission (BSEC) has sought clarification from Bank Asia regarding its investment of Tk10 crore in Universal Financial Solutions (UFS), which appears to have been unaccounted for or vanished.

While the private sector lender had previously reported this investment in 2019, 2020, and 2021, it suddenly reflected the investment in the UFS-Bank Asia Unit Fund, prompting queries from the commission.

A BSEC official noted that Universal Financial Solutions and UFS-Bank Asia Unit Fund are distinct entities, and this alteration has prompted the commission to seek an explanation from the bank regarding the change in reporting.

According to a BSEC investigation, Syed Hamza Alamgir, managing director of UFS, had earlier allegedly misappropriated Tk235 crore from investors across four mutual funds through various deceptive methods.

The mutual funds involved in this embezzlement are the UFS-Bank Asia Unit Fund, UFS-IBBL Shariah Unit Fund, UFS-Padma Life Islamic Unit Fund, and UFS-Popular Life Unit Fund, with an initial fund size of Tk430 crore.

The commission has asked for comprehensive disclosure regarding the aforementioned investments within seven working days.

The sought information includes the minutes of the board of directors meetings related to these investments, the basis of the investments, the general ledger balance of provision for the investments, and para-wise comments on "Key Audit Matters" raised by the statutory auditor in the audited financial statements for 2022.

An official at Bank Asia has conveyed to The Business Standard that a case has been filed through the Investment Corporation of Bangladesh (ICB), and it is currently pending in court. Due to this ongoing legal process, the bank is unable to provide any comments on this matter at this time.

According to the financial statements of 2019, Bank Asia reported a Tk10 crore investment in UFS, with an unrealised loss of Tk0.16 crore. By the end of December 2020, the unrealised profit had increased to Tk1.56 crore, and it further rose to Tk2.46 crore by the end of 2021.

In the January–September period of 2023, the bank achieved a consolidated profit after tax of Tk382 crore, compared to Tk312 crore in the same period the previous year.

During this period, its consolidated net interest income reached Tk456 crore, up from Tk398 crore in the same period in 2022. The bank has recommended a 15% cash dividend for 2022 for its shareholders.

Throughout the year, its consolidated earnings per share saw a 12% increase to Tk2.62, compared to Tk2.34 in 2021. The consolidated net profit of the private sector lender stood at Tk305.47 crore, an improvement from Tk273 crore in the previous year.

Notably, the bank registered an impressive 770% year-on-year growth in its profit from foreign exchange dealings in the first six months of 2022.

At the end of 2022, various state-owned and private banks recorded operating profits, benefiting from the central bank's relaxed policy that allowed lenders to show unrealised interests as profits and credit growth in the private sector.

However, when excluding operating expenses and provisioning for default loans, the net profit of the banks returned to normal levels.

Bank Asia, a third-generation public limited commercial bank, was incorporated in 1999 and listed on the stock exchange in 2004. It currently operates 129 branches, 11 sub-branches, four SME centres, four agri-branches, and five Islamic windows across the country.

As of 31 October 2023, sponsors and directors held 53.30%, and institutional, foreign and general investors held 35.92%, 0.17%, and 10.61% shares in the bank, respectively. The last trading price of its share was Tk20.20 on the Dhaka Stock Exchange as of Sunday.