Eight more banks make unusual gains from forex dealings

Bank Asia, a private commercial bank, has registered the highest 770% year-on-year growth in its profit from foreign exchange dealings in the first six months of the current year. 

The bank's profit from dollar trading surged by around eight times to Tk200 crore in January-June from only Tk23 crore in the same period a year ago.

Seven other banks that made excessive gains through dollar trading are NCC Bank, Dhaka Bank, Mercantile Bank, Shahjalal Islami Bank, United Commercial Bank, Eastern Bank and Islami Bank.

Infographic: TBS

The central bank already punished City Bank, Brac Bank, Dutch-Bangla Bank, Prime Bank, Standard Chartered Bank and Southeast Bank, mainly for bagging unusual profits from foreign exchange dealings.

Apart from Bank Asia, nine banks made exchange gains of above 200% during the period, while two made profits above 140% from the volatile dollar market, according to banks.

The central bank is likely to go for further action against other high profit-making banks, according to sources at the Bangladesh Bank. 

In a recent meeting with the Bangladesh Bank, bankers placed a list of 12 banks that made excessive profits from dollar trading, raising the question as to why only six banks were punished. 

Based on the list, the Bangladesh Bank is now planning to ask other banks to clarify their position about their unusual profits from the volatile dollar market, a central bank source confirmed. 

Bangladesh Bank spokesperson and Executive Director‍ Md Serajul Islam said they will inspect foreign exchange dealings of all banks and will take action if they find any unusual exchange gains. 

They have taken action against six banks after having gathered evidence of unusual exchange gains, he noted.

In January-June, taka lost 9% value amid rising dollar prices. At the beginning of the year, the interbank exchange rate was Tk85.80, which reached Tk93.45 at the end of June. 

However, in the open market dollar price crossed Tk100 per dollar, making the interbank exchange rate ineffective in LC (Letter of Credit) settlements. 

The Bangladesh Bank devalued taka 16 times during these six months.  

The severe dollar crisis forced the central bank to inject dollars into the market, causing an erosion of foreign exchange reserves by nearly $4 billion in six months of the current year.  

In this volatile market, some banks made an exchange gain of more than Tk5 per dollar, further intensifying the dollar crisis. 

The Bangladesh Bank recently set a maximum gap of Tk1 between buying and selling rates of dollars for banks to stabilise the forex market. 

According to an analysis of the profits that the banks made through dollar sales, Prime Bank posted a 504% or Tk126 crore year-on-year growth in income in January-June this year, followed by NCC Bank 500% or Tk100 crore, Brac Bank 417% or Tk75 crore, Dutch-Bangla Bank 403% or Tk117 crore, Dhaka Bank 353% or Tk106 crore, City Bank 340% or Tk136 crore, Mercantile Bank 245% or Tk120 crore, Shahjalal Islami Bank 234% or Tk97 crore, United Commercial Bank 205% or Tk135 crore,  Eastern Bank 159% or Tk43 crore, and Islami Bank 140% or Tk136 core.

The Bangladesh Bank recently asked six banks, including a foreign one, to remove their treasury heads on the grounds of making aggressive exchange gains that intensified the dollar crisis in the market, fuelling inflation.

The six banks are City Bank, Brac Bank, Dutch-Bangla Bank, Prime Bank, Standard Chartered Bank and Southeast Bank.