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AB Bank Foundation’s shares in IFIC Bank confiscated

BB asks AB Bank to stop activities of its foundation in three months

Star Business Report
The Bangladesh Bank (BB) yesterday confiscated 6.12 percent shares of IFIC Bank held by AB Bank Foundation, an arm of AB Bank Ltd.
The BB finds that AB Bank bought these shares through AB Bank Foundation in violation of the banking company laws.
The central bank ordered the cancellation and fcfWeiture of the shares with immediate effect and asked the AB Bank to stop activities of the AB Bank Foundation within three months.
BB confiscated the shares
following an investigation, which found that AB Bank violated the Banking Companies Act 1991 in purchasing the IFIC Bank’s shares in the name of its foundation.
Later, BB issued a show cause notice to the AB Bank asking it to explain why its shares in IFIC Bank should not be confiscated.
The central bank yesterday sent two letters to the managing directors of AB Bank and IFIC Bank in this regard.
"AB Bank's reply is not satisfactory. So, the BB according lo the Banking Companies Act 1991 has confiscated the shares and ordered to transfer those to
the BB with immediate effect,” the letter said.
The letter also termed the AB Bank Foundation as an illegal organisation as it was not formed as per the existing rules.
According to BB sources, AB Bank and AB Bank Foundation together holds a total of 7,44,237 or 18.31 percent shares in IFIC Bank with AB Bank Foundation holding 6.12 percent shares. The remaining shares are held by AB Bank.
Moreover, AB Bank also owns 99.60 percent shares in AB Bank Foundation. On top of that, eight directors of the foundation were also appointed by
the AB Bank, making the bank and the foundation a single entity flouting the laws.
President and Managing Director of AB Bank Kaiser A. Chowdhury could not be contacted for comments despites repeated attempts.
Earlier in March, AB Bank's merchant banking wing was fined Tk 10 crore by the Securities and Exchange Commission for disbursing around Tk 528 crore Ioans against its paid up capital of only Tk 57- crore during mid 2007 when stock market experienced an abnormal bullish trend due to liquidity glut stemming from excess margin loans.