BB rejects Janata Bank’s request to adjust Tk 27cr loss at Italian subsidiary

• Bangladesh Bank rejects Janata loss adjustment
• Subsidiary's profitability review set for 2026
• Italian unit posts continued annual losses
• High costs, hundi competition hurt exchanges

The Bangladesh Bank (BB) has turned down Janata Bank's request to adjust four years of losses at its Italian subsidiary, Janata Exchange Company (JEC) SRL, by dissolving the state-run lender's maintained provision.

In a recent letter to Janata Bank's managing director, the central bank said the matter would instead be reviewed based on whether the subsidiary can achieve profitability by June 2026, after which appropriate measures may be considered.

Earlier, the scam-hit bank had sought approval from the regulator to offset total losses of €1,962,902.43 incurred by JEC during 2021-2024, equivalent to around Tk 27.66 crore. The central bank, however, stated that approval cannot be granted to replenish the full amount of losses over this period.

JEC, which started operations in Rome in 2002 and later opened a branch in Milan, remained profitable until 2008 but has not reported a profit since 2009. In 2024, it recorded a loss of €495,023, following a loss of €509,083 in 2023.

Company data shows that in 2024, the JEC spent €810,029 on salaries, social security, retirement provisions, and administrative costs, while earning €363,682 from commission income, financing activities, gains on non-current assets, and other operations.

Janata Bank previously shut another overseas subsidiary, Janata Exchange Company INC (JECI) in the USA, in November 2021, after authorities discovered financial discrepancies of about $603,947 (approximately Tk 5.13 crore) in February 2020.

Contacted, Md Mazibur Rahman, managing director of Janata Bank, told The Daily Star that he was unable to respond to any questions at the moment.

Janata Bank is not the only state-run bank to have its subsidiary shut down. In 2022, Sonali Bank (UK) Ltd, an overseas branch of Sonali Bank, also closed its operations.

Currently, around 20 state-run and private commercial banks operate overseas branches, exchange houses, and other subsidiaries across 22 countries. However, several are closing their international operations due to sustained losses.

Industry insiders cite high operating costs, lack of in-depth market surveys, competition from hundi channels, and inadequate technological investment as the main reasons behind the declining performance of local banks' overseas exchange houses.