BB rejects Dutch-Bangla Bank’s Tk 1,000cr HQ purchase plan

The Bangladesh Bank has rejected Dutch-Bangla Bank's proposal to purchase a Motijheel building for more than Tk 1,000 crore to use as its corporate headquarters, saying the price was significantly inflated and the deal posed a conflict of interest involving the bank chairman's family.

Despite the rejection, the listed bank has yet to make a mandatory disclosure at the Dhaka Stock Exchange (DSE), where any price-sensitive decision must be communicated to shareholders.

"The bank should have issued a counter-disclosure once the central bank turned it down. Otherwise, how will general shareholders know the purchase has been cancelled?" said Saiful Islam, president of the DSE Brokers Association of Bangladesh.

Contacted, Abul Kashem Md Shirin, managing director and CEO of Dutch-Bangla Bank, told The Daily Star that the central bank has not yet formally informed them about the rejection of the private lender's application.  "So, we have not made any disclosure."

However, he did not comment on the issue of the high price of the building.

The building is owned by Amina Ahmed, mother of the bank's current chair, Sadia Rayen Ahmed

A senior official at the Bangladesh Securities and Exchange Commission (BSEC) confirmed the regulator had also advised against approving the purchase, having found the proposed price excessively high.

On August 27, Dutch-Bangla Bank informed the DSE that its board had agreed in principle to acquire the 21.5-storey building, pending regulatory clearance.

Arief Hossain Khan, executive director and spokesperson of Bangladesh Bank, recently said that the central bank reviewed the application and found the proposed valuation far above market price.

The regulator also noted that the building is owned by Amina Ahmed, mother of the bank's current chair, Sadia Rayen Ahmed.

Rayen Ahmed's father, Mohammad Shahabuddin Ahmed, previously served as chairman of the bank.

"Considering these factors, the central bank rejected the application," Khan said.

The building has a total area of 207,340 square feet, including 176,300 square feet of floor space and 31,040 square feet of basement. The building, proposed to be purchased at a cost of Tk 1,016 crore, was intended to serve as the bank's corporate headquarters.

According to Dutch-Bangla Bank's 2024 annual report, its head office is already housed in the same building on rent. The lease agreement sets the initial rent at nearly Tk 2 crore a month, including Tk 130 per square foot for 151,014 square feet and Tk 5,000 per month for each of the 37 parking spaces.

On September 18, the DSE asked the bank to explain the rationale behind the high purchase price. In its written response, Dutch-Bangla Bank said it remained committed to sound corporate governance and believed the acquisition would be beneficial for both the institution and its investors..

Shares of the bank fell 3 percent to Tk 37 yesterday. Last year, it declared a 10 percent dividend, down from 17.5 percent the previous year.

The bank said it had submitted all required documents, including price justification, arm's length evaluation, approval process, financial impact, and building details.

DSE Chairman Mominul Islam and its Chief Operating Officer Mohammad Asadur Rahman could not be reached for comment.