A day after the Bangladesh Bank (BB) took over the control of the troubled bank, the price of Oriental Bank's shares suspiciously shot up by 32 percent at the Dhaka Stock Exchange (DSE) on Tuesday.

The unusual incident prompted the central bank to write a letter to the SEC asking it to stop trading of Oriental Bank's shares at DSE.

The authorities suspended the trading of shares of the problem bank as per section 9(7) of the SEC Ordinance, 1969.

Although the shares of Oriental Bank are not enlisted with the Chittagong Stock Exchange (CSE), the SEC informed CSE about its decision.

Sources said, the suspicious rise in the share price of Oriental Bank also prompted Finance Minister M Saifur Rahman to call up the BB governor and the SEC chairman and to instruct them about particular measures to be taken.

"We have already started a special investigation into the Oriental Bank issue," Saifur told the media at the Secretariat yesterday adding, "after I woke up in the morning, I talked to the finance secretary, governor of BB, and the people of stock exchange and told them what we should do about it."

The central bank in its letter to the SEC said it is necessary to stop transfer of Oriental Bank's ownership for properly determining the asset-liabilities of the financial institution. The letter also said the Bangladesh Bank believes that all transfers and transactions of the shares of Oriental Bank should be suspended.

The letter added that the problem bank is suffering from a massive shortfall of capital and provision. It is deeply troubled by a huge accumulation of classified loans, income shortage, ineffective management, severe liquidity crisis and above all, a financial crisis. In this situation, to protect the interest of the depositors and to maintain public confidence on the banking system, the Bangladesh Bank dissolved the board of directors of Oriental Bank, removed its chief executive, and appointed an administrator, said the letter.

SEC Chairman Faruk Ahmed Siddique told journalist, "We have taken this measure to protect the interest of the general shareholders of Oriental Bank, so that they are not affected by unusual trading."

Upon completion of the ongoing BB investigation and filing of the report on the financial health of Oriental Bank, the SEC in consultation with the central bank will take its next step regarding share transaction of the troubled bank, he said.

The BB meanwhile started a detailed investigation into Oriental Bank's history of activities to find out which persons using their own names or pseudonyms took loans.

Oriental Bank has an accumulated loss of Tk 450 crore. Banking sources said the loss was caused by unscrupulous borrowing by the owners of the bank using false names, which have never been returned. Many of the owners also bought their shares of the bank using fictitious names.

The sources point out that the loans taken by the owners are much bigger than the value of their shares. That is why, they are desperate to sell out their shares in the market and get away, the sources claim. They said a number of 'extremely powerful people' are behind the fictitious names.

While the central bank was in the process of deciding to takeover Oriental Bank, the influential owners of the problem bank were allegedly lobbying the government to delay the takeover by six months so they could evade the scrutiny.