Rupali Bank in crisis as profit falls

The head office of Rupali Bank in the capital, whose future has been thrown into uncertainty by its stalled privatisation.Photo: Amran Hossain

Rupali Bank is in crisis as profits fall, bad loans increase and key staff and customers desert the state-owned bank whose future has been thrown into uncertainty by its stalled privatisation.
Official sources said the bank's performance had deteriorated due to an embargo imposed by the Privatization Commission (PC) on its normal banking activities.
The PC asked the bank to suspend most of its financial and administrative activities due to the sale process that started in mid 2006.
The operating profit of the bank dropped about fifty percent from Tk 81 crore in 2005 to Tk 37 crore in the year 2007, according to the bank's annual balance sheet.
The slump comes at a time when many other public and private banks are showing significant profit growth.
Rupali has also seen an increase in its classified or bad loans, up to 35 percent in 2007 against 26 percent in 2006. Total bad debt rose to around Tk 1575 crore in 2007 from around Tk 1100 crore a year earlier.
The government owns 93.26 percent of Rupali Bank but agreed to sell its stake to Saudi Prince Bander Bin Mohammad Bin Abdulrahman Al-Saud for $458 million. However, although the deal was agreed in early 2007 the sale has not been completed.
“As we are not able to issue new loans to the clients and many old clients are leaving the bank,” a high official of the bank said preferring anonymity.
“Many of these big clients are leaving the bank and not paying their payments regularly due to the uncertainty of bank's privatization process,” he added.
The uncertainty has also hit staffing. The bank currently has only 2749 officers and 1681 staff at its 496 branches across the country against an approved staffing level of around 10,000.
According to bank documents, seven of its branches are now running with just two personnel, 40 are run by three personnel, 76 branches are run with four, 104 branches are run with five, and 67 branches are run with six.
The government recently approved to appoint 177 officers but the bank official said this will not even keep pace with the number leaving.
The official feared that activities of the bank will come to collapse in terms of its financial and management activities if the government does not act immediately.
A senior finance ministry official said they were aware of the concerns of Rupali Bank's management and were planning to allow the bank to resume some of its normal activities. These may include, staff promotion and recruitment.
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