Sonali Bangladesh UK Ltd pays £2m in dividend

In continuation of its remarkable financial performance in recent years, the Sonali Bangladesh UK Limited (SBUK) earned a handsome amount in pre-tax profit of £8.0 million in 2023.

SBUK has paid dividend amounting £2.0 million to its two shareholders -- Ministry of Finance and Sonali Bank -- recently in proportion to their respective equity holdings of 51 per cent and 49 per cent, says a press release.

This dividend payout underscores the institution's financial stability, strategic realignment, dedication towards Bangladesh and remarkable resurgence following regulatory challenges, according to a press release issued on Tuesday.

SBUK Chairperson Md. Ashadul Islam met with representatives of both shareholders --Md. Muslim Chowdhury (Chairperson of Sonali Bank PLC) and Nazma Mobarek (Secretary of the FID, Ministry of Finance) -- on February 13 to formally confirm that the dividends have been credited to their accounts.

The meeting took place at the Financial Institutions Division (FID) of the Ministry of Finance. CEO of Sonali Bank Md. Shawkat Ali Khan, CEO of SBUK Masum Billah and other officials from the Ministry of Finance, including Md Azimuddin Biswas (Additional Secretary, Central and Commercial Bank Wing of the FID) and Sheikh Farid (Joint Secretary, State-Owned Commercial Bank Branch), were also present at the meeting.

SBUK Chairperson Md. Ashadul Islam also met with Finance Adviser Dr. Salehuddin Ahmed to discuss the strategic vision and future prospects of SBUK as a full-fledged bank in the UK.

The representatives from SBUK discussed past regulatory challenges faced by SBUK, including key reasons behind the loss of the banking licence and shareholding structure.

The meeting ended with optimism as they discussed the way forward for SBUK like regaining its historical rights of being a bank and enhanced collaboration moving ahead.

Established in 1973 to cater to the financial needs of the Bangladeshi diaspora in the United Kingdom, SBUK originally operated as a full-service bank, providing retail banking, trade finance, and remittance solutions.

However, following regulatory challenges and operational irregularities, its foreign branch licence was revoked in 1999, leading to its reconstitution as Sonali Trade & Finance UK Limited.

In 2001, Sonali Bank (UK) Ltd commenced operations under a new banking licence issued by the Financial Services Authority (FSA). The institution operated under a shareholder structure wherein the Ministry of Finance, Government of Bangladesh, retained majority ownership (51 per cent) while Sonali Bank PLC held the remaining stake.

However, SBUK faced severe regulatory headwinds, culminating in a substantial fine of £3.25 million by the Financial Conduct Authority (FCA) (changed from FSA) in 2016 for deficiencies in its anti-money laundering (AML) framework. The ensuing regulatory scrutiny resulted in a temporary prohibition on new deposit acceptance and placement on the FCA AML Watchlist. Extensive remediation efforts, including a substantial capital injection of £33.47 million, led to the institution's removal from the watchlist in 2018. Nevertheless, ongoing regulatory challenges culminated in the revocation of its banking license by the Prudential Regulation Authority (PRA) in 2022.

Amidst this regulatory turbulence, SBUK embarked on a strategic transformation under "Project Phoenix," transitioning into a Non-Bank Financial Institution (NBFI) focused on trade finance and financial institution services. This transition was formalized with the regulators' revocation of its banking permissions in August 2022, culminating in its rebranding as Sonali Bangladesh UK Limited.

Since the transition, SBUK has demonstrated exceptional financial performance. The institution reported pre-tax profits of £1.5 million in 2022, which surged to £8.0 million in 2023 -- a testament to its strategic realignment, cost-efficiency measures, and technological advancements. Notably, trade finance revenue exceeded £1.0 million per month in 2023, propelling the firm to a record-breaking total income of £11.74 million, representing a 106 per cent year-over-year increase.

Additionally, operating expenses were strategically reduced to £3.77 million in 2023, marking a 4.0 per cent decrease compared to budgeted projections and a 7.0 per cent year-over-year reduction. This financial upturn has enabled SBUK to remunerate its Shareholders with a £2.0 million dividend, reinforcing the institution's commitment to delivering sustainable value to its stakeholders.

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