6 banks’ MDs served show-cause notices over dollar trading manipulation

Bangladesh Bank (BB) has issued showcause notice to the managing directors of six local and foreign banks for their alleged role in destabilising the country’s foreign exchange market.

The central bank sent the show-cause letters to the managing directors of the banks on Wednesday, said a source of Bangladesh Bank.

The banks are: Southeast Bank, Dutch Bangla Bank, City Bank, Prime Bank, Brac Bank and Standard Chartered Bank, respectively.

The BB, in another letter issued on the same day, said that the extra profit from the dollar manipulation cannot be taken into the banks’ account.

According to the source, the central bank is conducting an investigation against 12 other banks into the same allegations. The information of the foreign exchange transaction of the banks has also been sought.

The central bank found anomalies of the banks in dealing with the foreign currency and confirmed that many banks made around 400 percent profit by manipulating the dollar prices, according to a source.

The dishonest move of the banks has plunged the country foreign exchange market into a catastrophic situation, claimed the source.

The BB will go for tougher action in future to this end, added the source.

Earlier on August 8, the central bank ordered five local private banks and one foreign bank to transfer their treasury heads, who allegedly had manipulated the exchange rates.

The banks are BRAC, City, Dutch-Bangla, Prime, Southeast and Standard Chartered.

Bangladesh Bank blamed these banks for making excessive profits by selling dollars at much higher rates than their purchasing prices.

And, by doing so these banks tried to destabilise the foreign exchange market, said a central bank official.

These banks bought dollars from exporters at Tk 94-95 but sold it to importers at Tk 110 and above. Some of these banks made exorbitant profits from the foreign exchange trade in recent months.