The 2024 fiscal year proved to be a disastrous period for Bangladesh’s capital market, with the ensuing crisis inflicting massive losses on the country’s banking sector. Analysis of published data reveals that a total of 31 banks, out of 34 listed and unlisted institutions, were severely impacted, incurring a combined loss of approximately BDT 3,629.50 crore (approximately $33 million USD) from their stock market investments.
In stark contrast to this colossal figure, only three banks managed to eke out a meager profit, totaling a negligible BDT 23 crore—a sum dwarfed by the industry-wide losses.
Governance Deficits and Flawed Decisions Blamed
Market analysts are pointing to a confluence of factors for the immense financial damage. Chief among the reasons cited are the short-sighted decisions of directors, inefficient use of investment funds, the inability to sell shares in a timely manner due to the enforcement of the ‘Floor Price’ mechanism, and high-risk investments in weakly capitalized or ‘junk shares.’
Professor Al-Amin, a member of the Capital Market Reform Task Force, offered a harsh critique, stating that the primary cause of the losses was a profound lack of good governance and rampant irregularities over the past few years. He also specifically highlighted bank investments in troubled entities such as the Beximco Green Sukuk Bond, ICB Islamic Bank, and People’s Leasing as significant contributors to the losses.
Top Losers Revealed
The consolidated loss of the 31 affected banks stands at BDT 3,629.50 crore. State-owned Janata Bank led the list of losers with the highest individual loss of BDT 400 crore. It was followed closely by:
- Sonali Bank: BDT 398 crore
- Eastern Bank (EBL): BDT 353 crore
- Southeast Bank: BDT 326 crore
- AB Bank: BDT 261 crore
These five banks alone account for a staggering BDT 1,738 crore of the total losses.
Other major losses among the remaining 26 banks include: Exim Bank (BDT 228 crore), National Bank (BDT 217 crore), Agrani Bank (BDT 216 crore), Uttara Bank (BDT 172 crore), NCC Bank (BDT 165 crore), Rupali Bank (BDT 153 crore), NRB Commercial Bank (BDT 133 crore), and Shahjalal Islami Bank (BDT 107 crore).
Only Three Banks Show Profit
The only institutions to register any profit were:
- Mercantile Bank: BDT 12 crore
- BRAC Bank: BDT 7 crore
- Prime Bank: BDT 4 crore
Banks Blame Floor Price and Global Headwinds
Officials from the affected banks largely attribute their losses to the floor price restriction, arguing it prevented them from executing timely share sales. They also noted that a failure to adjust margin loans led to accumulating interest and management costs.
Furthermore, they cited the global economic crisis and the fallout from the Russia-Ukraine war as contributing external factors. Data from the Bangladesh Bank confirms the dire market conditions, showing that the DSE’s main index plummeted by nearly 16% in 2024, severely damaging the banking sector’s capital market portfolio.
