Union Bank PLC has failed to properly utilise a significant portion of its IPO proceeds, with auditors detecting misuse, delays, and fund transfers to non-designated accounts, according to a report released by the Chittagong Stock Exchange (CSE).

The audit, conducted by G. Kibria & Co., revealed that as of December 31, 2024, the bank had unutilised IPO funds amounting to Tk 653 crore, for which no reconciliation was provided.

Auditors noted that while the bank fully utilised funds earmarked for SME financing, project finance, and government securities, serious discrepancies were found in its capital market investment.

The bank invested Tk96.98 crore through Time Securities Ltd, but later withdrew Tk 1 crore and transferred it to a Sonali Bank account that was not designated for IPO proceeds. As of December 2024, the market value of this investment had fallen by 47.32%, auditors said.

The report further observed that Union Bank failed to utilise the IPO proceeds within the prescribed deadline of January 17, 2023, and its application for an extension and fund reallocation was rejected by the Bangladesh Securities and Exchange Commission (BSEC).

In another breach, the proceeds were initially received in a regular Bangladesh Bank account instead of the designated IPO account with Union Bank’s Gulshan Branch, in violation of BSEC rules.

The auditors also pointed out that the bank did not submit quarterly utilisation reports on time, breaching clause 3 of Part C of the consent letter.

IPO proceeds refer to the funds raised by a company from investors through an Initial Public Offering. These funds must be used strictly for the purposes stated in the prospectus, such as business expansion, project financing, or debt repayment, under regulatory supervision.

Market analysts say that such irregularities could undermine investor confidence, as improper management of IPO funds raises concerns about governance and transparency. Delays, fund diversion, and lack of reconciliation may affect shareholder trust and could influence future investment decisions in the bank and the broader market.