BB favours Rupali Bank rights issue decision

---

FE Report
The central bank has favoured the decision of the board of directors of the Rupali Bank, a 'Z' category listed issue, to issue right shares to meet the paid-up capital shortfall of the Bank, official sources said.
The central bank made available its recommendations to this effect to the Ministry of Finance (MoF) last Sunday. Earlier, the MoF sought to know from the Bangladesh Bank about its position on the right share issue.
The board of directors of the Rupali had decided to issue three right shares against each existing share to raise its paid-up capital by June 30, 2010, a deadline set by the BB for all commercial banks in the country.
The decision was submitted to the MoF for approval, accordingly.
The BB in its opinion said that Rupali Bank Ltd would be financially strengthened and its paid up capital increased through the issuarnce of right shares.
'The MoF may consider approving the issuance of right shares to shareholders as decided by the board of directors of the Rupali Bank to strengthen the financial health of the Bank,' reads the opinion of BB.
The Banking Regulations and Policy Department of the BB sent the opinion to the MoF after another department of central bank, the Department of Offsite Department, scrutinized all financial indicators of Rupali and okayed the proposal relating to right shares, sources said.
Bangladesh Bank in 2008 issued a circular to increase bank capital to at least Tk 4.0 billion and out of which Tk 2.0 billion must be paid-up capital by August 11,2011 to meet the Basel-II requirement.
The banks need to maintain Tk 4.0 billion or 10 per cent of its risk-weighted assets, whichever is higher, as capital. Based on the calculation the capital requirement of the Rupali Bank on June 30 this year stood at Tk 5.31 billion.
Meanwhile, the MoF is planning to offload another considerable portion of share of Rupali through bourses and appoint the chief executive officer and fill up other top level posts of the banks with competent people from the private sector, sources said.
Presently, the government owns 94.55 per cent share of Rupali.
Officials in the MoF said they will soon inform the Rupali to issue right shares after the completion of all formalities
"BB has approved three right shares against each share. The SEC regulations bar a listed 'Z' category company to add premium to the face value,' a top MoF official told the FE.
"Another good portion of Rupali's share might be offloaded in the second phase.'