Govt may go for fresh tender for Rupali sale

FE Team | Published: November 06, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

A Z M Anas
As part of an alternative strategy, the government is likely to go for a fresh international tender to help attract "authentic" bidders for Rupali Bank if the proposed sell-out of the largely state-owned bank is further delayed.
"We're reviewing multiple options â€¦ If the proposed sell-out of the bank to the Saudi Prince is not over by the end of this month, we may invite fresh international tender to draw serious buyers," a source at the finance ministry said.
"But it'll require a decision up-front. If the tender is floated again, individuals will be barred from joining the bidding race-only banks, financial institutions and investment banks will be allowed to participate," the source pointed out.
The sources said the then BNP-led coalition government mounted pressure on the Privatisation Commission to leave a room for individuals to take part in the Rupali bidding.
Saudi Prince Bandar Bin Mohammad Bin Abdul Rahman Al Saudi outbid his rivals with the highest offer worth US$458 million to buy the majority stakes, at 93 per cent, of the local commercial bank.
The source, who preferred to remain unidentified because he is not authorised to give specifics of the plan, noted that the World Bank and the International Monetary Fund (IMF) were pressing the government to invite the fresh tender for Rupali Bank's divestment, given the Saudi Prince's "uncommonly vexing" delay.
Finance ministry officials said the lending agencies feel that Bangladesh Bank should be tasked with divesting Rupali Bank instead of the Privatisation Commission, taking the central bank's successful handling of the troubled Oriental Bank, for which renowned local and international institutions submitted Expression of Interest (EoI).
"The central bank's move was really smart. It has been able to attract a good number of local and international financial institutions to buy the troubled Oriental Bank," noted one official.
"It's a belated realisation â€¦ The WB and the IMF now feel that the Bangladesh Bank is well-positioned to carry out the divestment of the largely state-run commercial bank. But it will require taking over of the bank by the central bank by means of amending the Bangladesh Banks (Nationalisation) Order 1972," the official added.
The bank is still under the 'Bangladesh Banks (Nationalisation) Order 1972," although there is a scope for bringing it under The Bank Company Act (Bangladesh), 1991, officials said.
Finance ministry officials said they are currently studying the options of Rupali Bank's privatisation as suggested by GBRW Limited, a British consultancy, which was charged with restructuring the bank.
The UK's consulting agency, in its review report, did not recommend the issuance of initial public offering as an option to hunt shareholders, saying liquidation of the bank will be a better option instead.
A fully-provisioned bank with clean accounts, and a partial provisioning were among other options, the GBRW recommended.
"But we've concluded that liquidation is not a viable option in view of the political economy. Neither full-provisioning, nor partial provisioning is also viable in the local context," a finance ministry official said, referring to the recent discussions with the WB and the IMF.
Banking sector analysts say Bangladesh would have drawn authentic buyers of the bank, if it had taken the decisions, including state guarantee for non-performing loans and recapitalisation, before negotiations with the Saudi Prince.
They feel the interim administration should intensify its drive to convince the Prince to buy Rupali in order to prevent a potential "privatisation disaster" from happening in Bangladesh's history.