Govt unlikely to extend services of Agrani Bank consultants

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A Z M Anas
The caretaker government (CG) is unlikely to extend the advisory services of the PricewaterhouseCoopers (PwC) for the modernisation of Agrani Bank.
A working group, which oversees reforms in the state-run commercial banks, feels that the contract of the management advisory team for Agrani Bank should no longer be extended, well-placed sources said.
The PwC has sought a one-year extension, given its team's performance in turning the bank into "a reasonably profitable" financial institution, it was reliably learnt.
Last month, the working group, headed by a deputy governor of the Bangladesh Bank, recommended that services of the global consultancy firm should be not be extended.
"The finance ministry will act on the recommendations of the working group," a source confirmed.
The immediate past BNP-led coalition government struck a deal with the global consultancy firm in 2004 for a period of three years, putting in place an advisory team at the bank's top management level as part of broader reforms in the country's banking sector. The contract is set to expire in October next.
But the sources feared the bureaucrats currently serving with Agrani Bank still lacked capacity to deftly handle the bank's modernisation plan.
The sources insisted that the decision of not renewing the contract would be "arbitrary," given the fact that the bank started to churn out profits.
Chief executive officer of Agrani Bank Syed Abu Naser Bukhtear Ahmed declined to comment on the issue of service renewal of the global consultancy firm.
The bank, however, has continued to generate profits since appointment of PricewaterhouseCoopers, although its profits never exceeded the Tk 1.0 billion mark in the last 31 years.
According to official figures, Agrani's profits rose to Tk 3.58 billion (358 crore) in 2006 from Tk 2.14 billion in 2005. Even this year's profits are set to hit Tk 5.0 billion, bank officials said.
Naser, a banking veteran, notes that the contract has the provision of services extension on the basis of performance.
The bank is considered the only government-owned financial institution with "clean" audited statements since 2004.
Although Naser skipped a question as to whether the bank is ready for privatisation in the near future, he said the state-owned Agrani will be a public limited company (PLC) by the end of this month.
"I believe the Agrani Bank will be turned into a PLC by the end of this month. Vendors agreement will be signed shortly. Then the government will issue a gazette notification to transfer the assets and liabilities of the bank to the new company," he told the FE.
Originally, the advisory team comprised 11 members, but currently the posts of three advisers are remaining vacant.
Bank insiders say the absence of the advisers has limited the ability to implement the long-term management plan in some areas, notably in credit and branch management.
The government had appointed three consultancy agencies for Agrani, Sonali and Janata banks as part of its broader goal in overhauling the country's banking industry, characterised by inefficiency and losses.
The World Bank, one of the major donors of Bangladesh, extended financial support for carrying out reforms in the banking sector.
Meanwhile, the contract of the International Business and Technological Consultants Limited (IBTCL), which was tasked with advising the Sonali Bank management, expired on June 17, 2007.
On the other hand, the tenure of Janata Bank management consultants will expire on May 16, 2008.