Rupali divestment debacle puts a damper on Agrani sell-off agenda

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A Z M Anas
The World Bank (WB) has put its push for Agrani Bank sell-off agenda on the back burner, given the privatisation debacle in case of Rupali Bank.
"The bank has decided, in principle, not to increase its pressure on the government to start the sell-off process of Agrani Bank when the Rupali Bank privatisation has apparently been doomed into failure," a source at the finance ministry said.
The source, who was briefed about the new development, noted the global financial institution wants the interim administration to restructure the bank's board and appoint an efficient chief executive who can carry out other reforms.
The sources said the government was pledge-bound to appoint a financial adviser by the end of this year for Agrani to broker the process of its sell-off or attracting strategic investors.
"Bringing the Agrani Bank to the point of sale, a process that would be facilitated by appointment of a competent sales adviser, as in the case of Rupali Bank," says the programme document, exclusively crafted for the fourth tranche of Development Support Credit (DSC) development. Then BNP-led coalition government had appointed GBRW Limited, a British consultancy, to help move forward the divestment process of Rupali Bank.
The WB gave US$200 million, the fourth in a series, on condition that Bangladesh will corporatise Sonali, Janata and Agrani within a set timeline, bring Agrani to the "point of sale" and recruit chief executives of the three banks, tagging their job with performance.
No staffer at the World Bank's Dhaka office was available for comments.
"The global financial institution feels that the current atmosphere is not conducive to seeking strategic partners for Agrani. So, it's now overlooking the potentially contentious agenda," the finance ministry official told this correspondent.
Abu Naser Bukhtear, a former chief executive officer of Agrani Bank, feels that merger with other banks instead of sell-off will be the "best possible option" for Agrani, now a public limited company.
"If the bank is merged with other local banks, it will help generate millions of dollars and create a big bank in the country," Bukhtear, who is on the race to head the bank again, said Sunday in a telephone-interview.
The government has restructured the sickly commercial banks and turned Sonali, Janata and Agrani into public limited companies (PLCs) through a gazette notification to clear aside the way for divestment. The interim administration, however, has stuck to the previous decision of continuing its grip on Sonali Bank, since it handles treasury functions.
"Successful completion of the sale will mark a major milestone in the banking sector reform process and will set a powerful precedent for dealing with the other NCBs," the bank's document noted.
But finance ministry officials insisted that Rupali failed to create a "powerful precedent" as the global lender wished to.
Banking sector analysts, however, believe that the corporatisation process of three commercial lenders have enhanced their operational autonomy and accountability and, for the first time, brought them directly under Bangladesh Bank's supervisory and regulatory control.
The operations of these banks will be run by an autonomous board of directors, and the banks, which previously fell under the Bangladesh Bank's (Nationalisation) Order 1972, have now fallen under the Banking Companies Act 1991.
This is widely believed to have bolstered Bangladesh Bank's role to exercise fully its regulatory and supervisory powers over these newly corporatised banks.
Meanwhile, Saudi Prince Bandar Bin Mohammad Bin Abdul Rahman Al Saudi, has reneged on its promise to convey his decision to buy the majority stakes of Rupali Bank by November 30 to the Privatisation Commission.
The delay on the part of Saudi Prince, who outbid his rivals with the highest offer worth US$458 million to buy the majority stakes, at 93 per cent, is understood to have forced the global lender not to press the government side anew for sell another bank, still owned by the government.
Since 2001, Bangladesh has embarked on banking reforms, corporatising the three NCBs, while negotiating with a foreign buyer to sell Rupali.