Signing of vendors' agreement for 3 NCBs likely today

FE Team | Published: November 14, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

FE Report
The vendors' agreement to hand over assets and liabilities of state-owned Sonali, Janata and Agrani to the new banking companies is likely to be sealed today (Wednesday).
"The vendors' agreement with the newly-formed public limited companies (PLCs) is expected to be signed today in order to ensure transfer of assets and liabilities of Sonali, Janata and Agrani banks," a source familiar with the development told the FE Tuesday.
"Once signed, the agreement will empower the new boards of three banking companies to function independently, with the finance ministry taking a back seat," the source said.
The signing of the accord will mark a partial end to the government dominance in the country's banking sector, while also bringing the bank companies under the supervision of Bangladesh Bank.
On October 31, the Council of Advisers gave its seal of approval to the vendors' agreement, taking stock of the whole corporatisation process.
The state-run Sonali, Janata and Agrani banks have already obtained separate licences from the Registrar of Joint Stock Companies and Firms to operate as PLCs.
Relevant sources noted that the signing of the deal would allow the boards of such companies to have control over issues such as recruitment, firing of any staff, promotion and retrenchment.
The corporatisation process will also allow greater autonomy to the banks and enable the central bank to monitor their activities more rigorously, they said.
Earlier, the law ministry vetted the copy of the vendors' deal and gave its observations.
Financial analysts say modernisation is the cornerstone of sustainability of public sector banks, given the fact private commercial banks continued to generate what they called "super-profits."
Meanwhile, according to the sources, the finance ministry has already selected new chief executives of Sonali and Janata banks and they are expected to take up charges shortly.
The ministry is also on the look-out for appointing the chief executive officer of Agrani Bank as the post has remained vacant since the termination of contract of Abu Naser Bukhtear in September. Finance officials are now reviewing the applications submitted for the post.
The wind of reform has gained momentum in Bangladesh's banking system since 2004 when multilateral lenders, notably the International Monetary Fund and the World Bank (WB), pushed for restructuring the state-owned banks, tainted by inefficiency and corruption.
Under the WB-financed Enterprise Growth and Bank Modernisation Project, the then BNP-led coalition government agreed to privatise three of the four NCBs-Rupali, Janata and Agrani.
With a US$ 257.63 million loan from the global lender, the project is designed to overhaul Bangladesh's financial sector and stop losses of government-owned enterprises.
However, both sides reached a broader consensus on retaining the status of Sonali Bank as a treasury bank.