BB opinion sought on BRAC Bank
FE Report | Thursday, 19 June 2008
The Ministry of Finance has sought opinion from the central bank about selling of 51 per cent shares of the GSP Finance, financial institution, to the BRAC Bank Limited, officials said.
The ministry asked the Bangladesh Bank (BB) to provide information about the draft Memorandum of Understanding (MoU), signed between the GSP Finance and BRAC Bank Limited, the price of shares and the cause for non-floatation of shares by GSP.
"We will submit our report providing such information to the ministry within the next week," a BB senior official told the FE, adding that the central bank is now working to prepare such report.
A special team has already collected information from the GSP Finance to determine the existing asset-liability position of the non-banking financial institution, they added.
"The central bank wants the GSP Finance become a stronger entity with adequate financial base," another BB official said, adding that the BB has no objection if there is legal compliance by the parties concerned.
On May 8 last, the board of directors of BRAC Bank Ltd decided in principle (subject to the necessary regulatory approval) to acquire 1,946,500 shares of GSP Finance.
A memorandum of understanding has already been signed between BRAC Bank and GSP Finance.
The total number of GSP shares will stand at 3,816,500 after the paid-up capital is raised through issuance of 1,946,500 shares.
The BRAC Bank agreed in principle to acquire 1,946,500 shares, which will be 51 per cent of the post-issue paid up share capital of the company, where local and foreign stakes are involved.
After signing the MoU, the BRAC Bank has appealed the central bank for exemption of a certain section of the existing Bank Company Act that will allow purchase of the shares.
Under the existing Bank Company Act, no bank company shall empower holding shares in any company whether as pledge or mortgage or exclusive owner of an amount exceeding namely -a) thirty per cent of the total amount of the paid up capital and reserve of the said company and b) thirty per cent of the paid up capital of the said company.
The government, however, in consultation with the central bank may declare through notification that all or a particular section of the Act shall not be applicable to any bank company or any class of bank companies either generally or for such period as may be specified in the notification.
The concerned department of BB has sent a letter to the finance ministry seeking opinion to apply the authority for such exemption in certain cases in line with the existing bank company act.
The GSP Finance Company (Bangladesh) Limited (GSPB) was incorporated in Bangladesh on 29th October 1995 with the Registrar of Joint Stock Companies and Firms.
It started its commercial operation on April 17, 1996 under licence granted by the BB in accordance with the Financial Institutions Act of 1993.
The ministry asked the Bangladesh Bank (BB) to provide information about the draft Memorandum of Understanding (MoU), signed between the GSP Finance and BRAC Bank Limited, the price of shares and the cause for non-floatation of shares by GSP.
"We will submit our report providing such information to the ministry within the next week," a BB senior official told the FE, adding that the central bank is now working to prepare such report.
A special team has already collected information from the GSP Finance to determine the existing asset-liability position of the non-banking financial institution, they added.
"The central bank wants the GSP Finance become a stronger entity with adequate financial base," another BB official said, adding that the BB has no objection if there is legal compliance by the parties concerned.
On May 8 last, the board of directors of BRAC Bank Ltd decided in principle (subject to the necessary regulatory approval) to acquire 1,946,500 shares of GSP Finance.
A memorandum of understanding has already been signed between BRAC Bank and GSP Finance.
The total number of GSP shares will stand at 3,816,500 after the paid-up capital is raised through issuance of 1,946,500 shares.
The BRAC Bank agreed in principle to acquire 1,946,500 shares, which will be 51 per cent of the post-issue paid up share capital of the company, where local and foreign stakes are involved.
After signing the MoU, the BRAC Bank has appealed the central bank for exemption of a certain section of the existing Bank Company Act that will allow purchase of the shares.
Under the existing Bank Company Act, no bank company shall empower holding shares in any company whether as pledge or mortgage or exclusive owner of an amount exceeding namely -a) thirty per cent of the total amount of the paid up capital and reserve of the said company and b) thirty per cent of the paid up capital of the said company.
The government, however, in consultation with the central bank may declare through notification that all or a particular section of the Act shall not be applicable to any bank company or any class of bank companies either generally or for such period as may be specified in the notification.
The concerned department of BB has sent a letter to the finance ministry seeking opinion to apply the authority for such exemption in certain cases in line with the existing bank company act.
The GSP Finance Company (Bangladesh) Limited (GSPB) was incorporated in Bangladesh on 29th October 1995 with the Registrar of Joint Stock Companies and Firms.
It started its commercial operation on April 17, 1996 under licence granted by the BB in accordance with the Financial Institutions Act of 1993.