BB to seek EoI for Tk 3.5b sponsor shares for Oriental restructuring
Friday, 3 August 2007
Siddique Islam
The Bangladesh Bank (BB) is going to issue expression of interest (EoI) for selling the sponsor shares of troubled Oriental Bank Limited worth Tk 3.5 billion within a week.
The central bank took the move following the approval of a restructuring scheme for the bank by the government to protect depositors' interest.
Besides, the BB has planed to complete the implementation of the scheme by January 25, 2008, official sources said.
"We will try to install a new management in the bank in line with restructuring scheme by January 25 next," a BB senior official told the FE Thursday.
He also said the extension of the moratorium on activities of the bank will not be possible further as per the existing rules and regulations.
On June 27 last, the government extended moratorium on some banking activities of the bank for six more months to protect depositors' interest and facilitate its restructuring.
But the order came into effect from July 25 last.
On January 25 last, the finance ministry imposed six-month moratorium first to put restriction on withdrawal of cash above Tk 10,000 by the depositors. In case of new deposits, there is no restriction on withdrawal of money during the period.
Under the approved restructuring scheme, the paid up capital of the bank will reach Tk 7.0 billion while the general shareholders, including its depositors, will hold Tk 3.0 billion in terms of shares. Each share will have a face value of Tk 1000.
The finance ministry informed the central bank that it had approved the scheme and asked it to take necessary measures in this connection, the sources added.
The central bank will invite the EoI through its website and newspapers to attract potential investors for selling the sponsor shares of the Shariah- based Islamic bank.
"Both local and foreign investors may submit their letters of intent (LoI) to buy the shares," the BB official said, adding that the central bank will call bids from the investors after short listing.
The central bank will take decision to transfer the shares on the basis of the bids, he noted.
Under the scheme, a client having below Tk 1.0 million in deposit may buy shares with the money equivalent to 10 per cent of his deposit amount.
But a client, who has deposit ranging from Tk 1.0 million to Tk 10 million and above will have to buy the shares against the deposit.
Depositors having Tk 1.0 million or above but less than Tk 5.0 million must buy shares utilising 10 per cent of the deposited amount while those who have deposit worth Tk 5.0 million or above but less than Tk 10 million have to take shares against 20 per cent of the deposit.
Depositors having Tk 10 million or above have to buy shares with the amount equivalent to 25 per cent of the deposit.
Besides, the management of the bank will pay back the deposited money to the clients without any interest after adjusting the amount required for obtaining the bank shares.
The authorities also set a timeframe for paying back the money to the depositors in line with the scheme.
Sources, however, said the central bank has finalised all official formalities for publishing a gazette notification and issuing a circular in this connection. The approved scheme will come into effect from August 5.
The central bank took over the overall management of the bank and appointed an administrator on June 19, 2006 to protect the depositors' interest.
On August 6, 2006 the central bank ordered the removal of the managing director of the bank and superceded the board of directors for a period of one year.
The Oriental Bank Limited, a Shariah-based bank, started its operation on May 20, 1987 under the name of Al Baraka Bank Bangladesh Limited.
The bank is now running its business through 30 branches across the country where a total of 713 employees are engaged at different levels.
The Bangladesh Bank (BB) is going to issue expression of interest (EoI) for selling the sponsor shares of troubled Oriental Bank Limited worth Tk 3.5 billion within a week.
The central bank took the move following the approval of a restructuring scheme for the bank by the government to protect depositors' interest.
Besides, the BB has planed to complete the implementation of the scheme by January 25, 2008, official sources said.
"We will try to install a new management in the bank in line with restructuring scheme by January 25 next," a BB senior official told the FE Thursday.
He also said the extension of the moratorium on activities of the bank will not be possible further as per the existing rules and regulations.
On June 27 last, the government extended moratorium on some banking activities of the bank for six more months to protect depositors' interest and facilitate its restructuring.
But the order came into effect from July 25 last.
On January 25 last, the finance ministry imposed six-month moratorium first to put restriction on withdrawal of cash above Tk 10,000 by the depositors. In case of new deposits, there is no restriction on withdrawal of money during the period.
Under the approved restructuring scheme, the paid up capital of the bank will reach Tk 7.0 billion while the general shareholders, including its depositors, will hold Tk 3.0 billion in terms of shares. Each share will have a face value of Tk 1000.
The finance ministry informed the central bank that it had approved the scheme and asked it to take necessary measures in this connection, the sources added.
The central bank will invite the EoI through its website and newspapers to attract potential investors for selling the sponsor shares of the Shariah- based Islamic bank.
"Both local and foreign investors may submit their letters of intent (LoI) to buy the shares," the BB official said, adding that the central bank will call bids from the investors after short listing.
The central bank will take decision to transfer the shares on the basis of the bids, he noted.
Under the scheme, a client having below Tk 1.0 million in deposit may buy shares with the money equivalent to 10 per cent of his deposit amount.
But a client, who has deposit ranging from Tk 1.0 million to Tk 10 million and above will have to buy the shares against the deposit.
Depositors having Tk 1.0 million or above but less than Tk 5.0 million must buy shares utilising 10 per cent of the deposited amount while those who have deposit worth Tk 5.0 million or above but less than Tk 10 million have to take shares against 20 per cent of the deposit.
Depositors having Tk 10 million or above have to buy shares with the amount equivalent to 25 per cent of the deposit.
Besides, the management of the bank will pay back the deposited money to the clients without any interest after adjusting the amount required for obtaining the bank shares.
The authorities also set a timeframe for paying back the money to the depositors in line with the scheme.
Sources, however, said the central bank has finalised all official formalities for publishing a gazette notification and issuing a circular in this connection. The approved scheme will come into effect from August 5.
The central bank took over the overall management of the bank and appointed an administrator on June 19, 2006 to protect the depositors' interest.
On August 6, 2006 the central bank ordered the removal of the managing director of the bank and superceded the board of directors for a period of one year.
The Oriental Bank Limited, a Shariah-based bank, started its operation on May 20, 1987 under the name of Al Baraka Bank Bangladesh Limited.
The bank is now running its business through 30 branches across the country where a total of 713 employees are engaged at different levels.