Central bank advises govt to part with sick BCB
Thursday, 13 August 2009
Nazmul Ahsan
The Bangladesh Bank has suggested the government to wash its hands of the Bangladesh Commerce Bank (BCB), a problem bank, and recommended a few options in this connection.
The central bank suggestion came in the backdrop of an ever-deteriorating financial health of the bank. The government owns 40 per cent stake of the bank that originated from a collapsing private sector non-banking financial institution.
The BB, according to sources, in a recent report has proposed to the finance ministry, at least, four options to offload the shares held by the government in the BCB.
The BB report while highlighting the sickness of the bank said the bank has a capital shortfall of Tk 1.76 billion and provision shortfall Tk 781 million. The non- performing loan as of March last was 27.67 of the outstanding loan of the bank.
The BB has suggested the government to increase the approved paid-up capital of the BCB to Tk 4.0 billion from its current level of Tk 2.0 billion prior to the implementation of any of the first three options suggested by it.
In the first option, the BB has suggested increase in the paid-up capital of the bank and transfer of the same to a strategic partner.
The central bank in its second option recommended formulation of a reconstitution scheme for the BCB and transfer its share to both new investors and to existing depositors of the bank.
The merger of the BCB with any other bank, particularly with one of state-owned banks, is the third option suggested by the BB.
The BB in its last option recommended selling off the government's share to private sector without increasing the BCB's paid-up capital.
When asked, officials concerned in the finance ministry declined to make any comment on the future course of action relating to the BCB. They said the recommendations made by the BB are being scrutinized now.
The BCB was established through the reorganization of the former Bangladesh Commerce and Investment Ltd. (BCIL), which was set up on 27th January 1986 as a non-banking financial initiation with an authorized and paid-up capital of Tk. 300.00 million and Tk. 50.00 million respectively.
BCIL started functioning as an investment company and continued its business until April 1992. Consequent upon its liquidity crisis, Bangladesh Bank suspended its operation in April 1992. As a result the investors suffered a lot and the employees of the company rendered jobless. Ultimately to safeguard the interest of the depositors, employees and the general public, the government intervened and the Parliament passed an act in 1997 for the establishment of Bangladesh Commerce Bank Ltd.
The Bank formally started operation form 16th September 1999 with the paid-up capital of Tk. 920 million. 0f the amount, Tk. 300 million was provided by the government, Tk 100 million jointly by Sonali Bank, Janata Bank and Agrani Bank and the rest Tk.520 million by the depositors.
Presently, three directors represent depositors on 12-member boards of directors of the bank.
Currently, the BCB has 25 branches employing 452 officers and employees.
The Bangladesh Bank has suggested the government to wash its hands of the Bangladesh Commerce Bank (BCB), a problem bank, and recommended a few options in this connection.
The central bank suggestion came in the backdrop of an ever-deteriorating financial health of the bank. The government owns 40 per cent stake of the bank that originated from a collapsing private sector non-banking financial institution.
The BB, according to sources, in a recent report has proposed to the finance ministry, at least, four options to offload the shares held by the government in the BCB.
The BB report while highlighting the sickness of the bank said the bank has a capital shortfall of Tk 1.76 billion and provision shortfall Tk 781 million. The non- performing loan as of March last was 27.67 of the outstanding loan of the bank.
The BB has suggested the government to increase the approved paid-up capital of the BCB to Tk 4.0 billion from its current level of Tk 2.0 billion prior to the implementation of any of the first three options suggested by it.
In the first option, the BB has suggested increase in the paid-up capital of the bank and transfer of the same to a strategic partner.
The central bank in its second option recommended formulation of a reconstitution scheme for the BCB and transfer its share to both new investors and to existing depositors of the bank.
The merger of the BCB with any other bank, particularly with one of state-owned banks, is the third option suggested by the BB.
The BB in its last option recommended selling off the government's share to private sector without increasing the BCB's paid-up capital.
When asked, officials concerned in the finance ministry declined to make any comment on the future course of action relating to the BCB. They said the recommendations made by the BB are being scrutinized now.
The BCB was established through the reorganization of the former Bangladesh Commerce and Investment Ltd. (BCIL), which was set up on 27th January 1986 as a non-banking financial initiation with an authorized and paid-up capital of Tk. 300.00 million and Tk. 50.00 million respectively.
BCIL started functioning as an investment company and continued its business until April 1992. Consequent upon its liquidity crisis, Bangladesh Bank suspended its operation in April 1992. As a result the investors suffered a lot and the employees of the company rendered jobless. Ultimately to safeguard the interest of the depositors, employees and the general public, the government intervened and the Parliament passed an act in 1997 for the establishment of Bangladesh Commerce Bank Ltd.
The Bank formally started operation form 16th September 1999 with the paid-up capital of Tk. 920 million. 0f the amount, Tk. 300 million was provided by the government, Tk 100 million jointly by Sonali Bank, Janata Bank and Agrani Bank and the rest Tk.520 million by the depositors.
Presently, three directors represent depositors on 12-member boards of directors of the bank.
Currently, the BCB has 25 branches employing 452 officers and employees.