Govt decides to offload its entire stake in BCBL
Monday, 18 October 2010
Nazmul Ahsan
The Ministry of Finance (MoF) after a long indecision has finally decided to sell out its whole of 32.60 per cent share, including 10.86 per cent share of three state owned banks, now held with Bangladesh Commerce Bank Limited (BCBL), to private investors upon examining the recommendations of Bangladesh Bank (BB), a top official said.
The decision of the ministry has recently been sent to the cabinet division for approval.
The final decision came after ministry officials had found that offloading the government's share of BCBL or merging the bank or undertaking its reconstitution scheme, as recommended earlier by BB, would not bring any positive result to the ailing bank. Selling out the whole of the government's share to private investors was also included in the recommendations of BB, sources said.
The proposal of the ministry, sent to the cabinet division, however, has not mentioned any strategy on passing the bank to private sector.
The strategy of washing the government hands off from the BCBL either could be through open tendering or through Privatization Commission or through offloading by way of stock markets, hinted a top MoF official.
"Selling of the government's stake in BCBL has been finalised. After obtaining approval from the cabinet meeting, the MoF will be the final authority to devise the strategy to sell out the BCBL to private sector," a top MoF official said.
The Prime Minister's Office (PMO) also wants the government to sell its stake in BCBL, he added.
The government owns 32.60 per cent share of BCBL, 10.86 per cent share is held by Sonali, Janata and Agrani bank Limited equally. The majority share of BCBL is owned by general investors.
A group of interested businessmen including a number of law makers have been showing their keen interest to buy the government's stake in BCBL. The MoF asked BB several times to recommend options to finalise the next course of action of the problem bank.
Bangladesh Bank in August last year recommended an increase in paid-up capital of the bank and transfer it to a strategic partner.
The central bank in its second option recommended formulation of a reconstitution scheme for the BCBL and transfer its share to both new investors and to existing depositors.
The merger of the BCBL with any other bank, particularly with one of the state-owned banks, was the third option suggested by BB.
The BB in its last option recommended selling of the government's share to the private sector without increasing the BCBL's paid-up capital.
Earlier, the BB suggested the government to increase the paid-up capital of BCBL through issuing rights shares or restructure it soon to make the largely government-owned bank a viable financial entity.
The BB in its recommendation proposed issuance of 1.25 rights shares for every single share of Tk 100 to increase the paid-up capital of BCBL from the existing Tk 920 million to Tk 2.0 billion.
Currently, the BCBL has Tk 2.0 billion in authorised capital and Tk 920 million in paid-up capital.
The BCBL has a capital shortfall of Tk 1.63 billion and provision shortfall of Tk 766 million as of June, 2010. The non-performing loan as of June this year was about 28 per cent of the outstanding loan of the bank.
Meanwhile, a group of at least eight, including one joint-venture food company, business entities conveyed its intention to the PMO to take over the full government stake in BCBL.
Besides, a businessman-turned lawmaker has long been pursuing a number of top policy makers in the government to buy the entire government share of BCBL, informed sources said.
The BCBL was established through the reorganisation of the former Bangladesh Commerce and Investment Ltd. (BCIL), which was set up on 27th January 1986 as a non-banking financial initiation.
BCIL started functioning as an investment company and continued its business until April 1992. Consequent upon its liquidity crisis, BB 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 parliament passed an act in 1997 for the establishment of Bangladesh Commerce Bank Ltd.
The bank formally started operation form September 16, 1999 with the paid-up capital of Tk. 920 million. Of 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 the 12-member board of directors of the bank.
The BCBL has 25 branches employing 452 officers and employees.
The Ministry of Finance (MoF) after a long indecision has finally decided to sell out its whole of 32.60 per cent share, including 10.86 per cent share of three state owned banks, now held with Bangladesh Commerce Bank Limited (BCBL), to private investors upon examining the recommendations of Bangladesh Bank (BB), a top official said.
The decision of the ministry has recently been sent to the cabinet division for approval.
The final decision came after ministry officials had found that offloading the government's share of BCBL or merging the bank or undertaking its reconstitution scheme, as recommended earlier by BB, would not bring any positive result to the ailing bank. Selling out the whole of the government's share to private investors was also included in the recommendations of BB, sources said.
The proposal of the ministry, sent to the cabinet division, however, has not mentioned any strategy on passing the bank to private sector.
The strategy of washing the government hands off from the BCBL either could be through open tendering or through Privatization Commission or through offloading by way of stock markets, hinted a top MoF official.
"Selling of the government's stake in BCBL has been finalised. After obtaining approval from the cabinet meeting, the MoF will be the final authority to devise the strategy to sell out the BCBL to private sector," a top MoF official said.
The Prime Minister's Office (PMO) also wants the government to sell its stake in BCBL, he added.
The government owns 32.60 per cent share of BCBL, 10.86 per cent share is held by Sonali, Janata and Agrani bank Limited equally. The majority share of BCBL is owned by general investors.
A group of interested businessmen including a number of law makers have been showing their keen interest to buy the government's stake in BCBL. The MoF asked BB several times to recommend options to finalise the next course of action of the problem bank.
Bangladesh Bank in August last year recommended an increase in paid-up capital of the bank and transfer it to a strategic partner.
The central bank in its second option recommended formulation of a reconstitution scheme for the BCBL and transfer its share to both new investors and to existing depositors.
The merger of the BCBL with any other bank, particularly with one of the state-owned banks, was the third option suggested by BB.
The BB in its last option recommended selling of the government's share to the private sector without increasing the BCBL's paid-up capital.
Earlier, the BB suggested the government to increase the paid-up capital of BCBL through issuing rights shares or restructure it soon to make the largely government-owned bank a viable financial entity.
The BB in its recommendation proposed issuance of 1.25 rights shares for every single share of Tk 100 to increase the paid-up capital of BCBL from the existing Tk 920 million to Tk 2.0 billion.
Currently, the BCBL has Tk 2.0 billion in authorised capital and Tk 920 million in paid-up capital.
The BCBL has a capital shortfall of Tk 1.63 billion and provision shortfall of Tk 766 million as of June, 2010. The non-performing loan as of June this year was about 28 per cent of the outstanding loan of the bank.
Meanwhile, a group of at least eight, including one joint-venture food company, business entities conveyed its intention to the PMO to take over the full government stake in BCBL.
Besides, a businessman-turned lawmaker has long been pursuing a number of top policy makers in the government to buy the entire government share of BCBL, informed sources said.
The BCBL was established through the reorganisation of the former Bangladesh Commerce and Investment Ltd. (BCIL), which was set up on 27th January 1986 as a non-banking financial initiation.
BCIL started functioning as an investment company and continued its business until April 1992. Consequent upon its liquidity crisis, BB 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 parliament passed an act in 1997 for the establishment of Bangladesh Commerce Bank Ltd.
The bank formally started operation form September 16, 1999 with the paid-up capital of Tk. 920 million. Of 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 the 12-member board of directors of the bank.
The BCBL has 25 branches employing 452 officers and employees.