Govt urged to allow more banks to do merchant banking
Tuesday, 10 July 2007
FE Report
Listed banks have reiterated the demand of the government for allowing more commercial banks to do merchant banking to strengthen the institutional support in the stock market.
The demand was raised at a meeting Monday, arranged by the Dhaka Stock Exchange (DSE).
Top executives of commercial banks, financial institutions and Securities and Exchange Commission (SEC) were present in the meeting held at a local hotel.
The banks and financial institutions have also demanded of the SEC to expedite the process relating to permission for floatation of mutual funds in the market.
At present only 14 mutual funds are operating in the stock market with the issued capital of Tk 835 million.
"We don't understand why the SEC has forwarded the applications of the banks on merchant bank operation to the finance ministry, those are gathering dusts in the ministry for years," a market operator was quoted as saying in the meeting.
He also stated that the SEC, not the finance ministry, has the sole authority for permitting the banks on operation of merchant banking.
Currently, only a few private commercial banks--AB Bank, Prime Bank, Dhaka Bank and Exim Bank-are doing merchant banking among the 28 listed commercial banks.
Sources concerned said commercial banks -- Mutual Trust Bank Ltd, One Bank Ltd, National Bank Ltd, Standard Bank Ltd and Trust Bank Ltd -- applied more than four years back for merchant banking operations, aiming to strengthen the institutional support in the stock market.
But the finance ministry did not allow any of them.
Market operators further said that the amendment in the Securities and Exchange Commission (merchant banker and portfolio manager) regulations, 1996 which allowed the merchant bankers to do portfolio management with the bankers' own funds would bring real benefit to the stock market, once all the commercial banks come forward in the stock market.
Earlier, merchant bankers were only allowed to do portfolio management with the clients' funds.
The SEC on April 17 of 2006 amended the Securities and Exchange Commission (merchant banker and portfolio manager) regulations, 1996 allowing the merchant bankers to manage portfolios with the bankers' own funds.
At present, there are 26 merchant banks, but only four -- AB Bank, Prime Finance & Investment Company Ltd, AAA Consultant and Financial Advisor and ICB Capital Management Ltd -- remained active.
The SEC first issued registrations to some 25 merchant banks in early 1997. The paid-up capital of each full-fledged merchant bank is now Tk 20 million only.
But the paid-up capital of the merchant banks should be enhanced to Tk 250 million in view of the present market situation, said a market operator.
The paid-up capital is now Tk 10 million for merchant banks which perform underwriting and Tk 2.5 million for issue managers.
Listed banks have reiterated the demand of the government for allowing more commercial banks to do merchant banking to strengthen the institutional support in the stock market.
The demand was raised at a meeting Monday, arranged by the Dhaka Stock Exchange (DSE).
Top executives of commercial banks, financial institutions and Securities and Exchange Commission (SEC) were present in the meeting held at a local hotel.
The banks and financial institutions have also demanded of the SEC to expedite the process relating to permission for floatation of mutual funds in the market.
At present only 14 mutual funds are operating in the stock market with the issued capital of Tk 835 million.
"We don't understand why the SEC has forwarded the applications of the banks on merchant bank operation to the finance ministry, those are gathering dusts in the ministry for years," a market operator was quoted as saying in the meeting.
He also stated that the SEC, not the finance ministry, has the sole authority for permitting the banks on operation of merchant banking.
Currently, only a few private commercial banks--AB Bank, Prime Bank, Dhaka Bank and Exim Bank-are doing merchant banking among the 28 listed commercial banks.
Sources concerned said commercial banks -- Mutual Trust Bank Ltd, One Bank Ltd, National Bank Ltd, Standard Bank Ltd and Trust Bank Ltd -- applied more than four years back for merchant banking operations, aiming to strengthen the institutional support in the stock market.
But the finance ministry did not allow any of them.
Market operators further said that the amendment in the Securities and Exchange Commission (merchant banker and portfolio manager) regulations, 1996 which allowed the merchant bankers to do portfolio management with the bankers' own funds would bring real benefit to the stock market, once all the commercial banks come forward in the stock market.
Earlier, merchant bankers were only allowed to do portfolio management with the clients' funds.
The SEC on April 17 of 2006 amended the Securities and Exchange Commission (merchant banker and portfolio manager) regulations, 1996 allowing the merchant bankers to manage portfolios with the bankers' own funds.
At present, there are 26 merchant banks, but only four -- AB Bank, Prime Finance & Investment Company Ltd, AAA Consultant and Financial Advisor and ICB Capital Management Ltd -- remained active.
The SEC first issued registrations to some 25 merchant banks in early 1997. The paid-up capital of each full-fledged merchant bank is now Tk 20 million only.
But the paid-up capital of the merchant banks should be enhanced to Tk 250 million in view of the present market situation, said a market operator.
The paid-up capital is now Tk 10 million for merchant banks which perform underwriting and Tk 2.5 million for issue managers.