Group of 8 eyes BCB's govt stake
Tuesday, 26 January 2010
Nazmul Ahsan
A group of eight firms -- seven local and one joint-venture companies -- is lobbying to buy the government stake in Bangladesh Commerce Bank (BCB), sources in the Prime Minister's Office (PMO) said on Monday.
The PMO has initially been convinced to sell the government's share in BCB to interested private investors and asked the Ministry of Finance (MoF) and Bangladesh Bank (BB) for necessary actions.
The interested companies are: Dhaka Capital Builders, Modern Capital City Ltd, Fuwang Food Industries Ltd, Razzak Textile Mills Ltd, Mak Fine Paper, BRB Cables, S A Paribahan and Noman Group of Industries.
Of them, Fuwang Food Industries is a Taiwan-Bangladesh joint venture company, while the remaining seven business entities are owned by local industrialists.
The Dhaka Capital Builders is the lead business firm among eight, a top official in the PMO said. He, however, said the interested companies are yet to mention the proportion of shares to be bought from 40 per cent government's stake in BCB.
"Their (eight interested companies) investment could be equal, which is not yet been elaborated.. They are lobbying hard,' the top official in the PMO said.
Mashiur Rahman, Economic Affairs Adviser to the Prime Minister Sheikh Hasina, has recently asked both MoF and BB to initiative to sell off the 40 per cent share of the government in BCB, an official concerned said.
However, the officials concerned in MoF and BB remained tight lipped on the issue.
'We have no comment; please wait and see,' a senior BB official told the FE on Monday when asked to give information about the development of BCB as per the directive of the PMO.
The government owns 40 per cent stake of the bank, which was created out of a collapsing private sector non-banking financial institution.
Earlier, BB suggested the government to wash its hands of BCB, a problem bank, and recommended a few bailout options in this connection.
The central bank suggestion came in the backdrop of deteriorating financial health of the bank. The BB in a report proposed to the finance ministry at least four options to offload the shares held by the government in the BCB.
The BB 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 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.
According to the latest statistics, the bank has a capital shortfall of Tk 1.76 billion and provision shortfall of Tk 781 million. The non- performing loan as of December, 2009 of BCB was about 27 per cent of the outstanding loan of the bank.
The BCB was established through reorganisation 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 authorised 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 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.
Currently, three directors represent depositors on a 12-member board of directors of the bank.
The BCB has 25 branches employing 452 officers and employees.
The MoF in November last decided to maintain the status-quo as far as the ownership structure of the Bangladesh Commerce Bank (BCB) is concerned until 2010.
A group of eight firms -- seven local and one joint-venture companies -- is lobbying to buy the government stake in Bangladesh Commerce Bank (BCB), sources in the Prime Minister's Office (PMO) said on Monday.
The PMO has initially been convinced to sell the government's share in BCB to interested private investors and asked the Ministry of Finance (MoF) and Bangladesh Bank (BB) for necessary actions.
The interested companies are: Dhaka Capital Builders, Modern Capital City Ltd, Fuwang Food Industries Ltd, Razzak Textile Mills Ltd, Mak Fine Paper, BRB Cables, S A Paribahan and Noman Group of Industries.
Of them, Fuwang Food Industries is a Taiwan-Bangladesh joint venture company, while the remaining seven business entities are owned by local industrialists.
The Dhaka Capital Builders is the lead business firm among eight, a top official in the PMO said. He, however, said the interested companies are yet to mention the proportion of shares to be bought from 40 per cent government's stake in BCB.
"Their (eight interested companies) investment could be equal, which is not yet been elaborated.. They are lobbying hard,' the top official in the PMO said.
Mashiur Rahman, Economic Affairs Adviser to the Prime Minister Sheikh Hasina, has recently asked both MoF and BB to initiative to sell off the 40 per cent share of the government in BCB, an official concerned said.
However, the officials concerned in MoF and BB remained tight lipped on the issue.
'We have no comment; please wait and see,' a senior BB official told the FE on Monday when asked to give information about the development of BCB as per the directive of the PMO.
The government owns 40 per cent stake of the bank, which was created out of a collapsing private sector non-banking financial institution.
Earlier, BB suggested the government to wash its hands of BCB, a problem bank, and recommended a few bailout options in this connection.
The central bank suggestion came in the backdrop of deteriorating financial health of the bank. The BB in a report proposed to the finance ministry at least four options to offload the shares held by the government in the BCB.
The BB 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 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.
According to the latest statistics, the bank has a capital shortfall of Tk 1.76 billion and provision shortfall of Tk 781 million. The non- performing loan as of December, 2009 of BCB was about 27 per cent of the outstanding loan of the bank.
The BCB was established through reorganisation 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 authorised 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 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.
Currently, three directors represent depositors on a 12-member board of directors of the bank.
The BCB has 25 branches employing 452 officers and employees.
The MoF in November last decided to maintain the status-quo as far as the ownership structure of the Bangladesh Commerce Bank (BCB) is concerned until 2010.