Ownership structure of BCB to remain unchanged until 2010
Saturday, 21 November 2009
Nazmul Ahsan
The Ministry of Finance (MoF) has decided to maintain the status-quo as far as the ownership structure of the Bangladesh Commerce Bank (BCB) is concerned until 2010.
Besides, a move has been taken to increase its paid-up capital as suggested by the Bangladesh Bank (BB), official sources said.
The financial health of BCB will have to be improved before taking any decision towards restructuring or merging or offloading the shares of the bank. The government and three state-owned banks own over 43 per cent shares of the BCB, sources said.
In a recent directive, Finance Minister AMA Muhith has asked the officials concerned to maintain the status quo in terms of ownership of the BCB until 2010 to help strengthen the capital of the bank and make it more attractive to investors, officials in the MoF said.
The directive which was issued by Mr Muhith came after the law ministry gave the finance ministry a go-ahead signal recently either for restructuring or merging or offloading shares of the bank.
Earlier, the BB in August, proposed to the MoF to implement any of the options.
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 implementa -tion 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.
Meanwhile, the Board of Directors of BCB has recently decided to issue 1:1.25 right shares to the shareholders of the bank to increase its paid-up capital to Tk 2.0 billion. The paid-up capital of BCB is now Tk 920 million.
The decision of issuing right shares has recently been sent to the MoF for approval.
"We are going to seek opinion of BB on the proposed right share of BCB before allowing the bank to increase its capital base,'' a top MoF official told the FE.
He said they want financial improvement of the bank before deciding its fate after 2010.
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 Ministry of Finance (MoF) has decided to maintain the status-quo as far as the ownership structure of the Bangladesh Commerce Bank (BCB) is concerned until 2010.
Besides, a move has been taken to increase its paid-up capital as suggested by the Bangladesh Bank (BB), official sources said.
The financial health of BCB will have to be improved before taking any decision towards restructuring or merging or offloading the shares of the bank. The government and three state-owned banks own over 43 per cent shares of the BCB, sources said.
In a recent directive, Finance Minister AMA Muhith has asked the officials concerned to maintain the status quo in terms of ownership of the BCB until 2010 to help strengthen the capital of the bank and make it more attractive to investors, officials in the MoF said.
The directive which was issued by Mr Muhith came after the law ministry gave the finance ministry a go-ahead signal recently either for restructuring or merging or offloading shares of the bank.
Earlier, the BB in August, proposed to the MoF to implement any of the options.
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 implementa -tion 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.
Meanwhile, the Board of Directors of BCB has recently decided to issue 1:1.25 right shares to the shareholders of the bank to increase its paid-up capital to Tk 2.0 billion. The paid-up capital of BCB is now Tk 920 million.
The decision of issuing right shares has recently been sent to the MoF for approval.
"We are going to seek opinion of BB on the proposed right share of BCB before allowing the bank to increase its capital base,'' a top MoF official told the FE.
He said they want financial improvement of the bank before deciding its fate after 2010.
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.