Prime Bank to hike investment in telecom, power projects
Tuesday, 23 March 2010
FE Report
Prime Bank has planned to scale up financing in infrastructures including the capital-intensive power and telecom sectors as part of its efforts to boost industrialisation in the country, its chief executive officer (CEO) said Monday.
Risk-averse Bangladeshi private banks usually stay clear of funding big projects, forcing many local investors to seek loans abroad or at a costly term from foreign financial giants operating in the country.
Prime Bank Limited CEO Ehsanul Haque said the PBL - the leading private bank in the country -- wants to be an exception as it has planned to bankroll key energy and telecom projects in the coming months through its 'hugely successful' syndication lending arrangements.
"The risk sharing nature of the syndicated loan model makes it ideal for investing in mid and large scale infrastructure projects and over the years we have seen that such lending works perfectly well in the country," Haque told newsmen at a briefing. to mark the occasion of "Decade of Loan Syndications: As Lead Arranger" in celebration of its ongoing journey for expanding partnership and building economy.
Haque said Bangladeshi economy needs massive investments in infrastructure and his bank "sees ample opportunities to provide large scale financing in power, telecommunications, renewable energy, tourism and communication related projects."
"These are the sectors which are likely to grow enormously in the coming years and would require huge volume of large and mid scale financing which can better be served through syndicated loan schemes", he added.
The 15-year-old private bank, over the last decade raised around Tk. 11.5 billion through syndicated financing as lead arranger while providing funds worth of another Tk. 4.5 billion either as participating banks.
This year, the bank has already arranged Tk. 850 million under such scheme for Sea Pearl Beach Resort and Spa Limited in Cox's Bazar, which is set to be the first five star resort in Bangladesh promoting international time sharing.
Earlier, the bank also played a pioneering role in raising syndication loan for the country's first vacuum evaporated salt re-crystallization plant, the first hydrogen peroxide project and the first ever float glass manufacturing plant.
In 2006, the bank arranged the first ever Sharia'h based syndicated investment facility and at the same time, it has imparted training on syndication techniques and practices for central bank officials, officials said.
"Years ago, only the multinational banks used to take the leading role in syndicated financing but lately the local private banks have come forward to dominate the scene", Ehsanul Haque said.
Terming the syndicated loan scheme as the future in the banking sector, he said, "The greater opportunity for risk sharing in syndicated financing would enable the local banks to finance a greater number of up and coming infrastructure projects requiring sizable investments".
Haque called for quicker initiation of the government's Public Private Partnership (PPP) projects, underlining these large-scale infrastructures would require joint financing by the government and private sector to take off.
"Until now, the local private banks have largely opted out of financing large-scale power sector projects as they usually involve long term investment and pose greater risk", Ehsanul said.
"But once the PPP model comes into play, the private lenders can also go into joint collaboration with the government sector for financing such mega ventures", he added.
Prime Bank has planned to scale up financing in infrastructures including the capital-intensive power and telecom sectors as part of its efforts to boost industrialisation in the country, its chief executive officer (CEO) said Monday.
Risk-averse Bangladeshi private banks usually stay clear of funding big projects, forcing many local investors to seek loans abroad or at a costly term from foreign financial giants operating in the country.
Prime Bank Limited CEO Ehsanul Haque said the PBL - the leading private bank in the country -- wants to be an exception as it has planned to bankroll key energy and telecom projects in the coming months through its 'hugely successful' syndication lending arrangements.
"The risk sharing nature of the syndicated loan model makes it ideal for investing in mid and large scale infrastructure projects and over the years we have seen that such lending works perfectly well in the country," Haque told newsmen at a briefing. to mark the occasion of "Decade of Loan Syndications: As Lead Arranger" in celebration of its ongoing journey for expanding partnership and building economy.
Haque said Bangladeshi economy needs massive investments in infrastructure and his bank "sees ample opportunities to provide large scale financing in power, telecommunications, renewable energy, tourism and communication related projects."
"These are the sectors which are likely to grow enormously in the coming years and would require huge volume of large and mid scale financing which can better be served through syndicated loan schemes", he added.
The 15-year-old private bank, over the last decade raised around Tk. 11.5 billion through syndicated financing as lead arranger while providing funds worth of another Tk. 4.5 billion either as participating banks.
This year, the bank has already arranged Tk. 850 million under such scheme for Sea Pearl Beach Resort and Spa Limited in Cox's Bazar, which is set to be the first five star resort in Bangladesh promoting international time sharing.
Earlier, the bank also played a pioneering role in raising syndication loan for the country's first vacuum evaporated salt re-crystallization plant, the first hydrogen peroxide project and the first ever float glass manufacturing plant.
In 2006, the bank arranged the first ever Sharia'h based syndicated investment facility and at the same time, it has imparted training on syndication techniques and practices for central bank officials, officials said.
"Years ago, only the multinational banks used to take the leading role in syndicated financing but lately the local private banks have come forward to dominate the scene", Ehsanul Haque said.
Terming the syndicated loan scheme as the future in the banking sector, he said, "The greater opportunity for risk sharing in syndicated financing would enable the local banks to finance a greater number of up and coming infrastructure projects requiring sizable investments".
Haque called for quicker initiation of the government's Public Private Partnership (PPP) projects, underlining these large-scale infrastructures would require joint financing by the government and private sector to take off.
"Until now, the local private banks have largely opted out of financing large-scale power sector projects as they usually involve long term investment and pose greater risk", Ehsanul said.
"But once the PPP model comes into play, the private lenders can also go into joint collaboration with the government sector for financing such mega ventures", he added.