Small investors stand to lose as Saudi prince mum on Rupali takeover
Thursday, 12 July 2007
Refayet Ullah Mirdha
Small investors in the stock market are at risk of incurring huge losses due to the delay in signing of the final deal for handover of ownership of the largely state-owned Rupali Bank to Saudi prince Bandar Bin Mohammad Bin Abdulrahman Al Saud.
A section of unscrupulous investors have allegedly taken away a huge amount of money from the country's stock market since beginning of the process of handing over ownership of the bank to the prince.
The issues of the Rupali Bank, a 'Z' category entity, had been traded at Tk 600 each before inviting tender for selling the bank to private entrepreneurs through the Privatisation Commission (PC) last year.
Prices of the Rupali Bank shares surged when the PC awarded the tender to Saudi prince Bandar Bin Mohammad Bin Abdulrahman Al Saud as the highest bidder.
The price rally of Rupali Bank shares had continued for many months on the news that it was being handed over to the Saudi prince.
The share prices of the bank had even rose to more than Tk 2400 each. But in Wednesday's trading, its shares were priced at Tk 1494.25 each.
General investors are passing their days in anxiety as to whether the prince ultimately will take over more than 93 per cent ownership of the bank at a cost of US$ 458 million (45.8 crore). The Ministry of Finance (MoF) recently set a deadline for the Saudi prince to respond by July 15 in this connection.
"I bought a good number of Rupali Bank shares spending my deposit money. But, I cannot sell those now and I have to incur a huge loss," said a Chittagong-based small investor while talking to the FE Wednesday.
When asked, chairman of the Securities and Exchange Commission (SEC) Faruk Ahmed Siddiqui said the prices of Rupali Bank shares increased in the stock market through normal trading.
"So, we have little to investigate in this connection. Moreover, the final date for handing over ownership of the bank is yet to be decided," the SEC chairman said.
Talking to the FE, chief executive officer (CEO) of DSE, Salahuddin Ahmed Khan said any investigation into the surge of prices of Rupali Bank shares is very complex.
"It is true that a good number of small investors will face losses, if the prince does not take over the ownership of the bank," the DSE CEO told the FE Wednesday.
A senior official of the MoF said the government cannot wait for an indefinite period to hand over ownership of the bank.
This is a serious matter in a sector like banking, he said adding that the government has also spent a significant amount of money to hand over the bank to the prince.
"If the prince does not respond before July 15, the security money worth US$100,000 submitted for participating in the bidding will be forfeited," he said.
He said the ministry may opt for selling the bank through the Investment Corporation of Bangladesh (ICB) as was done in the case of other state-owned enterprises, as any fresh tendering is a lengthy process.
Small investors in the stock market are at risk of incurring huge losses due to the delay in signing of the final deal for handover of ownership of the largely state-owned Rupali Bank to Saudi prince Bandar Bin Mohammad Bin Abdulrahman Al Saud.
A section of unscrupulous investors have allegedly taken away a huge amount of money from the country's stock market since beginning of the process of handing over ownership of the bank to the prince.
The issues of the Rupali Bank, a 'Z' category entity, had been traded at Tk 600 each before inviting tender for selling the bank to private entrepreneurs through the Privatisation Commission (PC) last year.
Prices of the Rupali Bank shares surged when the PC awarded the tender to Saudi prince Bandar Bin Mohammad Bin Abdulrahman Al Saud as the highest bidder.
The price rally of Rupali Bank shares had continued for many months on the news that it was being handed over to the Saudi prince.
The share prices of the bank had even rose to more than Tk 2400 each. But in Wednesday's trading, its shares were priced at Tk 1494.25 each.
General investors are passing their days in anxiety as to whether the prince ultimately will take over more than 93 per cent ownership of the bank at a cost of US$ 458 million (45.8 crore). The Ministry of Finance (MoF) recently set a deadline for the Saudi prince to respond by July 15 in this connection.
"I bought a good number of Rupali Bank shares spending my deposit money. But, I cannot sell those now and I have to incur a huge loss," said a Chittagong-based small investor while talking to the FE Wednesday.
When asked, chairman of the Securities and Exchange Commission (SEC) Faruk Ahmed Siddiqui said the prices of Rupali Bank shares increased in the stock market through normal trading.
"So, we have little to investigate in this connection. Moreover, the final date for handing over ownership of the bank is yet to be decided," the SEC chairman said.
Talking to the FE, chief executive officer (CEO) of DSE, Salahuddin Ahmed Khan said any investigation into the surge of prices of Rupali Bank shares is very complex.
"It is true that a good number of small investors will face losses, if the prince does not take over the ownership of the bank," the DSE CEO told the FE Wednesday.
A senior official of the MoF said the government cannot wait for an indefinite period to hand over ownership of the bank.
This is a serious matter in a sector like banking, he said adding that the government has also spent a significant amount of money to hand over the bank to the prince.
"If the prince does not respond before July 15, the security money worth US$100,000 submitted for participating in the bidding will be forfeited," he said.
He said the ministry may opt for selling the bank through the Investment Corporation of Bangladesh (ICB) as was done in the case of other state-owned enterprises, as any fresh tendering is a lengthy process.