The latest enhancement of paid-up capital by commercial banks for their subsidiaries has given a 'breathing' space and scope of adopting existing business to the banks amid the sluggish trend of capital market, the top officials said.
As per the approval of the Bangladesh Bank (BB) and the securities regulator, some banks having over exposure expanded the paid-up capitals of their subsidiaries by converting their loans into equities.
The bank subsidiaries whose paid-up capitals have been expanded are: AB Investment, Southeast Bank Capital Services, Shahjalal Islami Bank Securities, NBL Securities, MTB Capital, Mercantile Bank Securities and One Securities.
Md. Sayadur Rahman, president of the Bangladesh Merchant Bankers Association (BMBA), said both the central bank and the securities regulator have facilitated the banks in adjusting over exposure without creating sell pressure in the capital market.
"The subsidiaries got relief from interest payments against their loans taken from parent companies," said Rahman, also the director of EBL Investments.
Earlier, the parent companies' loans provided to their subsidiaries were also a component of the capital market exposure.
Due to sluggish trend of the capital market observed after 2010-11 stock market debacle, the subsidiaries were not in a situation to repay principal amount and the interests well.
The central bank later excluded the banks' equity investments from the exposure limit following the longstanding demand of the stakeholders.
The BB later allowed the banks having over exposure to convert their loans, provided to their subsidiaries, into equities.
"We have got the opportunity of adopting existing business," said Sheikh Ashraful Haque, chief executive officer of AB Investment.
He said the activities of the bank subsidiaries' would be revived for the capital market.
Md. Alamgir Hossain, head of operations of the Southeast Bank Capital Services, said they were under the pressure of paying interest ranging Tk 250 million to Tk 300 as interest against the loans taken from parent company.
"Now we are not required to pay the interest and principal amount. At the same time, our parent company has also got fresh investment scopes," Alamgir said.
He expressed his optimism to return profits to their parent company after capital expansion.
A senior official of the securities regulator has also echoed with the officials of the bank subsidiaries.
All scheduled banks reportedly can invest Tk 45 billion more in the capital market after availing the BB's policy support for adjustment of their stock market overexposure by July 21.
Among the bank subsidiaries, AB Investment enhanced paid-up capital by above Tk 3.01 billion, Mercantile Bank Securities by Tk 2.95 billion, One Securities by Tk Tk 500 million, MTB Capital by Tk 1.25 billion, Southeast Bank Capital Services by Tk 3.0 billion, Shahjalal Islami Bank Securities by Tk 600 million and NBL Securities by Tk 3.0 billion.
Asked, the officials of the Pubali Bank Securities said they have also applied to the securities regulator for expanding paid-up capital by Tk 5.0 billion.
After enhancement of capital, AB Investment's paid-up capital has stood at Tk 6.0 billion, Mercantile Bank Securities Tk 3.6 billion, One Securities Tk 2.5 billion, MTB Capital Tk 3.25 billion, Southeast Bank Capital Services Tk 5.5 billion, Shahjalal Islami Bank Securities Tk 2.74 billion and NBL Securities Tk 4.0 billion.
After getting approval on capital expansion, the paid-up capital of the Pubali Bank Securities will reach at Tk 6.6 billion.
© 2024 - All Rights with The Financial Express
