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Govt bank share offloading uncertain

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14 Sep 2020 18:32:54 | Update: 15 Sep 2020 12:11:38
Govt bank share offloading uncertain

Offloading of shares of four state-owned banks — Sonali, Agrani, Janata and Bangladesh Development Bank (BDBL) — have become uncertain within government deadline due to bureaucratic tangle.

As a result, the deadline for issuing shares of state-owned banks under financial institutions division under finance division by October 31 this year is being delayed further.

In this case, the authorities concerned including the Financial Institutions Division under Ministry of Finance are making excuses.

However, Rupali Bank, which is currently listed in the stock market, has made all preparations to offload another 15 per cent of its shares.

That state-run banks will soon send a proposal for the permission of the Finance Minister AHM Mustafa Kamal. If allowed, the shares will be offloaded in phases through the Investment Corporation (ICB), a government investment institution.

Competent sources in the Financial Institutions Division have confirmed the matter.

Economists say there is no supply crisis but the share market has been experiencing shortage of strong company shares in the capital market.

As a result, it is important to offload shares of government institutions to increase the confidence of investors in the country’s two stock markets.

Former caretaker government's financial adviser AB Mirza Azizul Islam said the main problem in the local stock market is the crisis of confidence of investors. He said, “Demand and supply have created this crisis for two reasons.”

“It has been said for a long time that the number of good companies in the market are low. And without the presence of financially strong companies, the market lacks depth,” he said.

Mirza said in this case, the listing of government shares is important. The issue of listing of government shares is being delayed due to bureaucratic complications, he added.

It is learned that Finance Minister AHM Mustafa Kamal had a meeting with the officials and stakeholders concerned at the Secretariat on February 9 this year.

At the meeting, it was decided to offload the shares of four banks in the capital market. These are Sonali, Agrani, Janata and BDBL who were asked to issue shares by October 31. In this case, it was decided to offload 25 percent shares through direct listing.

On the other hand, another State-Owned Enterprise (SOE) Rupali Bank is currently listed. Investors hold 9.71 percent of the shares. Therefore, the bank was asked to give up another 15.19 percent shares and hand over 25 percent shares to the general investors in stock market.

However, there was no time limit for this. The finance minister recently held another meeting with the concerned officials on the progress of the meeting on February 9. The meeting was informed by 4 banks that they could not prepare due to coronavirus pandemic. As a result, it will take more time to offload state-run bank shares.

Rupali Bank's Chief Financial Officer Shawkat Jahan Khan, at a recent meeting held at the Secretariat, said that they had taken the initiative to offload the shares earlier. But the initiative came to a halt due to falling prices in the stock market. Now they are ready to issue shares.

Saifur Rahman, executive director of the regulatory body Bangladesh Securities and Exchange Commission (BSEC), told the meeting that there are some regulatory rules for issuing shares. Following these rules, Rupali Bank’s allowed share to be offloaded in the stock market. However, the schedule has to be decided keeping in view the rise and fall of share price with demand and supply.

Shukla Das, Chief Executive Officer of ICB Capital Management, told the meeting that the total number of shares of Rupali Bank stood at 6.28 crore at 15.61 per cent share.

In this case, the transfer cost and the government will have to pay 5 percent advance tax. However, an application can be made to the National Board of Revenue for tax exemption.

Meanwhile, the company's share price was Tk 26 in the market last week and the market value of 15.61 percent shares stands at Tk 175 crore.

Director of DSC Rakibur Rahman said at present the condition of the stock market is good. The support of all parties is essential to maintain this situation.

He said that at the moment both the investment and the government will benefit if the shares of government institutions come to stock market. He, however, said the issue of government share listing has been stalled for a long time due to opposition from bureaucrats. This situation must end in the interest of the local stock market.

 

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