The Bangladesh Securities and Exchange Commission (BSEC) has ordered the Dhaka Stock Exchange (DSE) to investigate the unusual price hike in Islami Bank Bangladesh PLC shares and submit the report within the next 30 days.
In an order issued on Wednesday, the BSEC said that the price and volume of shares of Islami Bank fluctuated significantly in recent times, which seems unusual and suspicious.
The order said DSE will investigate the trading of Islami Bank shares between August 6 and September 25 to identify the reasons, including market manipulation, insider trading and other market abuses, behind such unusual movement of price and volume of units of the said scrip.
Analysis of DSE data shows that the price of Islami Bank shares has increased by 60 per cent over the past month. On August 25, the price of the bank's shares was Tk 44. On Wednesday, after one month, the bank's share price was at Tk 70.4 when trading ended.
After the ousting of the Hasina government on August 5 through the student-led mass uprising, the price of shares of Islami Bank has increased the most among over 400 listed companies in the stock market in the past month and a half. During the tenure of the Awami League government, there were no buyers for the bank's shares at the floor price of Tk 32.60.
Trading ended on the first day of the week, Sunday, at Tk 54.30. On Monday, trading started at Tk 55. The price continued to rise, reaching Tk 59.50 at one point, and ultimately closed at Tk 58.70, marking the highest price in 12 years.
In April 2012, the price of Islami Bank's shares was above Tk 50.
On Tuesday, the share price closed at Tk 64. And on Wednesday, Islami Bank shares jumped yet again. The price rose by 10 per cent and closed at Tk 70.4.
During this time, the share price of other banks did not increase much compared to this bank. Share prices of some poor-quality banks fell during this period.
After the fall of the Awami League government, economist Ahsan H Mansur was appointed as the Bangladesh Bank (BB) governor by the interim government led by Prof Muhammad Yunus.
After taking office, Ahsan initiated various measures to restore order in the banking sector, which was plagued by irregularities, loan scandals and a mountain of non-performing loans.
As part of these initiatives, on August 21, Ahsan announced changes to the Board of Directors of Islami Bank.
The decision followed years of concerns about the bank’s operations since it was taken over by S Alam Group in 2017. With this decision, S Alam Group's grip over the Islami Bank ended after seven years of its domination and rampant misappropriation of nearly thousands of crores of taka in the name of loans.
The central bank dissolved the Islami Bank board and Md Obayed Ullah Al Masud, former managing director of Rupali Bank, was appointed as the new chairman of the board.
Four other independent directors appointed include Md Khurshid Wahab, former executive director of BB; Md Abdul Jalil, former DMD of Al Arafah Islami Bank; M Masud Rahman, former professor of finance at Dhaka University; and Md Abdus Salam, a chartered accountant.
Since these appointments freed Islami Bank from S Alam Group’s control, investor interest in the bank's shares has likely increased and led to a rise in prices.
