Riding on the announcement that it would receive a sovereign guarantee of Tk 3,000 crore from the government, the state-owned Investment Corporation of Bangladesh (ICB) ranked third among the top five companies with the most significant share price increases on Monday.
The government intends to extend this sovereign guarantee to ICB, enabling it to secure a corresponding loan from Bangladesh Bank or other financial institutions and banks."
The information was recently obtained through relevant sources at the Financial Institutions Division (FID) under the Ministry of Finance.
Riding on the news of the sovereign guarantee, ICB saw a surge in trading interest on Monday. By the closing bells, the company's share price had climbed 8.76 per cent to Tk 58.30, up from Tk 53 recorded during the previous day.
ICB had been seeking a Tk 5,000 crore loan from the government for several years to address liquidity shortages in the stock market. However, due to financial constraints, the government was unable to provide a direct loan. Instead, it opted to support ICB by acting as a guarantor for the corporation.
ICB Managing Director Md Abul Hossain recently informed the media that an application, along with some documents in the government-prescribed format, is required to obtain the sovereign guarantee. He expressed that preparations for these documents are underway, and the application will soon be submitted to the ministry.
"We had requested Tk 5,000 crore from the government. However, I cannot say how much we will receive."
"If the guarantee is received, the loan will be used for investments in the stock market and partial repayment of high-interest loans from the state-owned and private banks. Half of that loan will be used to repay various bank loans, and the rest will be invested in the stock market," said Abul Hossain.
When contacted by The Business Post, ICB's Managing Director Abul Hossain said that he was in a meeting at that moment.
As of the third quarter, which concluded on March 31, 2023, ICB's debt stood at Tk 817 crore to the government, unchanged from June of the previous year, and Tk 311 crore to private banks, down from Tk 357 crore, indicating ICB's repayment of Tk 46 crore of private bank loans in the first nine months of the current fiscal year 2023-24.
According to ICB's financial report for the quarter mentioned above, the corporation incurred a net loss of Tk 267 crore in the first nine months of FY24. In contrast, during the same period of the previous fiscal, it logged a net profit of Tk 49 crore.
Additionally, during the July-March period of 2023, the ICB suffered financial losses, which were attributed to the interest expense of Tk 675 crore on loans and deposits. During the period, ICB earned Tk 136 crore in interest income. As a result, the net interest expense amounted to Tk 538 crore in the negative.
