Bonanza bonus shares of banks to bury bourses

Number of bonus shares of banks for the shareholders in the bourses of the country came down by 50 percent even then it will bury the wobbly bourses of the country under the bonanza bonus shares.

Bonus shares of 111 crore worth of Tk 1 thousand 566 crore of 19 listed banks are coming to the bourses for the 2019 against bonus shares of 220 crore 33 lakh 43 thousand 395 in 2018.

But the stock markets do not have the capacity to take the pressure of this huge bonus shares which will further bring down the current share prices of the already wobbly stock markets, said the concerned insiders.

The board of directors of four banks have announced only bonus shares for the 2019 but boards of the rest 15 banks have announced cash as well as bonus shares.

Due to the floor price (minimum price limit), most of the bank's bonus shares will not be adjusted. This is going to happen because the share price of most banks is at the floor price. That is why bonus shares will be free along with cash dividends.

The boards of 19 listed banks have announced to give 111 crore 29 lakh 63 thousand 493 bonus shares for the 2019. Which will be provided at the Annual General Meeting (AGM) of the banks with the consent of the shareholders. This will increase the paid up capital of the banks to the tune of Tk 1,112 crore 96 lakh 34 thousand 930 crore. The shares that have a current (July 12) market price of Tk 1 thousand 565 crore 84 lakh.

Out of 24 banks, which added to the stock market in 2018, 16 entities announced only bonus shares while eight declared cash as well as bonus shares.

In this regard, Dhaka Stock Exchange (DSE) director Shakil Rizvi said, the market was negatively affected by the directors' whimsical decision on bonus shares. However, the regulatory body, the Bangladesh Securities and Exchange Commission (BSEC) is now in a tough position. That is why bonus shares have come down this year.

Stock market expert Professor Abu Ahmed said that in the case of banks, the issue of giving bonus shares is a little different. Many banks have to pay bonus shares in compliance with Basel II conditions. However, many banks do not have the capacity to pay cash dividends. At some point it may be okay. Even then, the stock market is suffering because of bonanza bonus shares. Despite the lack of demand of shares, the pressure of bonus shares has been mounting on the sick share markets every year.