Experts raise eyebrows, raising question about bringing in ailing entities
Four state-run banks will offload 25% of their stakes in stock market by September this year to boost the sagging capital market.
The four banks are Bangladesh Development Bank Limited (BDBL), Agrani, Janata and Sonali. On the other hand, Rupali Bank will offload more shares, as it is already listed.
The decision came at a stakeholders' meeting of state-owned commercial banks at the secretariat on Sunday. Finance Minister AHM Mustafa Kamal presided over the meeting.
Economists and share market analysts, however, raised question about the efficacy of bringing in such loss-making tainted public sector banks in the wobbly stock market.
They rather advised enlisting profit-making public sector entities such as Chittagong port and the Hazrat Shajalal International Airport for a turnaround of the plunging stock market.
They think that the public sector banks should be made profitable first and then listed on the bourse.
“The government is planning to release 25% shares of the four state-owned commercial banks by September, which will be difficult for us to implement within such as a short time,” said Agrani Bank Managing Director Mohammad Shams-UL Islam, who attended the meeting.
He said Rupali Bank would be the first to offload around 15% shares as the bank was already listed. Then would come the BDBL, Sonali, Agrani and Janata with 25% of their shares, he added.
Currently, the government has 90.19 % shares in the Rupali Bank, and the rest is in the stock market.
The governments would do revaluation of the balance sheet of the state-owned banks before they were listed, said the Agrani Bank managing director.
“The government will make it easier for us to get listed,” he hoped.
The government has formed a committee comprised with representatives from each of the four banks. The ICB will coordinate with the panel during the process, according to the source.
State-owned Sonali Bank is the largest bank in the country. The bank’s paid-up capital is Tk4,530 crore.
At the end of September last year, the total non-performing loans of Sonali Bank stood at Tk12,747.04 crore (29.27% of its total outstanding loans), according to the Bangladesh Bank data.
The bank faced Tk2,056.18 crore capital shortfall while its operating profit stood at Tk1,730 last year.
Bangladesh Development Bank Ltd (BDBL) is a state-owned specialized bank.
The bank’s non-performing loans stood at Tk763.71 crore at the end of December last year, which is 38.22% of its total outstanding loans. BDBL operating profit stood at Tk40.07 crore last year.
State-run Agrani Bank’s paid-up capital stood at Tk2,072 crore, according to the bank’s balance sheet on December 31, 2018.
Agrani Bank’s NPLs stood at Tk6,235.72 crore (16.15% of its total outstanding loans) and the bank's capital shortfall stood at Tk787.79crore at the end of September last year.
State-owned Janata Bank's paid-up capital stood at Tk2,314 crore at the end of 2018.
The bank has the highest amount of default loans of Tk21,660.06 crore (44.57% of the total outstanding loans) at the end of September last year.
The bank's capital shortfall stood at Tk933.34 crore at the end of September last year.
Asked about the issue, economist Profession Abu Ahmed told Dhaka Tribune that it was a surprising decision by the government as none of the four banks was eligible for listing on the stock exchange.
“I don’t understand how the banks which are incurring losses and depended on government subsidy can be listed on the bourse in violation of rules. The finance minister should clear that first,” he said.
Asked if listing of government companies would boost investors' confidence, he said, “Such losing government companies cannot boost confidence. If profit making government concerns like Dhaka Airport or Chittagong Sea Port come to stock market that might boost the confidence,” he said.
“I see no benefit for the investors or overall market in such move,” he added.