Ten days after losing its chairman, Islami Bank Bangladesh Ltd is preparing to lose one of its biggest sponsor shareholders after the Ibn Sina Trust yesterday announced its intention to withdraw from the country’s largest private bank by the end of next month.
The trust expressed its intention to sell off all of its shares at the prevailing market price through the country's two stock exchanges – Dhaka and Chittagong – within the next 30 working days, sources at the Dhaka Stock Exchange (DSE) told the Dhaka Tribune yesterday.
The sell-off could deal a further blow to Islami Bank after Arastoo Khan resigned as chairman of the board of directors on April 17, 2018 citing personal reasons.
The Ibn Sina Trust is the largest local corporate shareholder in Islami Bank. Its 36,077,391 shares are worth around Tk94.16 crore at the current market price of Tk26.10 per share.
On January 5, 2017, Ibn Sina left the bank's board during a massive management reshuffle which saw Arastoo Khan appointed chairman in place of Mostafa Anwar, who had been in post since June 2015.
The banks’ then managing director, Abdul Mannan, and its vice-chairman, Azizul Haque, were also forced to resign from their posts at the same time as Mostafa Anwar.
Arastoo Khan himself resigned on April 17, 2018, and was replaced by Md Nazmul Hasan, a professor at Dhaka University and an independent director of the bank.
Although Ibn Sina was still to issue an official statement yesterday as to why it has now decided to sell off its stakes in Islami Bank, a source inside the trust attributed the move to a need to raise funds.
“We need to increase our liquid assets,” the source said. “This is why, despite the low share price in the market at present, the board of the trust has decided to sell off all the shares in the Islami Bank.”
A source in the bank, on condition of anonymity, told the Dhaka Tribune that the major reasons for the decision were a sharp rise in defaulted loans, the ongoing liquidity crisis, and a fear of internal instability due to a lack of satisfaction among bank employees.
This move comes nearly a year after the Saudi Arabia-based Islamic Development Bank (IDB), one of the two foreign investors remaining in Islami Bank, sold off two-thirds of its shares, shrinking its stake in the bank to 2.1% from 7.5%.
Despite this reduction in its shareholding, however, the IDB remains on board and active in Islami Bank.
Two other foreign banks have sold out from Islami Bank in recent years. In 2014, foreign sponsor shareholder Bahrain Islamic Bank sold off all its shares, followed by Dubai Islamic Bank, which sold all its shares in 2015.
Islami Bank has always had the reputation of being influenced by Jamaat-e-Islami, the Islamist political organization noted for its connection with the local collaborators of Pakistan occupation forces during the Liberation War in 1971.
Jamaat's Central Executive Committee leader Mir Quasem Ali, a convicted war criminal who was hanged in 2016, was a former chairman of Islami Bank.
Another top Jamaat leader, Abu Nasser Muhammad Abduz Zaher, who is also a director of Ibn Sina Pharmaceuticals Ltd, was the chairman of the bank's board of directors before he left the country in 2015 after the war crimes trial began in full swing.
When it was established in 1983, Islami Bank had 13 Middle East-based investors who owned 70% of the shares. The rest of the shares were owned by the government and local stakeholders.
According to the latest update given by the DSE, 46.70% of the total shares of Islami Bank are currently owned by sponsors/directors of the bank.
Local institutional investors own 9.16% of the shares and foreign investors own 26.37%, while public investors have a 17.77% stake in the bank.