City Bank gets nod to sell shares to IFC

Bangladesh Bank has finally allowed City Bank to sell 5 percent of its shares to the International Finance Corporation more than one year after a deal was signed, said a top banker yesterday.

“We are extremely happy and grateful to Bangladesh Bank and the Bangladesh Securities and Exchange Commission for their approval to the proposal,” Mashrur Arefin, additional managing director of the private commercial bank, told The Daily Star.

The central bank gave City Bank its nod in a letter yesterday.

In February last year, City Bank signed a deal with the IFC, the private sector lending arm of the World Bank Group, to sell 5 percent of its shares at more than Tk 131 crore. The IFC will pay Tk 28.3 per share, which includes a premium of Tk 18.3.

Accordingly, City Bank, a first generation private lender, applied to the central bank for the approval. But the BB declined to approve the deal. Instead, it suggested City Bank raise funds from the local market if it needs capital.  According to the deal, the IFC will have a member to the board of City Bank.

“With IFC's representation to the board, the bank's corporate governance will improve significantly and global best practices will be adopted as well,” said Arefin.

A City Bank share closed at Tk 41.3 on the Dhaka Stock Exchange yesterday.

The IFC provides debt, equity and guarantee products in sectors, including financial markets, infrastructure, agribusiness and manufacturing to help enhance employment opportunities, fuel growth and spur innovation.

The IFC's equity investment ranges between 5 percent and 20 percent of a company's shares, according to its website. It said equity investment provides developmental support and long-term growth capital that private enterprises need.