SBAC Bank to offer merchant banking, asset management

The South Bangla Agriculture and Commerce (SBAC) Bank has decided to establish two subsidiaries to venture into merchant banking and asset management.

The newly listed lender took the decision in a board meeting, according to its disclosure posted on the Dhaka Stock Exchange website yesterday.

The merchant banking company, SBAC Bank Capital Management, will have paid-up capital of Tk 40 crore while authorised capital of Tk 50 crore, subject to approval of regulatory authorities.

The asset management company, SBAC Bank Asset Management Company, will have paid-up capital of Tk 40 crore while authorised capital of Tk 50 crore.

Due to low credit growth and lingering pandemic, the banking sector is facing increasing risks as well as a drop in profitability, said Mosleh Uddin Ahmed, managing director and CEO of SBAC Bank.

Last year most banks logged higher operating profits from the stock market, he said, adding that the bond market was going to be vibrant while government treasury bonds tradable.

"So the stock market will generate good business in the future," he said.

"Our foray into the capital market will enhance our acceptability to customers, market and boost brand value. So, we decided to come to the business," he said.

SBAC Bank announced 4 per cent cash and 4 per cent stock dividends for the year ending on December 31, 2020.

The company has also informed that bonus shares had been declared out of profits and retained earnings and not from any reserve.

The stock dividend declaration is to meet Basel-III requirements, it added.

Beginning commercial operations in Bangladesh on February 20, 2013, SBAC Bank issued 10 crore ordinary shares at face value and raised Tk 100 crore in the current year.