IDB to sell shares in Islami Bank

Islamic Development Bank has expressed its intention to sell off over two-thirds of its holdings in Islami Bank Bangladesh -- the second major sponsor to do so.

The proposal was made at a board meeting of IBBL on March 30, according to the local bank's chairman, Arastoo Khan. At present, IDB holds 7.5 percent of IBBL's shares.

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Areef Suleman, IDB representative in IBBL, said the Saudi-based multilateral development lender wants to bring its holdings down to around 2 percent, which is the bare minimum for a seat in the board, two directors who attended the meeting told The Daily Star.

IDB said it thinks that Islamic banking is well established, and even flourishing, in Bangladesh; its withdrawal from the country now would not have a negative impact, the directors said.

“Still, we want IDB in the board as its presence enhances quality and governance,” Khan told The Daily Star.

The Jeddah-based lender wants to reinvest the money from the sale to help some African countries set up Islamic banks, according to one of the directors.

At the going market rate, IDB would get about Tk 300 crore from the sale.

As of March 31, IDB holds over 12.078 crore shares worth nearly Tk 394 crore based on the closing price on Dhaka Stock Exchange yesterday. IDB now has to take approval from the central bank and the Bangladesh Securities and Exchange Commission before selling the shares.

The Saudi lender's announcement comes on the heels of the sale of 40 lakh shares by Mustafa Anwar, the immediate past chairman of IBBL's board of directors and a sponsor of the bank, out of his total holdings of 42 lakh in the banks.

Dubai Islamic Bank, a major sponsor, had sold its entire holdings in IBBL in phases between 2014 and 2015.

Foreign shareholders hold over 52 percent stakes in IBBL, including IDB's 7.5 percent.

Saudi-based Yousif Abdullah Al-Rajhi and Al-Rajhi Co. for Industry & Trade have 7.58 percent and 9.93 percent stakes respectively, and the Public Institution for Social security in Kuwait and Kuwait Finance House 6.46 percent and 5.25 percent respectively.

IBBL witnessed a massive change in its board and management towards the end of last year. The board's chairman and managing director along with a number of directors were changed. Presently, IBBL has record 9 independent directors in its board.

Bangladesh is one of the top 5 beneficiary countries of IDB along with Pakistan, Egypt, Turkey and Morocco.

The total financing for the five countries represent about 45 percent of the total net approvals, according to IDB's website.