Five state-run banks are set to get listed on the stock market by September as part of the government’s move to prop up the ailing bourse that has arguably dragged investor confidence down to rock bottom.
A quarter of the shares of Sonali, Agrani, Janata, Rupali and Bangladesh Development Bank (BDBL) would be offloaded on the stock market, said Finance Minister AHM Mustafa Kamal.
Former finance ministers had time and again promised to bring public banks to the stock market and even tried a number of times. But they failed to advance the agenda.
This time seems to be different as Finance Minister AHM Mustafa Kamal has announced a timeline to bring them to the bourse.
The shares will be offload in phases based on demand, Kamal told reporters yesterday after a meeting with Bangladesh Bank Governor Fazle Kabir, Bangladesh Securities and Exchange Commission Chairman Khairul Hossain and managing directors and chairmen of the five banks at his office.
“25 per cent is a huge amount, so we have to analyse the demand,” he said, adding that the timeline to offload the shares will not shift beyond October 31.
Rupali Bank is already listed with the stock exchanges: about 10 per cent of its shares are available in the market now.
The other 15 per cent would be offloaded within the next 2-3 months. BDBL’s timeline is August and Agrani’s September. Janata and Sonali would be listed within October.
Asked about the later timeframe for Sonali and Janata, Kamal said Sonali, which the country’s largest lender, is performing treasury functions, so it may take some more time.
“But the shares will be offloaded -- that has been decided.”
A committee has already been formed to work on the listing of the banks, which will be coordinated by the state-owned merchant bank Investment Corporation of Bangladesh.
Stock market experts though are sceptical about the boost in morale the banks’ listing would bring given the lenders’ underwhelming performance. They fear the stocks might turn junk and add to the pile of problems the bourse is battling.
But Kamal begs to differ.
“All five banks are profitable now and we are not refinancing them. So, when the banks are listed on the market they will impact the market positively.”
Regardless, the government will facilitate what the market needs to get hale and hearty, he said, adding that it must not do anything to influence the market index.
The finance minister also touched upon the state of the economy.
“The overall economic situation is good though one sector is in a bad situation. Not all sectors in all countries run at the same pace.”
However, the global economic outlook at present is far from rosy.
“We are worried all the time about the capital market, which tend to be reflections of an economy. But, our capital market has not been aligned with the movement and strength of the economy for a long time.”
The finance ministry found the reasons for the mismatch were: low institutional investor participation and retail investor-based market.
“If institutional investors are low then the market behaves in a volatile way sometime. And such volatility is not good for a stock market.”
As remedy the government will work on the insurance sector, the capital market and the banking sector.
“To cure the sectors we are removing the impediments at first. We are reforming legal sides. We got two dedicated benches in the court to solve tax and banking issues so that cases can be solved within short time.”
To lure in institutional investors, the government will bring in state-run companies to the market.
“We earlier promised to bring them and now we are working on this.” Apart from banks, the finance minister recently announced offloading share of seven power companies.