The cabinet is close to a decision on how to restructure the government-controlled Bangladesh Commerce Bank (BCB), which has long been considered a problem bank, a central bank official said.
Bangladesh Bank sent a proposal to the cabinet early this month, evaluating two options for renewal -- the government's share of the bank could either be sold to a strategic partner or to the private sector, most likely through Investment Corporation of Bangladesh (ICB).
The BCB finances depicted in the BB proposal show that the bank's present capital deficit is Tk 152 crore. To meet the central bank's capital reserve rules, BCB must more than double its reserves to Tk 400 crore. The state bank lost more than Tk 2.6 crore in 2009.
The central bank's analysis of both options recommends selling shares through ICB, even though this makes it harder to turf its current politically subservient management.
The BB judged past experiences of selling government stakes in banks to strategic partners as not promising.
A BB high official said selling government shares through ICB has a key limitation -- this method limits the ability to change the top brass of the bank, which in turn may inhibit its turnaround.
In the mid-90s, two non-bank financial institutions -- National Credit and Commerce Ltd and Bangladesh Commerce and Industry Ltd (BCI) -- were converted to banks. They got new names -- NCCBL and BCB.
NCCBL strengthened under private ownership, but BCB remained weak.
Of BCB's Tk 95 crore in paid-up capital, the government's share is Tk 30 crore; while that of Sonali, Agrani and Janata banks totals Tk 10 crore. The rest belongs to BCI depositors and private directors.