Citigroup set to enter into stock market as merchant banker

Citigroup, world's leading financial conglomerate with operations in investment banking and insurance, has set to enter into the local stock market as a merchant banker.
This is the first foreign financial institution that received license from the Securities and Exchange Commission (SEC) to operate merchant banking activities such as underwriting, and issue and portfolio management in the capital market.
The SEC at a meeting in Dhaka yesterday approved the Citigroup Global Markets Bangladesh Ltd, a subsidiary of Citigroup, to operate as a merchant bank, officials of the capital market watchdog said.
After the meeting, SEC Executive Director Farhad Ahmed said after a long time the commission gave nod for merchant banking, as the government has recently returned the authority of giving licenses for merchant banking to the commission.
However, as per the government decision, the SEC could provide licenses to maximum 35 financial institutions for merchant banking.
Presently, there are 28 merchant banks in the capital market, of which only 10 to 12 are active.
Talking to The Daily Star, Abrar A Anwar, director and head of global commercial bank of Citigroup, Bangladesh, said as there is a supply crisis for securities in the stock market, Citigroup can contribute to bringing good products, bonds and corporate entities in the stock market.
The market regulator is also evaluating the performance of the existing merchant banks, as many of them are now inactive, Farhad said, adding that the SEC may cancel the licenses of the bad performing merchant banks.
The SEC also took tougher actions against those who submitted more than two applications for initial public offerings (IPO).
Farhad Ahmed said an applicant cannot submit more than two applications, one in his/her name and another jointly with other person. In case an applicant makes more than two applications, all applications will lose validity and will not be considered for allotment purpose. In addition, the commission may forfeit whole or part of the application money, he said.
He said the commission imposed the conditions following an allegation that the investors submit more than two applications for IPOs.
He said from now on for opening a beneficiary owner's (BO) account, an applicant will have to provide his/her/their mother's name in the BO application form.
Meanwhile, the SEC has published a book recently, which comprises all the securities related ordinance, act, rules and regulations.