BSEC yet to approve Norfund proposal to buy 10pc equity shares of MTB

FE Report | Published: April 25, 2019 10:37:53 | Updated: April 25, 2019 12:51:57


The proposal regarding issuance of a substantial amount of shares to a foreign investment fund by Mutual Trust Bank (MTB) is yet to get regulatory approval though the bank sought permission from the BSEC almost six months back.

Norfund, owned by the Norwegian government, in September of 2018 reached an agreement to buy 10 per cent equity shares in Mutual Trust Bank at more than Tk 1.73 billion.

After a series of negotiations, both sides have agreed to make the deal at Tk 27.19 a share, including Tk 17.19 as premium.

In exchange, Norfund will get a seat in the board of the bank.

Asked, a senior official of the Bangladesh Securities and Exchange Commission (BSEC), however told the FE on Wednesday that the bank's proposal is under their active consideration.

"The securities regulator is set to settle the issue as soon as possible," the BSEC official said.

As per the board's decision, the MTB will issue above 63.70 million shares, which is 10 per cent of paid-up capital, to the Norfund.

The MTB sought approval from the securities regulator on November 6 last after completing relevant processes including approvals from the central bank and shareholders.

The officials said the bank took the decision of issuing shares as part of its move to enhance the paid-up capital and strengthen corporate governance.

"It will be positive for both the bank and country as foreign fund will come here. We are anxiously awaiting the regulatory approval as any investment plan is set considering a specific timeframe," said Anis A. Khan, the managing director of the MTB.

Mr. Khan said the regulatory approval to the proposal of issuing shares is also related to some other mandatory functions.

"Before getting the regulatory approval, we are unable to complete the bank's annual report and annual general meeting (AGM) as well. We hope the securities regulator will help us in completing mandatory functions in due time," Mr. Khan added.

"Indeed, the trust that Norfund has placed in us will brighten our reputation and image outside the country," Khan said.

With Norfund's investment, he said, MTB's capital base will also increase significantly to meet the Basel III requirement.

Presently, the bank's paid-up capital stands at Tk 5.73 billion and it will go up to Tk 7.46 billion thanks to the injection of the fund.

The Norwegian Investment Fund for Developing Countries (Norfund) facilitates economic growth and poverty reduction by investing risk capital in profitable businesses in developing countries.

This is the first time it has agreed to buy equity stakes in a bank in Bangladesh.

Earlier this year Norfund signed an agreement with MTB to provide a concessional loan of $20 million for the socio-economic development of Bangladesh. Norfund gave equity and loans to Brac Bank in 2010 and loans to City Bank in 2017.

International Finance Corporation, an arm of World Bank Group, bought 5.0 per cent stakes in City Bank a couple of years ago.

In addition to banks, Norfund has indirect investment in Bangladesh's eight firms: Ananta Apparels, Butterfly Marketing, Fiber @ Home, Popular Pharmaceuticals, Rahimafrooz Superstores, Runner Automobiles, STS Holdings and Zero Gravity Ventures.

Norfund was set up by the Norwegian government in 1997 to help the economic development of poor countries by providing capital to local companies.

The fund receives its investment capital from the state budget. Its priority sectors are clean energy, financial institutions and food and agribusiness. It also supports small and medium sized companies in the developing countries.

MTB, presently an 'A' category company, was listed with the stock exchanges in 2003.

The company's sponsor-directors hold 38.01 per cent shares, institutions 23.27 per cent and general shareholders 38.72 per cent as of March 31, 2019, according to Dhaka Stock Exchange (DSE).

The bank's share price remained unchanged at Tk 33.20 each on Wednesday.

raihanmchowdhury@gmail.com/mufazzal.fe@gmail.com

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