DBBL to launch subsidiaries to gain foothold in ‘bond market business’

Dutch-Bangla Bank Ltd (DBBL) has decided to establish two fully-owned subsidiaries -- a merchant bank and a brokerage house to boost its involvement in the capital market.

The capital market will generate good business in future with a vibrant bond market, as Treasury bonds are now tradable on the stock exchanges, said a top official of Dutch-Bangla Bank, requesting not to be named.

"Our involvement in the capital market will enhance our acceptability to customers, market and boost our brand value," he said.

The second generation private lender has also planned to join a consortium of 10 private commercial banks to open a digital bank namely "Digi10 Bank PLC" by investing Tk 125 million, said the bank in a stock exchange filing on Wednesday.

The fully-fledged merchant bank, Dutch-Bangla Bank Investment Ltd will have a paid-up capital of Tk 250 million while a brokerage house --- Dutch-Bangla Bank Securities Ltd --- will have a paid-up capital of Tk 100 million.

Establishment of the two subsidiaries and the investment in the proposed digital bank are subject to approval of the regulatory authorities, the bank said.

A merchant bank's main functions are underwriting initial public offerings, managing new issues, rights issues and corporate advisory, and portfolio management.

A brokerage house is licensed to buy and sell stocks or securities.

The investment in the digital bank is intended to help expand business quickly and retain the existing smart customer base.

The other sponsors of the digital bank are City Bank, Eastern Bank, Mercantile Bank, Midland Bank, Mutual Trust Bank, NCC Bank, Prime Bank, Pubali Bank and Trust Bank.

The DBBL's investment is 10 per cent of the paid-up capital of the proposed digital bank.

Two other listed banks --- Bank Asia and BRAC Bank -- and five other companies have also shared their plans to invest in digital banks to facilitate cashless transactions.

ACI, one of the leading conglomerates in Bangladesh, decided to invest Tk 100 million, while Crystal Insurance, Pragati Insurance, Pragati Life Insurance and Unique Hotel & Resorts will also invest Tk 125 million each in similar initiatives.

The Bangladesh Bank invited applications on June 21 for proposals to form digital banks. The initial deadline was August 1 this year. It was later extended to August 17 (Thursday) to give entrepreneurs more time to prepare detailed applications with necessary documents.

As per the guidelines, a digital bank will have a minimum paid-up capital of Tk 1.25 billion. The capital will come from sponsors.

Sponsors' shares cannot be transferred within five years from the commencement of the business, without prior permission from the Bangladesh Bank.

Dutch-Bangla Bank made a net profit of Tk 5.66 billion in 2022, the highest since its listing in the stock market in 2001. Based on the profit, it disbursed 25 per cent dividends for 2022 (17.5 per cent cash and 7.5 per cent stock).

The bank's half-yearly profit, however, dropped 3.22 per cent year-on-year to Tk 2.40 billion in January-June this year.

Its mobile financial service (Rocket) also showed strong performance providing financial services to unbanked communities efficiently and at affordable costs. Currently, Rocket holds more than 17 per cent market share in this segment.

The bank's stock has been languishing at the floor price of Tk 59.10 for the last two months. Still, it is the most-valued stock among banks.

Meanwhile, Prime Bank also decided to form two subsidiaries - an asset management company and a mobile financial service (MFS) company.

The mobile financial service (MFS) company's paid-up capital will be Tk 450 million while the asset management company's Tk 100 million, according to a stock exchange filing on Wednesday.

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