A Financial Institutions Division official said the proposal for exemption had already been submitted to Finance Minister.
Mutual Trust Bank Limited (MTB) has sought exemption from a sub-section of the Bank Company Act to facilitate the purchase of the bank’s shares by a Norwegian state-owned firm.
Norfund, a private equity company owned by the Norwegian Ministry of Foreign Affairs, wants to buy 10 percent of the bank’s shares but is unable to do so because of the restriction laid down in sub-section 14(1)(f) of the Bank Company Law.
Sub-section 14(1)(f) says: “No banking company incorporated in Bangladesh, except new banks and special banks, shall commence its business in Bangladesh unless it satisfies the condition that the voting rights of any individual shareholder, except those of the government, do not exceed 5 percent of the total voting rights of all the shareholders.”
This means Norfund will violate the voting rights condition if it owns 10 percent of the bank’s shares, which is why it needs the exemption.
A Financial Institutions Division official said the proposal for exemption had already been submitted to Finance Minister AHM Mustafa Kamal for approval.
Bangladesh Bank has already consented to Norfund’s purchase of shares.
Norfund has offered to buy a total of 6,37,07,004 MTB shares worth Tk173.24 crore, with the premium of each share valued at Tk 27.19.
On May 23, Norfund bought 3,01,77,002 shares for Tk82.06 crore and the remaining shares will be bought for Tk91.18 crore after the exemption is granted.
MTB Managing Director Anis A Khan told The Business Standard Norfund now owns 5 percent of the bank’s shares.
“But they cannot own 10 percent of the shares due to legal constraints mentioned in the Bank Company Act,” he said.
Anis said Norfund’s investment had improved the bank’s reputation. “The investment has also increased MTB’s capital base significantly, facilitating the process of meeting the Basel III requirement.”
Basel III is an internationally agreed set of measures developed by the Basel Committee on Banking Supervision in response to the financial crisis of 2007-09. The measures aim to strengthen the regulation, supervision and risk management of banks.
Norfund gave equity and loan to the City Bank last year and to Brac Bank in 2010.
International Finance Corporation, member of the World Bank Group, bought a 5 percent stake in the City Bank a couple of years ago.