Crackdown on S Alam spurs sharp rise in shares of five banks
Following the central bank governor's announcement to remove S Alam Group and its allies from control of five listed banks, the shares of these banks surged on the Dhaka Stock Exchange (DSE) on Thursday (22 August).
The five banks are Islami Bank Bangladesh, Social Islami Bank, First Security Islami Bank, Union Bank and Global Islami Bank.
The central bank dissolved the Islami Bank board and appointed five independent directors on Thursday.
On the day, the share price of Social Islami Bank surged by 10%, reaching Tk11, with 40 lakh shares traded for Tk4.29 crore during the session. The share price of Islami Bank rose by 9.97% to Tk43, with 33 lakh shares traded for Tk14 crore.
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Union Bank shares gained 9.37% to Tk7, Global Islami Bank shares increased by 9.23% to Tk7.1, and First Security Islami Bank shares rose by 8.69% to Tk7.5.
On Tuesday, following the central bank's instruction, the Bangladesh Securities and Exchange Commission (BSEC) ordered the bourses and the central depository to freeze shares of banks controlled by S Alam Group and associates.
According to the DSE, the shares at the five listed banks to be frozen are worth over Tk2,900 crore at present market value as revealed in the instant screening.
Earlier, the Bangladesh Bank imposed lending limits on six banks owned by the controversial S Alam Group, requiring it to obtain central bank approval before granting any loan exceeding Tk5 crore.
Allegations of financial crime against S Alam were already in place before the Hasina government fell. However, following the government's ousting, further accusations have emerged against the former mid-level entrepreneur who, over the past decade, rose to prominence as a banking giant with the support of the Hasina administration.
Using corruption and influence over regulators and government agencies, he is accused of taking control of several banks, including six major ones, and siphoned off thousands of crores of taka in depositors' money through fraudulent loans.
Market situation
The benchmark index of the Dhaka bourse, DSEX, rose by 92 points to reach 5,699, snapping a five-day losing streak.
The EBL Securities in its daily market review said the downbeat capital market logged some recovery as bargain hunters chose to take positions in particular large-cap scrips following consecutive corrections, although overall market sentiment still remains subdued.
The indices remained upbeat for most of the session, mainly riding on investors' buying interest in the giant bank sector stocks owing to some reinstated optimism surrounding recent reforms in the industry, it added.
During the last five sessions, the DSEX lost 346 points, while the market capitalisation dropped around Tk29,000 crore.
Market insiders said in the four days after the political regime change, the index rose to 6,216 on 11 August from 5,216 on 4 August as large-cap stocks including Grameenphone, Robi and British American Tobacco Bangladesh surged sharply to reverse the downtrend.
As soon as the buying spree cooled down, investors preferred profit booking or reducing their cost prices.
Meanwhile, market turnover also increased by 45% to Tk778 crore on Thursday compared to the previous session.
On the sectoral front, banking, telecom and pharma led the turnover contribution table as they accounted for 29.6%, 14.7% and 14.1% of the DSE turnover value, respectively.
Grameenphone topped the gainers table with the turnover value of Tk84 crore, followed by BRAC Bank with Tk37 crore and Olympic Industries with Tk28 crore.
Out of the 394 issues traded on the DSE, 151 advanced, 210 declined and 33 remained unchanged.
Indices in the Chittagong Stock Exchange (CSE) also settled on the green terrain. CSCX, the broad-based index of the port city bourse, closed 1.13% higher at 9,865, while turnover stood at Tk13 crore.
