Brac is going to increase its stake at Brac Bank Limited.
Buying 2.5 crore Brac Bank shares, the key sponsor of the bank is going to extend its holding to 46.17% from existing 44.29%.
Based on the current market price it is going to be an around Tk100 crore investment in the secondary market within 30 November.
Bangladesh Securities and Exchange Commission (BSEC) has expressed its nod to the investment plan on Wednesday and Brac is waived from complying with insider trading and significant shareholding-related regulations, according to a statement by the securities regulator.
The decision is intended to demonstrate and convey the confidence in the best SME-lending Bank, its management and future potentials, said Tushar Bhowmik, chief financial officer of Brac.
"We also appreciate the way how Brac Bank's professional management is overcoming the business challenges emerged from the pandemic and the interest rate capping this year," he added.
Analysts have been worried about the banking sector profitability at the beginning of the year when the central bank imposed the banking industry interest rate ceiling of 9% in lending and 6% against deposit, which was apparently a gross deviation from the market rates.
Later, bold monetary easing to boost the pandemic-hit economy helped the market rates come even lower while the capping concerns now seem to fade away.
The easy money on top of the better-than-expected performance of Bangladesh economy and some other government steps to support the capital market also helped the stock market and Brac Bank turn out like many other blue chip scrips at the local bourses.
The interest rate capping might have short-term impacts on the banks' profitability, but over the long run it is likely to play a positive role in the economy, said Tushar.
Following the halved earnings per share (EPS) over the first six months of the year, Brac Banks EPS nearly doubled in the July-September quarter, compared to that in the respective periods a year ago.
For the first nine months of the year, the bank posted Tk2.01 in EPS, which was Tk2.52 over the same period a year ago. Its net asset value per share stood at Tk33.81 at the end of September.
Brac Bank shares closed at Tk42.9 on Wednesday at the Dhaka Stock Exchange, 1.42% higher than the previous day.
The bank began its journey in 2001 with a difference in business model—focusing on small ticket loans to small and medium enterprises. The central bank allowed Brac to hold as high as 50% of the Brac Bank shares.
In line with the socio-economic development agenda of Brac, the bank has been playing a tremendous role in financial inclusion, especially through its fin-tech subsidiary Bkash—the top mobile financial service provider in the country.
Brac Bank also expanded into the brokerage and investment banking business.
The bank was listed with the local bourses in 2007. Currently, more than 37% of the bank shares are owned by foreign investors while both institutional investors and general public almost equally share the remaining 18.26% ownership.