Uttara Bank Limited has decided to wind up its subsidiary company UB Capital and Investment Limited as it has not operated since its inception, according to a filing by the listed commercial bank.
The bank formed UB Capital and Investment in September 2010 in order to operate fully-fledged merchant banking and portfolio management services.
However, since then it has not been able to obtain a business license from the Bangladesh Securities and Exchange Commission.
Uttara Bank had subscribed to all except 600 of the 1 crore shares of UB Capital and Investment, a company with Tk10 crore paid-up capital.
Managing the company assets, UB Capital and Investment witnessed nominal positive growth in shareholders' equity over a decade.
The voluntary winding up of the company would be subject to compliance of necessary rules and regulations, Uttara Bank said in its filing with the stock exchanges on Sunday.
There are 63 investment banks in Bangladesh, which are already licensed by the securities regulator.
Due to a lack of investment banking activities in the economy and professional strengths within teams, most of the merchant banks are struggling in business.
However, nearly a dozen top-tier investment banks are doing well as they have moderate income from services like: issue management, underwriting, corporate advisory, fund arrangement, and discretionary portfolio management.
Uttara Bank is a first generation private commercial bank in Bangladesh.
Having listed with the Dhaka Stock Exchange in 1984, it grew to over Tk500 crore in terms of paid up capital and nearly four times that in net asset value. In 2019, the bank posted annual earnings per share of Tk4.59.
The bank's long term credit rating is "AA" and short term rating is "ST-2," according to the Emerging Credit Rating Limited report disclosed in mid-2019.