UAE-based BTA Wealth buys Tk111cr shares of Islami Bank

The United Arab Emirates-based BTA Wealth Management has bought over 2% stake – 3.42 crore units of shares – of Islami Bank Bangladesh Limited at a cost of Tk111 crore as the leading private-sector lender has been in a struggle for liquidity shortage.

The shares were traded at Tk32.6 each in the block market on 27 April, according to the Dhaka Stock Exchange.

"The newly established asset management company [BTA Wealth] showed its interest in investing in the capital market of Bangladesh at the BSEC road show in Dubai. Following that, it has invested in Islami Bank as a test run," Bangladesh Securities and Exchange Commission (BSEC) Chairman Professor Shibli Rubayat Ul Islam told The Business Standard.

BTA Wealth, a firm of Dubai International Financial Centre, also has bigger investment plans in the Bangladesh market, he added.

The Dubai International Financial Centre is the leading financial hub for the Middle East, Africa and South Asia, and comprises 72 countries with an approximate population of 3 billion and a GDP of $8 trillion, according to its website. The BTA website says it formed an investment fund called "BTA Tiger Fund" in 2022 for investing in emerging markets.

Established in 2016 and headquartered in Emirates Financial Towers in Dubai, BTA Wealth has no other investment in Bangladesh, several brokerage firm officials told TBS, adding that Islami Bank is its maiden investment in the country.

When contacted, Islami Bank Bangladesh Chairman Mohammad Nazmul Hassan told TBS that he is not aware of the investment of BTA Wealth. Its Managing Director Mohammed Monirul Moula could not be reached for comments.

Meanwhile, another Tk3.32 crore shares of Islami Bank Bangladesh were sold in the block market for Tk108 crore on Tuesday, according to Dhaka Stock Exchange. The details of the trade could not be known immediately.

Currently, the Saudi Arabia-based Al-Rajhi Co for Industry and Trade, Islamic Development Bank and Arabas Travel and Tourist Agency jointly hold a 22.04% stake in Islami Bank Bangladesh's paid-up capital. Among general shareholders, foreign investors own another 20.23% share of the bank. Foreigners, together with sponsors and general shareholders, hold a total of 42.27% of the bank's shares.

Besides, four Middle East-based sponsors – Bahrain Islamic Bank, Islamic Development Bank, Kuwait Finance House, and Dubai Islamic Bank – sold off or reduced their holdings in the bank since 2015, stock market sources said.

Islami Bank Bangladesh has been going through a severe cash crisis as its depositors withdrew Tk17,783 crore in 2022, ‍according to its audited financial statement. In that year, the bank invested Tk11,430 crore. As a result, its net operating cash flow dropped by Tk97.11 per share year-on-year.

At the end of 2022, its net operating cash flow per share stood at Tk55.68 negative when it held only Tk23,429 crore as cash and cash equivalents. However, its profit increased by 28% year-on-year to Tk616 crore in 2022. In that year, its earnings per share was Tk3.84, which was Tk2.99 a year ago. The bank declared a 10% cash dividend for its shareholders for 2022.

The private-sector lender went through tough days last year as some reports about its alleged irregularities in large loan disbursement came to light, causing distrust among depositors.

In the first quarter (January-March) of this year, depositors continued to withdraw money from the bank.  They withdrew Tk2,646 crores during this period. The bank's profit fell by 32% year-on-year to Tk57.12 crore in the March quarter, as a consequence.

The ownership of Islami Bank was changed in early 2017. Later on, a change was brought about to its board of directors.