Dutch-Bangla Bank to start merchant banking and brokerage businesses
The merchant bank will be a fully owned subsidiary of the Dutch-Bangla Bank.
Dutch-Bangla Bank, a top-tier private sector lender, is set to open a new window to operate merchant banking and brokerage businesses, both are intermediaries in the capital market.
To this end, the lender, which currently does not own any subsidiaries and operates a conventional banking system, will establish two subsidiaries subject to the approval of regulatory bodies, according to a stock exchange filing.
The decisions were made at a board meeting on 14 August, said the bank.
"The board decided to form a full-fledged merchant bank, namely Dutch-Bangla Bank Investment Limited, with a proposed paid-up capital of Tk25 crore," the lender said in a disclosure.
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The merchant bank will be a fully owned subsidiary of the Dutch-Bangla Bank.
Usually, the core functions of a merchant bank are issue management, underwriting, and portfolio management services.
According to the Bangladesh Securities and Exchange Commission (BSEC), at present, 68 merchant banks are in operation.
Dutch-Bangla Bank has also decided to form another fully owned subsidiary for the brokerage business (stock dealer and stock broker) with a paid-up capital of Tk10 crore.
The bank is also joining a consortium of 10 banks to obtain a licence as a digital bank.
To become a sponsor shareholder, the Dutch-Bangla Bank is investing Tk12.5 crore in the proposed Digi10 Bank PLC.
The Dutch-Bangla Bank got listed on the stock exchanges in 2008.
According to its half-yearly financials for 2023, its total operating income increased to Tk1637 crore, a 7.96% increase over the first half of 2022.
However, its net profit declined by 3.38% to Tk240.34 crore.
Till June 2023, the bank disbursed a loan of Tk38,422.91 crore, which is a 5% jump from December 2022.
Its classified loan till June 2023 jumped to Tk2,124.61 crore from Tk1,559.95 crore six months ago at the end of 2022.
The ratio of disbursed and classified loans surged to 5.53%, which was 4.29% at the end of 2022.
In 2022, the bank made a profit of Tk566 crore and paid a 17.5% cash and 7.5% stock dividend to its shareholders.
