People's Leasing shares surge 10% as trading resumes after 4 years

Shares in People's Leasing and Financial Services, a troubled non-bank financial institution (NBFI), climbed 10% to hit the single-day ceiling on the first trading session after a four-year suspension.

On Sunday, 1.14 lakh shares worth Tk3.8 lakh at Tk3.30 each were traded under the Z category in line with the Dhaka Stock Exchange (DSE) decision last week to resume transactions.

In July 2019, the DSE halted trading to safeguard investor interests, prompted by the initiation of a liquidation process due to the company's declining financial condition.

Last December, the company devised a strategy for its revival, intending to change its name and rebrand as Sonar Bangla Lease Finance PLC to shed its negative image. However, the Bangladesh Bank has declined the company's proposal to change its name, citing ongoing legal proceedings in court.

Hasan Shaheed Ferdous, the court-appointed chairman of the NBFI, told TBS earlier, "In response to the High Court's directive, we are taking steps to reinvigorate the company. As part of our strategic revitalisation plan, we have been granted permission to recommence trading the company's shares.

"We have reached out to both domestic and international investors to secure funding for the company. However, they expressed apprehensions due to the suspension of share trading. Now, we have met the conditions stipulated by the Bangladesh Securities and Exchange Commission to lift this suspension order."

The chairman also said they have yet to receive an official investment proposal from any business entity, but they are actively engaging with various potential investors.

"We recently held discussions with Blue Ray, a Dubai-based company. With the resumption of share trading for the company, interested parties can now purchase shares and potentially become stakeholders in the company," he continued.

How People's Leasing landed in a quagmire

The NBFI found itself in deep water when Prashanta Kumar Halder, often referred to as PK Halder, embezzled around Tk3,500 crore from numerous financial institutions, including People's Leasing.

Following this, the company initiated its liquidation process in April 2019, after its board notified the central bank of its inability to repay depositors upon maturity.

However, in July 2021, the High Court intervened and revived hope for the struggling NBFI by reconstituting its board of directors, thereby preventing the company from undergoing liquidation.

The board appointed by the High Court for People's Leasing has put forth various strategies to revive the NBFI, such as securing new capital through partnerships, recovering loans, and effectively utilising its assets.

Revival is rare

It is noteworthy that instances of rebounding from financial challenges are uncommon in Bangladesh. A notable exception is the Bank of Credit and Commerce International, which successfully revitalised itself by rebranding as Eastern Bank.

Moreover, Oriental Bank underwent a transition to become ICB Islamic Bank, and Farmers Bank was renamed Padma Bank. However, these institutions are still grappling with the challenges and have not fully overcome them.

According to data from People's Leasing, it has recovered Tk101 crore from borrowers and returned Tk37.53 crore to 2,053 depositors till 27 December 2023.

In December 2021, the company's total deposits stood at Tk2,661 crore, and total outstanding loans amounted to Tk1,211 crore.