Summit buys ICB bank stake $55m deal signed

Sajjadur Rahman

ICB Banking Group that acquired Oriental Bank and renamed it ICB Islamic Bank Bangladesh has decided to sell its entire shareholding for $55 million to a group of Bangladeshi buyers.

The Switzerland-based, Malaysian-owned ICB Banking Group currently holds 50.1 percent or 3,506,743 ordinary shares in the bank.

ICB signed a sale and purchase agreement with Summit Industrial and Mercantile Corporation, Cosmopolitan Traders, Alliance Holdings, Summit Alliance Port Ltd and Shore Cap Holdings Ltd on Thursday.

Of the buyers, Summit Industrial and Mercantile Corporation, Cosmo-politan Traders and Summit Alliance Port are owned by Summit Group. Alliance Holdings incorporated in 1998 has business in container terminals, pre-engineered steel building, beverage, financial institutions, real estate, gas pipeline laying/construction, textiles, IT and dairy sectors.

“The bank requires further capital to meet its huge demand for provisioning due to the loss incurred during the Oriental management,” a member of the bank's board of directors said, requesting anonymity.

Masihul Huq Chowdhury, managing director of the bank, said: “The previous management of the bank did not keep adequate provisioning against bad loans.”

Bangladesh Bank (BB) in June 2006 dissolved Oriental Bank's board of directors after detecting massive corruption. To safeguard the interest of the depositors, the central bank took over the management and appointed a BB executive director as the bank's administrator.

“ICB Group doesn't want to inject the additional capital,” said the director.

ICB Islamic Bank incurred a loss of $5.9 million or around Tk 41 crore for the year that ended on December 31, 2009, according to ICB statistics.

The MD of the bank said the extra money used for pro-visioning has mainly caused the losses.

Earlier in February 2008, ICB Group had entered into a share sale and purchase agreement with the BB and The Oriental Bank Ltd to acquire a 50.1 percent equity interest in The Oriental for a total cash of Tk 350 crore (approximately $51.2 million). The acquisition completed in March 2008.

Of the remaining 49.9 percent shares, general shareholders own 25 percent. Different government organisations and financial institutions, including the BB, Bangladesh Export Processing Zones Authority and Power Development Board, own the rest.

The group on its website said the proposed disposal is subject to the approval of the central bank and is expected to be complete by September.

About the takeover of the once 'problem bank', Chairman of Summit Group Aziz Khan said: “We'll focus more on the rural unbanked people and infrastructure financing.”

ICB Financial Group Holdings AG is the holding company of ICB Banking Group (ICB), an international commercial banking business that was listed on the London Stock Exchange in May 2007. ICB Banking Group has presence in 14 countries of Africa, Asia and Europe.