Corporate
National Bank under provision deficit and intense financial crisis
Private Commercial National Bank has been suffering from severe financial crisis for two years. The bank is now planning to raise 100 million dollars or 1000 crores of funds from foreign sources through foreign bond issue to fulfill the regulatory capital requirements.
Meanwhile, Bangladesh Bank is planning to appoint an administrator to the bank, which is facing a provision deficit and financial crisis.
According to the data of Bangladesh Bank, the bank’s capital deficit at the end of June this year stood at Tk 300 crore and due to high non-performing loans, the bank also faced a huge provision deficit of Tk 7,115 crore in June. Provisions are funds set aside by banks to compensate for future losses.
According to information published on the Dhaka Stock Exchange (DSE) website on Sunday, the board of directors of the bank has decided to issue seven-year bonds worth $100 million in foreign currency subject to the approval of regulatory authorities.
National Bank will be the first private bank to issue foreign currency bonds to raise funds from foreign investors.
Managing Director of the bank. Mehmood Husain, when contacted, said the fund had to be raised due to high non-performing loans eroding the bank’s capital.
Mehmood Husain said that they are trying to collect funds from US and UK-based investors. Foreign funds are not just banks; He commented that it will be good for the country.
The board of directors of the bank has approved the foreign currency bond as we have received preliminary assurances from the foreign investors after informing them about the high non-performing loans and the current financial situation, he said. The main reason behind the investment by foreign investors is that the bank’s asset base is quite strong.
He said that he wants to reorganize the bank’s business strategy by focusing on the SME sector to get out of the dependence on corporate loans.
As part of this, the bank plans to strengthen its capital by raising funds from domestic and foreign sources. Earlier in May, the bank announced to raise Tk 500 crore from domestic sources by issuing subordinated bonds to meet regulatory capital requirements.
National Bank’s capital adequacy ratio (CAR) for risk-weighted credit exposure stood at 9.38pc in June, which is required to be at least 10pc as per the regulatory body’s conditions.
According to Bangladesh Bank, the bank’s capital deficit at the end of June this year stood at Tk 300 crore. Increasing defaults due to huge loan non-conformities squeeze the bank’s capital.
The bank’s non-performing loan ratio stood at 23.24pc in June, the second highest among private sector banks. The bank also faced a huge provision deficit of Tk 7,115 crore in June as a result of high non-performing loans.
Provisions are funds set aside by banks to compensate for future losses. High NPLs require banks to maintain higher provisioning, which is collected from profits.
A growing provisioning deficit erodes banks’ capital which constricts banks’ ability to lend, putting public money at risk.
The bank posted a loss of Tk 190 crore in the first six months of this year under the pressure of growing provision deficit and capital loss.
Even after Bangladesh Bank appointed an observer to the board of directors of the bank in 2014, the financial condition of the National Bank has been deteriorating for the past two years. The bank’s share price on DSE has remained below the face value of Tk 10 for the last two years due to deteriorating financial indicators.
Bangladesh Bank identified the bank as one of the 10 weakest banks after new governor Abdur Rauf Talukder took charge. In a recent press conference, the governor said about identifying 10 weak banks, the central bank will sit with them one-on-one to improve the condition of the banks.
Banks are classified on the basis of their capital shortfall, NPL ratio, provisioning and loan-deposit ratio.
The governor has already held a meeting with the owners and top management on the financial performance of the National Bank. The central bank is now planning to appoint an administrator to the bank, a Bangladesh Bank source said.
Bangladesh Bank suspended the loan operations of the bank in May last year in the context of liquidity crisis caused by huge loan irregularities.
The moratorium was later lifted in December when liquidity conditions improved. But even after the long moratorium, the central bank was forced to go into moratorium again in May this year due to the continued irregularities in the bank loans. However, this time Bangladesh Bank limited the credit sector by giving a partial suspension.
Correspondent To witness the deep and diverse historical culture and the latest achievements of high-quality development, the seven-day “International Insights into China” event was held with the theme of “Towards Openness and Integration of the New Era”. The event was held in various cities in China’s autonomous region of Inner Mongolia and Shaanxi Province between October 13 and 19. Media reporters and international students from different countries, including Bangladesh, participated in it.
This event is guided by the Cyberspace Administration of China’s Network Communication Bureau and jointly co-hosted by the Cyberspace Administration of Inner Mongolia Autonomous Region, the Cyberspace Administration of Shanxi Province, and China Daily Newspaper.
During the event, the delegation members visited the Inner Mongolia Museum, Yili Modern Smart Health Valley, Mengcao Seed Industry Center, Grassland Cloud Valley, Huawei Cloud Service Data Center, Qisumu Railway International Logistics Park, Huayan Temple, Hanging Temple and Yungang Grottoes, and Yingxian Wooden Pagoda. They have immersed themselves in the profound and diverse historical and cultural charm of Inner Mongolia and Shanxi, and witnessed the latest achievements of high-quality development. During the activities, the delegation members used their unique “outside eyes” perspective, lenses, and pens to show the world the beautiful picture of cultural inheritance and innovative development in Inner Mongolia and Shanxi and tell the extraordinary story of the local practice of Chinese-style modernization.
The journey began on 13 Oct, and on Oct 14, they explored the Inner Mongolia Museum in Hohhot, where the city’s grassland culture and historical heritage. From Oct 15 to 16, the delegation visited Inner Mongolia’s Ulaanqab City, also known as the “Prairie Technology Valley”, where the Huawei Cloud Data Center, a core area of Inner Mongolia’s big data industry, left a lasting impression on the delegation. The second half of their journey was devoted to Shanxi province. From Oct 16 to 19, they visited iconic tourist sites, such as the Huayan Temple, Nine-Dragon Wall, Hanging Temple, Yungang Grottoes in Datong City, and the Yingxian Wooden Pagoda in Shuozhou City.
Bayasgalan Lkhagvadulam from Mongolia, after climbing the Hanging Temple, said it is marvelling. It’s hard to imagine how people built this temple on the cliff 1,500 years ago. It’s awe-inspiring. If you are interested in ancient architecture, I highly recommend visiting Shanxi to see it yourself.
A group of 20 foreign media journalists, experts, and international students from different countries and regions, including Bangladesh, Kazakhstan, and Mongolia, participated in this event.
The bdapps community gathered for a momentous occasion at the “bdapps Connect: Engage & Innovate 2024 – Top Developers Meet & Greet,” held at the Robi Axiata Ltd. Head Office. The event united leading developers from the bdapps ecosystem for a day brimming with insightful discussions, interactive activities, and valuable networking opportunities.
The event was graced by prominent leaders from Robi Axiata Ltd., including Shihab Ahmad, Chief Commercial Officer; Shafiq Shamsur Razzaq, General Manager – Digital VAS & New Business; and Fatema Nashrah, Manager. Md. Altamis Nabil, Business & Engagement Lead at bdapps, along with key members of the bdapps admin team, were also present to engage with the developer community.
Adding star power to the gathering, renowned content creator and entrepreneur Rafayat Rakib, Founder of Digital Dropouts and Official Trainer & Mentor at Fiverr, attended as a special guest. He enthralled the audience by sharing his inspiring entrepreneurial journey, offering valuable industry insights, and motivating developers to expand their entrepreneurial horizons.
A key highlight of the event was the engaging activities, where the top developers were divided into teams to participate in interactive games and brainstorming sessions. The teams competed in an “App Idea Generation Competition,” where they showcased their creativity by pitching innovative app ideas aimed at solving real-world problems. The competition encouraged teamwork and highlighted the developers’ ingenuity. The best-performing team and standout individuals were recognized with exclusive prizes from bdapps, making the event a memorable experience for all participants.
The program concluded on a high note with an inspiring speech by Shihab Ahmad, who praised the developers for their pivotal role in transforming bdapps into a thriving hub of innovation. He acknowledged their contributions and encouraged them to continue driving forward. Additionally, Shafiq Shamsur Razzaq emphasized the importance of collaboration and ongoing learning to foster a future-ready digital community.
“bdapps Connect: Engage & Innovate 2024” successfully celebrated the achievements of the developer community while motivating them to push the boundaries of creativity and innovation in the digital space.
bdapps, a local app store and API hub, enables content providers and application developers to monetize their apps. With more than 50,000 developers working on the platform, bdapps is a flourishing ecosystem that continues to drive digital innovation and entrepreneurship.
Pacific Bangladesh Telecom, the first mobile phone operator in the country, seeks to relaunch Citycell.
The company has recently applied to the Bangladesh Telecommunication Regulatory Commission (BTRC) to reclaim its licence and spectrum.
In 2016, the BTRC shut down Citycell’s operations on the grounds of a decline in subscribers and failure to pay outstanding dues. Later, in October 2023, the regulatory body officially cancelled Citycell’s licence and spectrum. At the time of its closure, Citycell, the country’s only CDMA (Code Division Multiple Access) technology operator, had around 15,000 subscribers.
However, in its recent review application letter, Pacific Bangladesh Telecom stated that BTRC’s order to cancel Citycell’s licence was illegal.
Pacific Bangladesh Telecom in the application, signed by its head of regulatory and corporate affairs Nishat Ali Khan, argued that Citycell was excluded from various technological upgrades, including spectrum allocation, due to political decisions by the then government.
Despite paying all fees, new claims of outstanding dues were raised unjustifiably, it said. Ultimately, the operation was shut down citing a decrease in subscribers, even though Citycell had an annual turnover of over Tk200 crore before the closure, said the company.
Nishat told the news reporter that they plan to return to court, deeming BTRC’s cancellation of Citycell’s licence illegal while the case concerning outstanding dues is still ongoing in court.
“We have applied to the BTRC to get the licence back, and we will also appeal to the court in the future,” he said.
In the letter, Pacific Bangladesh Telecom stated that at the time of Citycell’s shutdown, the company held 8.82 GB of spectrum and had 850 towers. The closure left 1,000 employees unemployed overnight.
It also claimed to have fully paid all types of fees, including VAT and taxes. As a result of the shutdown, the company said it incurred debts amounting to Tk4,000 crore. If Citycell had remained operational, it could have generated at least Tk2,000 crore in revenue during the period until now.
The letter mentioned that BTRC’s claim of Tk218 crore in outstanding dues, which led to the cancellation of Citycell’s licence, was incorrect. The company argued that although the BTRC demanded the amount for 10 GB of spectrum, Citycell was actually allocated 8.5 GB of spectrum. Therefore, the claim lacked justification, it said, adding that the matter of outstanding dues was already being contested in court.
When asked why it did not approach the court at the time against BTRC’s decision, Nishat said, “The cancellation of Citycell’s licence was a political decision by the government. The court would not have ruled against the government’s decision. That’s why we did not file a petition in court back then.”
When asked whether it would be possible to relaunch Citycell with its significant debt if BTRC reinstated the licence, Nishat responded that despite the shutdown, the company has not defaulted on any bank loans.
Citycell eyes transition to GSM technology
He further said that if the licence is restored, the owners are prepared to transition Citycell from CDMA to GSM technology to resume operations.
Asked by the news reporter, Aminul Haque, acting chairman of the BTRC, declined to comment on the receipt of the letter or the matter of returning the licence.
On 9 September 2022, all spectrum allocated to Citycell and the Radio Communication Equipment Licence was cancelled on 7 August of the same year. Subsequently, on 15 September 2023, the BTRC cancelled Citycell’s 2G service licence.
According to officials concerned, during the tenure of President Hussain Muhammad Ershad, Citycell was granted a licence in 1989. The service was launched jointly by Hong Kong-based Hutchison and Bangladesh Telecom Limited. They used analogue mobile technology. The mobile service was highly expensive and not accessible to the general public.
When the BNP came to power, in 1993, the domestic industrial group Pacific Motors and Far East Telecom acquired a 55% stake in Citycell. Of the stake, Pacific Motors held 37.95% and Far East Telecom held 17.51%. The remaining 44.54% of the shares were owned by Singtel, a Singapore-based telecommunications provider. The head of Pacific Motors is former foreign minister and BNP leader M Morshed Khan.
Before Grameenphone acquired its licence in November 1996, Citycell was the sole mobile operator in the country.
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