The bank’s share price jumped 9.86% to close at Tk23.40, extending its winning streak to five consecutive trading sessions. During this period, the stock gained around 16%, adding approximately Tk500 crore to the bank’s market capitalisation.
Logo of Islami Bank Bangladesh PLC. Photo: Collected
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Logo of Islami Bank Bangladesh PLC. Photo: Collected
Shares of Islami Bank Bangladesh PLC surged on the Dhaka Stock Exchange (DSE) today (15 November) following a proposal for a major government-backed equity injection aimed at strengthening the bank’s capital base and reducing the influence of its controversial former owners.
The bank’s share price jumped 9.86% to close at Tk23.40, extending its winning streak to five consecutive trading sessions. During this period, the stock gained around 16%, adding approximately Tk500 crore to the bank’s market capitalisation.
The rally followed the bank’s formal approach to the government seeking a Tk6,000 crore equity investment through the issuance of new shares, according to market insiders.
According to the media report, under the capital restoration plan submitted to the Bangladesh Bank, the lender has proposed issuing 600 crore new ordinary shares at a face value of Tk10 each via private placement, which would raise its paid-up capital from Tk1,609.99 crore to Tk7,609.99 crore.
If approved, the state-backed capital injection would grant the government a 78.8% ownership stake and direct control over the country’s largest private commercial bank.
Earlier, the bank received central bank clearance to raise its authorised capital fivefold from Tk2,000 crore to Tk10,000 crore to counter a growing capital shortfall driven by rising defaulted loans.
The board approved the authorised capital expansion proposal on 4 November, which requires amendments to the bank’s memorandum and articles of association alongside approvals from regulators and shareholders at an upcoming extraordinary general meeting.
Following the proposal, the Bangladesh Bank’s Banking Regulation and Policy Department forwarded the matter to the Financial Institutions Division on 9 November to gauge whether the government agrees to take up the strategic equity participation.
A senior Islami Bank official, speaking on condition of anonymity, explained that channeling the investment through the government rather than private placement prevents former owners, notably those linked to the S Alam Group, from regaining influence by buying back newly issued shares.
The state equity injection would simultaneously reduce capital shortfalls, help meet regulatory requirements, dilute legacy ownership stakes, and provide an avenue for the government to offload the shares to general investors once the bank’s financial recovery succeeds, he added.
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