- Status of investment bankers
- 65 investment banks have obtained licenses
- 10-12 IPOs are approved each year
- Some banks are under BSEC observation
- The majority of them only manage wallets
- BSEC is strict on the application of the conditions
The Bangladesh Securities and Exchange Commission (BSEC) has requested information from investment banks and money managers on their performance, as the regulator believes that many institutions are not meeting their licensing requirements.
An investment banker or portfolio manager deals with issues and portfolio management for his own clients and those of his clients, as well as underwriting – a process by which an individual or institution assumes risk financial for a fee.
Under licensing conditions effective from 2010, a merchant bank must submit documents for at least one initial public offering (IPO) to the BSEC every two years.
In addition, it will have to create five new client portfolios each year in addition to its own portfolios.
BSEC officials said some merchant banks cannot meet their license conditions regarding issuance and portfolio management.
A dozen investment banks are active in all activities – issuance and portfolio management as well as underwriting – while the majority of them only manage portfolios.
The commission will examine the business activities of these investment banks and money managers, the officials added.
After obtaining information, the commission is likely to launch an investigation into some investment banks to find out the reasons for their poor performance, officials said.
Sources said that between 2010 and 2020, some investment banks were less active in issuing management.
These are AB Investment, Abaci Investments, Agrani Equity and Investment, AIBL Capital Management, Bangal Investment, BLI Capital, City Bank Capital Resources, Cosmopolitan Finance, Exim Islami Investment, Green Delta Capital, GSP Investment, Hal Capital, IIDFC Capital, Islami Bank Capital Management, Jamuna Bank Capital Management, Meghna Capital Management, Race Portfolio & Issue Management, Riverstone Capital, Roots Investment, Strategic Finance and Uttara Finance Capital Management Limited.
Some investment banks such as City Bank Capital Resources have performed well in the bond market.
On the other hand, ICB Capital Management, AFC Capital Limited, Imperial Capital, LankaBangla Investments, Prime Bank Investments, Banco Finance & Investment, IDLC Investments, AAA Finance & Investment Ltd are mainly active in the marketing of new issues, have indicated sources.
The BSEC has requested the Bangladesh Merchant Bankers Association (BMBA) to collect information from its members in a directed format and submit it to the regulator within the next five working days.
Market insiders said 65 merchant banks work in the capital market, which only sees 10 to 12 IPOs each year.
BMBA Chairman Saidur Rahman said the licensing terms are impractical as only a few IPOs get approval each year.
Merchant banks should be active in their respective fields to make the capital market dynamic, he added.
Mahbub H Mazumdar, managing director of AFC Capital, said merchant banks should properly comply with license conditions as they are the only gateway for new businesses to enter the market.
He said poorly performing merchant banks should appoint skilled manpower to play their role and the regulator should assess the good performance of investment banks.
BSEC Executive Director and Spokesperson Mohammad Rezaul Karim said the commission initially wanted to know the status and then would find out the reasons why some investment banks and money managers had not complied with the licensing conditions.
After getting all the documents, the commission will review them and take the next steps, he added.