DHAKA, 6 October 2006 — Bangladesh’s prime minister yesterday approved the sale of a majority stake in the country’s fourth largest bank to a Saudi prince for $330 million, an official said.
Prince Bandar ibn Mohammad ibn Abdul Rahman’s offer for 67.5 percent of state-owned Rupali Bank Ltd. beat out six other bidders in August but the sale still needed Prime Minister Khaleda Zia’s approval.
“Prime Minister Khaleda Zia today (Thursday) approved the sale and we have already issued a letter of intent to new owner,” Privatization Commission Chairman Enam Ahmed Chowdhury told AFP.
“Prince Bandar will start taking over the bank from Sunday,” he said, adding the prince would spend another $42 million for recapitalization of the bank and an additional $50 million for its new work plan.
News of the Rupali sale last month saw its share price jump to more than 3,000 taka ($45), a six-fold rise in six months on the Dhaka Stock Exchange. Rupali, with more than 500 branches across the South Asian country and more than 5,000 employees, desperately needs an injection of funds because a large numbers of borrowers have defaulted.
Rupali, one of four state-run commercial banks in Bangladesh, has bad debts listed at 7.72 billion taka ($128 million), according to the government. Chowdhury had said the Saudi team would inject $5 billion into the bank.
The other bidders included J.J. Finance of Britain, Sabre Capital and Muscat Bank of Oman, Maa International of Malaysia and two domestic firms. The government put Rupali Bank up for sale under an agreement with the International Monetary Fund.
The IMF had delayed disbursement of a $70 million soft loan to the government after it failed to launch a privatization process early last year. Bangladesh is one of the world’s poorest countries and nearly half its 140 million population lives on less than a dollar a day.