businessnews24bd.com :
Bangladesh stock market and financial services sector generally have been ailing for last five years. Lack of investments has driven Non Performing Loans (NPL) beyond 10% of lending portfolios, and the current NPL ratio is materially higher than 1-3% of internationally acceptable tolerable levels. Bangladesh Bank has been trying relentlessly to bring discipline in the financial services sector. A few high profile fraudulent loans responsible for stock market crash in late 2010.
The market is down by almost 50% from the peak in 2010, and at the same time daily average trading volume has dropped to below BDT 500 crore from BDT 2,000 crore. As a result all market intermediaries including merchant banks, brokerage as well as asset managers suffered heavily. Although most mutual funds have materially outperformed the market. However, along with eroding liquidity, closed end mutual funds have become practically illiquid and trading prices are highly depressed relative to net asset values of these funds (50% discount to NAV), and certainly shaken investor confidence.
Few negative news have surfaced focusing on the asset management sector specially targeting LR Global although a long track record in Bangladesh that the company awarded the Best Investment Management Company by World Finance for two consecutive years in 2013 and 2014.
There are few issues that have been raised against LR Global by BSEC which has conducted 2 inquiries and investigations for almost 9 months (for March 2014-Januray 2015). LR Global termed the allegation totally fabricated and baseless and strongly protested against the negative publicity through a press release. In February 2015, BSEC finally concluded the inquiry/investigation and ordered LR Global to pay a whopping 50 Lac fine, liquidate its private equity investments (almost 5%) that have been made over a tenor of 5 years, return office & administrative fees charged since the inception of the funds, close bank accounts that apparently have lower yield, and barred the company from launching a new fund for one year. In addition, to these instructions, BSEC also slapped fund auditor Huda Vasi with a 5 lac fine for providing auditor’s opinion and 25 lac to BGIC, the fund trustee.
Bangladesh stock market and financial services sector generally have been ailing for last five years. Lack of investments has driven Non Performing Loans (NPL) beyond 10% of lending portfolios, and the current NPL ratio is materially higher than 1-3% of internationally acceptable tolerable levels. Bangladesh Bank has been trying relentlessly to bring discipline in the financial services sector. A few high profile fraudulent loans responsible for stock market crash in late 2010.
The market is down by almost 50% from the peak in 2010, and at the same time daily average trading volume has dropped to below BDT 500 crore from BDT 2,000 crore. As a result all market intermediaries including merchant banks, brokerage as well as asset managers suffered heavily. Although most mutual funds have materially outperformed the market. However, along with eroding liquidity, closed end mutual funds have become practically illiquid and trading prices are highly depressed relative to net asset values of these funds (50% discount to NAV), and certainly shaken investor confidence.
Few negative news have surfaced focusing on the asset management sector specially targeting LR Global although a long track record in Bangladesh that the company awarded the Best Investment Management Company by World Finance for two consecutive years in 2013 and 2014.
There are few issues that have been raised against LR Global by BSEC which has conducted 2 inquiries and investigations for almost 9 months (for March 2014-Januray 2015). LR Global termed the allegation totally fabricated and baseless and strongly protested against the negative publicity through a press release. In February 2015, BSEC finally concluded the inquiry/investigation and ordered LR Global to pay a whopping 50 Lac fine, liquidate its private equity investments (almost 5%) that have been made over a tenor of 5 years, return office & administrative fees charged since the inception of the funds, close bank accounts that apparently have lower yield, and barred the company from launching a new fund for one year. In addition, to these instructions, BSEC also slapped fund auditor Huda Vasi with a 5 lac fine for providing auditor’s opinion and 25 lac to BGIC, the fund trustee.
