ICB to expand trading network via sponsors

The state-run Investment Corporation of Bangladesh (ICB) has considered expanding trading services across the country to generate additional income to overcome its financial woes.

As per a proposal approved by the ICB board of directors, separate trading wings will open at the branches of the ICB’s corporate sponsors— state-run banks. ICB will execute trades at those wings on behalf of their sponsors in exchange for brokerage commission.

The banks will launch trading in their branches on receiving an approval from the central bank.

Initially, the brokerage services will be introduced at the branches in divisional headquarters.

ICB’s Managing Director Niranjan Chandra Debnath confirms that the proposal has already been approved and that ICB’s corporate sponsors have also accepted it.

ICB’s sponsors, such as Sonali Bank, Janata Bank, and Agrani Bank, conduct securities trading through the ICB Securities Trading Company Ltd. (ISTCL) as the banks do not have DP (depository participatory) licences. The Corporation also executes trades on behalf of other banks, which are not its sponsors, such as Rupali Bank and BASIC Bank. They will also be able to open trading wings.

The ICB managing director said the banks need not inject capital for logistic support to provide trading services at their branches. Only a computer and an employee apart from the infrastructure the bank branches already have would be enough to facilitate trading.

“The regular clients of the banks will get trading services at the branches,” Mr. Debnath said.

The services would also increase the income of the banks through the sale of their own products, including margin loans linked to securities trading.

“The banks will immediately seek permission from the central bank for launching the services,” said Mr. Debnath.

Presently, ICB’s operation outside Dhaka is very limited because of a limited number of branches of its own and its subsidiaries.

The ISTCL has only seven branches across the country while private firm LankaBangla Securities has more than 10 branches in Chittagong city and its outskirts. The operational gap is as wide when ISTCL is compared with other major investment firms.

ICB’s client base will expand significantly if it can provide trading services through the branches of its sponsors.

“Sonali, Janata and Agrani Bank have thousands of clients who will not need to open bank accounts for accessing trading services. It [trading wing] will create a win-win situation for both ICB and its owners,” said the ICB MD.

Sonali, Janata, and Agrani Bank each has more than 20 branches in Chittagong city alone.

If every branch initially provides trading services to at least 20 clients, the number of clients will come to 1,200 in Chittagong city. This number will soar if ICB can operate in all divisional headquarters through bank branches.

The expansion has been designed at a time when the Corporation is in a dire strait. It reported its first-ever annual loss of Tk 1.21 billion in FY25 due to investment losses, higher provisioning, and expensive borrowing. A year earlier, it earned a profit of Tk 326.8 million amid a downward pressure on income since FY22.

Imprudent portfolio management before 2024 was another major reason behind ICB’s stepping into the red.

As part of a broader revival strategy, the Corporation will seek another Tk 100 million from the government and will look to work with the government to help raise public funds through securitization of large and important public infrastructure projects.

Meanwhile, the Corporation on Thursday celebrated its 50th anniversary at a city hotel, attended by Finance Minister Amir Khosru Mahmud Chowdhury and the top brass of the finance ministry and the securities regulator.

At the programme, the finance minister and the chairman of the securities regulator stressed the need for raising the ICB’s operational standards to match those of private financial firms for the sake of its survival and progress.

They advised the Corporation to improve its professionalism and operational efficiency.

Source: The Business Standard