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ECC okays $65m bailout for NBP Bangladesh
Khaleeq Kiani
— Reuters/File
ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Friday decided to bail out the National Bank of Pakistan’s (NBP) Bangladesh operations with $65 million (Rs6.6 billion) public money.
The decision was made after the Bangladesh branch’s equity eroded because of Rs14bn losses due to loans that were deemed unrecoverable from the outset.
The NBP’s losses two years ago led to regulatory capital shortfalls, requiring the government to inject money to avoid winding up the bank’s operations in Bangladesh.
“The amount in two tranches is to be remitted to NBP Bangladesh till Jan 31, 2015,” said a statement issued by the finance ministry.
The ministry said the State Bank of Pakistan (SBP) had evaluated the proposal and recommended that the NBP may be allowed to remit $65m to its Bangladesh office from inter-bank market.
NBP President Iqbal Ashraf told National Assembly’s Standing Committee on Finance earlier this month that the bank would proceed against 26 top officials, including seven Bangladeshi nationals, for causing a loss of Rs14bn. The bank’s losses were the result of a complete breakdown of command and control system both at the branch and head office levels, he said.
Muneer Kamal, chairman of the NBP’s board of directors, said: “More than 90 per cent of the $150m Bangladeshi loan portfolio was non-performing.”
Extended after 2003, the non-performing loans (NPLs) came to light in 2008 when a borrower defaulted on letters of credit.
The NPLs originally amounted to Rs9.7bn, but later went up to Rs14bn. Some of the officials responsible for the loss had already fled.
Meanwhile, the ECC on a proposal of the Ministry of Water and Power also approved the exemption from tax on profits and gains to Hubco Power Company’s Narowal power plant after its demerger as a new wholly-owned subsidiary wherein all assets and liabilities related to the plant will be transferred to the new company under sections 284-287 of the Companies Ordinance 1984.
The committee also decided to set up a monitoring cell under the secretary cabinet division to pursue the implementation of all ECC decisions.
Published in Dawn, December 20th, 2014
Khaleeq Kiani
— Reuters/File
ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Friday decided to bail out the National Bank of Pakistan’s (NBP) Bangladesh operations with $65 million (Rs6.6 billion) public money.
The decision was made after the Bangladesh branch’s equity eroded because of Rs14bn losses due to loans that were deemed unrecoverable from the outset.
The NBP’s losses two years ago led to regulatory capital shortfalls, requiring the government to inject money to avoid winding up the bank’s operations in Bangladesh.
“The amount in two tranches is to be remitted to NBP Bangladesh till Jan 31, 2015,” said a statement issued by the finance ministry.
The ministry said the State Bank of Pakistan (SBP) had evaluated the proposal and recommended that the NBP may be allowed to remit $65m to its Bangladesh office from inter-bank market.
NBP President Iqbal Ashraf told National Assembly’s Standing Committee on Finance earlier this month that the bank would proceed against 26 top officials, including seven Bangladeshi nationals, for causing a loss of Rs14bn. The bank’s losses were the result of a complete breakdown of command and control system both at the branch and head office levels, he said.
Muneer Kamal, chairman of the NBP’s board of directors, said: “More than 90 per cent of the $150m Bangladeshi loan portfolio was non-performing.”
Extended after 2003, the non-performing loans (NPLs) came to light in 2008 when a borrower defaulted on letters of credit.
The NPLs originally amounted to Rs9.7bn, but later went up to Rs14bn. Some of the officials responsible for the loss had already fled.
Meanwhile, the ECC on a proposal of the Ministry of Water and Power also approved the exemption from tax on profits and gains to Hubco Power Company’s Narowal power plant after its demerger as a new wholly-owned subsidiary wherein all assets and liabilities related to the plant will be transferred to the new company under sections 284-287 of the Companies Ordinance 1984.
The committee also decided to set up a monitoring cell under the secretary cabinet division to pursue the implementation of all ECC decisions.
Published in Dawn, December 20th, 2014
