For the first time since the 1996 stock market crash, a banking company has been oversubscribed by over 13 times, creating new interest among analysts as the sector used to be regarded as an area lacking lustre all these times.

Against an offer ofTk 1.5 crore, Dutch Bangla Bank Limited (DBBL) received applications worth Tk 21.45 crore. DBBL floated its Initial Public Offering (IPO) at a 50 per cent premium.

The bank is yet to receive the statements of application from its eight branches, which is expected to push the oversubscription figure much higher.

DBBL, a joint venture between

local and Dutch sponsors, invited subscription for its 11’0 at 50 per cent premium against a face value of Tk 100 per share between January 15 and 24.

The bank happens to be the first issue coming with a premium after the 1996 market boom and bust.

DBBL is offering Tk 3.32 crore, of which Tk 1.82 crore has been subscribed through private placement while the rest was offered to the public.

Market analysts attribute the good response to DBBL's IPO to a number of factors which helped restore investors' confidence in the banking sector.

The banking sector as a whole has been performing well now and

this is ‘well reflected' in the market trend, they said.

This very sector, which was burdened with default loans, underwent various reform imposed by the central bank. Bangladesh Bank went to the extent of identifying seven banks as ‘problem banks' of which Iwo have already come out of the status. Statistics reveal that a few others have improved their positions to some extent.

These banks including some others could not pay any dividend for a long time, as the regulations forced them to meet their provisions against bad loans first.

As a result, the accumulated funds accrued over the years turned into profit after provision-

ing. This had a bearing on the stock market, analysts said.

The banks started releasing their profit figures, which again generated interests among the investors, raising prices of bank scrips.

Amid such a situation, DBBL offered its shares which were warmly greeted by investors.

"The bank in its prospectus showed a half-yearly post-tax profit of Tk 4.75 crore till June 30, 2000 with a statutory reserve of Tk 2.12 crore,” said one stock market expert,.

He said the return on the bank’s capital was claimed to be 75 per cent while its classified loans were shown as low as only .4 per cent.