DHAKA: As institutional investors of stock market, merchant banks have recovered loss getting provisioning facility by Securities and Exchange Commission (SEC).
These institutions got released from long term negative impact of margin loan. As a result, turnover became boost.
On the other hand, to get same facility for brokerage house Dhaka Stock Exchange (DSE) has made appeal to the SEC as the decision made in the DSE board meeting recently regarding this application, sources said.
According market analyst, due to institutional investors, including merchant banks activeness on transaction is the main cause for increasing DSE turnover.
The SEC recently has opened the chance to 20 percent of provisioning instead of 100 percent against the loss for the merchant banks.
As a result, most of the merchant banks became free from circle of margin loan and increased their investment power.
Meanwhile, some institutions converted their margin loan to the equity and add with paid capital as a result they don’t have to repayment negative margin loan to the mother bank.
The City Bank securities have already converted their negative margin to the equity as a result they recovered financial capability.
Due to the implementation of provision facility, investors became agree to the bank company’s shares as these institutions overcome the possibility of negative impact on EPS and profit in the financial statement of 2012 year.
In the year end of 2012 there may come expected announce of dividend for not keeping 100 percent of provision against loss as a result investors eager to transaction bank issues.
A merchant bank official, wishing anonymity, said, due to provision facility, merchant banks would not become totally free from loss actually but there will have no negative impact on financial report which will give positive indicator to the market.
The institutions have got chance to recover their loss step by step for provisioning facility, he added.
BDST: 1144 HRS, 17 Feb, 2013
JNA/ Edited by: M. Mahbub Alam, Asst Output Editor/ SM Salahuddin, Output Editor email@example.com
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