The stock market regulator has allowed 12 capital market intermediaries linked to nine non-bank financial institutions (NBFIs) facing closure over negative equity to continue operating, arguing that keeping the subsidiaries operational could help preserve their value during liquidation.
At its regular commission meeting on Monday, the Bangladesh Securities and Exchange Commission (BSEC) allowed two brokerage houses and two merchant banks to continue their operations normally.
It also gave four brokerage houses, three merchant banks and one asset management company additional time to improve their financial conditions before facing possible closure.
Just because you kill the parent does not mean you have to kill its child. The death of a father does not mean that the son must also die.BSEC spokesperson and Executive Director Md Abul Kalam
All 12 intermediaries are subsidiaries of nine non-bank financial institutions (NBFIs) that Bangladesh Bank has listed for closure.
The nine institutions are FAS Finance & Investment Limited, Fareast Finance & Investment Limited, Aviva Finance Limited, People's Leasing and Financial Services Limited, International Leasing and Financial Services Limited, Bangladesh Industrial Finance Company (BIFC), Premier Leasing & Finance Limited, GSP Finance Company (Bangladesh) Limited, and Prime Finance & Investment Limited.
Speaking to Daily Waadaa, BSEC spokesperson and Executive Director Md Abul Kalam said, “Just because you kill the parent does not mean you have to kill its child. The death of a father does not mean that the son must also die.”
He added: “Bangladesh Bank may kill the father or mother, but these are their children. They are separate registered entities.”
Earlier, Bangladesh Bank decided to liquidate the nine non-bank financial institutions (NBFIs) to restore stability in the country's financial sector.
The institutions have been linked to various financial irregularities, including alleged embezzlement during the tenure of the Sheikh Hasina-led fascist regime, and many have failed to repay depositors. They also have liabilities exceeding their assets, leaving them with negative equity.
The entities allowed to continue normal operations are Premier Leasing Securities Broking Ltd., a subsidiary of Premier Leasing & Finance Limited, and AVIVA Equity Management Ltd., a subsidiary of Aviva Finance Limited. Both are brokerage houses. The other two are PLFS Investments, associated with People's Leasing and Financial Services Limited (PLFS), and Prime Finance Capital Management Ltd., a subsidiary of Prime Finance & Investment Limited. Both are merchant banks.
The four brokerage houses granted additional time to improve their financial positions are Premier Leasing Securities Ltd., associated with Premier Leasing & Finance Limited; International Leasing Securities Ltd., a subsidiary of International Leasing and Financial Services Limited; Fareast Stocks and Bonds Ltd., a subsidiary of Fareast Finance & Investment Limited; and PFI Securities Ltd., linked to Prime Finance & Investment Limited.
IL Capital Ltd., associated with International Leasing and Financial Services Limited, and GSP Investment Ltd., linked to GSP Finance Company (Bangladesh) Limited, are the two merchant banks granted additional time to improve their financial positions.
FAS Capital Management Ltd., a merchant bank associated with FAS Finance & Investment Limited, was also given additional time, along with Prime Finance Asset Management Company Ltd., an asset management company associated with Prime Finance & Investment Limited.
BSEC Executive Director Md Abul Kalam said, “Subsidiary companies are assets of the parent company. If their licences are shut down, they will not be able to operate or retain any value. Rather, the parent company will suffer further losses.
“This decision will help the parent company and its owners retain more value, contrary to how many people are misinterpreting it.”
“The proposed Securities and Exchange Commission Act 2025 includes a provision stipulating that clients’ money and assets will not fall under liquidation proceedings. The provision has been incorporated to protect their interests by treating them as bankruptcy-remote assets,” Md Abul Kalam said.