United Group hastily pulls back from Islami Bank board

Hazrat Shahjalal (RA) Industrial City, a proposed company of power giant United Group, has left the post of directorship of Islami Bank within just one and a half months of assuming the position.

The withdrawal of directorship from the board of Islami Bank by selling off its entire shareholdings so soon has blindsided many, including the group's nominated director.

“I never expected this. It was abnormal and embarrassing for me,” said ANM Saidul Haque Khan, who became a director of Islami Bank on June 2 as a nominee of Hazrat Shahjalal (RA) Industrial City.

Khan said he did not know why the owner has sold out their entire shares so quickly.

There are talks in the financial market that United Group has booked quick profits by selling the shares.

The share price of Islami Bank started declining from Tk 27 plus since the turn of the year, according to Dhaka Stock Exchange website. Between February and May, the bank's share price dropped as low as Tk 22 a share.

It started picking up in June and reached a one-year high of Tk 34.4 a share in July, when United Group's sister concern announced sale of its entire holdings of 32,547,335 shares.

Hazrat Shahjalal (RA) Industrial City sold its stocks at Tk 32 a share, an official of Dhaka Stock Exchange said.

If the average buying price of the stocks was Tk 25 a share, the profit was more than Tk 22.78 crore, which is a good sum for a company that is yet to begin operations.

“When we saw the price of the share has gone up, we decided to sell those to book profits,” Moinuddin Hasan Rashid, managing director of United Group, told The Daily Star.

Rashid admitted that the buying price of each Islami Bank share was about Tk 25 and the selling price Tk 32.

Other than the lure of quick profits, another factor has motivated them to sell the shares, he said.

“We came on board to add value and contribute to the growth of the bank's business. Later we found we could not do, so we came out,” Rashid added.

Hazrat Shahjalal (RA) Industrial City is the newest company of United Group. It was supposed to be built in Sylhet on an area of more than 100 acres.

The new enterprise was to encompass the full range of textile manufacturing activities -- from spinning to fabrics and apparel making plus dyeing. The factory was scheduled to go into commercial operation by 2016, according to the website of the group.

Now the group has postponed building the proposed industrial city, according to Rashid.

MA Mannan, managing director of Islami Bank, confirmed to The Daily Star about the sale of shares by United Group and the withdrawal of their nominee of directorship from the board.