City Bank bucks trend as foreigners inject Tk280cr amid broader market exodus

In a striking divergence from the prevailing bearish sentiment among international investors, City Bank emerged as a rare beneficiary of foreign capital in June. 

While global fund managers aggressively offloaded shares across the broader market, they injected nearly Tk280 crore into the bank, more than doubling their stake in the private commercial lender within a single month.

According to the monthly shareholding report for June, foreign investment in the bank skyrocketed to 9.98%, up from 4.79% in May – a 5.19 percentage point increase. 

Data from the Dhaka Stock Exchange indicates that overseas investors scooped up roughly nine crore shares, primarily from the general public. Local institutional investors also showed strong appetite, increasing their holdings by 4.45 percentage points during the same period.

City Bank's success is a sharp contrast to the rest of the banking sector. Out of the 17 listed banks that have foreign shareholding, the bank was the only one to record an increase in June. 

Meanwhile, 11 banks saw their foreign holdings remain stagnant, and five experienced drastic declines. BRAC Bank witnessed the most significant exit, with foreign investors offloading shares valued at Tk186 crore, followed by notable sell-offs in Prime Bank and Uttara Bank.

A source within City Bank attributed this sudden influx of foreign capital to a strategic leadership move. The bank recently appointed a fund manager from Brummer & Partners, a reputed multinational investment firm, to manage its investment portfolio. 

This manager's global network and the subsequent revaluation of the bank's future potential are believed to have drawn in a fresh wave of international institutional buyers.

However, the bank's performance stands as an isolated island in a sea of red. The exodus of international capital from the Dhaka bourse accelerated to an alarming pace in June, with net foreign sell-offs reaching Tk358 crore – the highest monthly exit this calendar year.

Beyond BRAC Bank, other defensive giants like Grameenphone (Tk42 crore), Square Pharmaceuticals (Tk35 crore), Marico (Tk23 crore), and Renata (Tk16 crore) faced heavy liquidations.

Market analysts and local asset managers point to a growing trust deficit between the regulator and international funds. Concerns have intensified following the removal of former central bank governor Ahsan H Mansur and new directives, such as requiring banks to maintain Tk2,000 crore in paid-up capital to declare dividends and capping interest rate spreads at 4%.

Industry leaders warn that such interventions are pushing the country toward a "command economy," where regulatory directives override free-market forces.