The central bank says it will not approve any mergers aside from the 5 proposals on the table
Published : 15 Apr 2024, 11:08 PM
Bangladesh Bank has decided not to approve any mergers aside from the 10 public and private banks which are voluntarily proposing mergers.
If new mergers are necessary, the experience from these five mergers will be put to use to evaluate them, said Mezbaul Haque, executive director and spokesman for the central bank.
“We have received five public and private proposals for bank mergers. For now, we will not accept any new proposals beyond these five.”
“Once these mergers are complete, more can be conducted, but Bangladesh Bank will not go for any new mergers until the process is completed.”
It may take three to four years to complete all the preparations and legal processes necessary to merge the banks.
“Many processes have to be followed in order to merge two banks. Auditors have to be appointed, assets and liabilities have to be fixed, share prices have to be fixed, shares have to be allocated, and legal proceedings must be completed. We [Bangladesh Bank] will gain experience in implementing these five proposals – experience is needed. After that, we will see.”
Asked which banks were to merge, Mezbaul said, “Padma and Exim Banks are among the list. The other names have been reported in the media.”
Following years of discussions with economists, Bangladesh Bank took the initiative to merge weak banks with strong ones in order to reduce the total number of banks.
As part of these plans, the central bank announced a ‘Prompt Corrective Action’ policy, giving banks a one-year time frame in addition to fixing a two-and-a-half year ‘Road Map (Action Strategy)’.
Before the full bank merger policy was issued, the private Padma Bank announced it would merge with the private Shariah-based Exim Bank. The two banks have already signed an agreement with the approval of Bangladesh Bank.
After the release of the merger policy, the merger Bangladesh Development Bank Plc, known as BDBL, with the state-owned Sonali Bank was approved by the respective boards of directors.
Discussions with Bangladesh Bank regarding the mergers of the privately-owned City Bank with the state-owned BASIC and the National Bank with the UCB Bank are ongoing. State-owned Bangladesh Agricultural Bank may merge with Rajshahi Agricultural Development Bank.
The mergers of these six banks have not been finalised. The banks say that negotiations are ongoing and their boards of directors have not taken any decision in this regard yet.
However, Bangladesh Bank assumes these ten banks will work only on the five proposals for mergers.
According to the ‘Roadmap’ and ‘PCA’, banks have until December to decide on mergers.