New Chairman Khalilur vows to bring scam-hit National Bank back on track without merger

The bank has been making headlines for merger talks and changes to its board amid irregularities, loan scams

Plagued by default loans and irregularities, National Bank Limited will turn around within a year and it will not go for a merger, its new Chairman Khalilur Rahman says.

“The Bangladesh Bank has agreed to [no merger] on condition of improving the bank’s financial health in one year,” he said at a press conference in the bank’s headquarters at Bangla Motor in Dhaka on Monday after taking the reins.

Khalilur runs Chattogram-based KDS Group. He is one of the sponsor directors of NBL, the first Bangladeshi private bank founded by a set of entirely local sponsor directors in 1983.

He says the bank will get back on track if it gets everyone’s support, and show improvement in its financial report due after December, which he says will help it avert a situation like a merger.

Khalilur also responded to allegations of irregularities in disbursing loans that led to huge defaults.

“There won’t be any plunder in the National Bank. Not a single paisa will be looted. I can assure you this,” he said.

Officials at the press conference said sponsors announced Tk 10 billion investment in the bank to help it turn around and the new board set a target to collect Tk 30 billion deposits.

“We understand the needs of businesses. The bank will recover its lost glory with their help,” Khalilur said.

The new board will try to recover old unpaid loans, expand its business and turn back to profits, he said.

He was accompanied by the three new directors of the bank. They are independent director Helaluddin Nizami, a former commissioner of Bangladesh Securities and Exchange Commission and professor of Chattogram University, chartered accountant Ratna Dutta, and former Bangladesh Bank executive director Zahurul Huda.

Their appointment to the board came after chairman Syed Ferhat Anwar and three directors stepped aside.

The three others who stepped down with Ferhat are Parveen Haque Sikder, the only remaining member of the Sikder family on the board, independent director and former Bangladesh Bank executive director Sirajul Islam, and former Southeast Bank managing director M Kamal Hossain.

After Parveen’s resignation, Sikder Insurance-nominated Shafiqur Rahman and sponsor shareholder Moazzem Hossain have remained on the board.

Riddled with loan scams and irregularities, the bank showed some improvements last year by halving its annual losses to Tk 15 billion after suffering Tk 32.61 billion losses in 2022 – meaning total Tk 47.6 billion losses in two years.

Ferhat, a former Dhaka University professor, had taken charge in December after serving as an independent director of Meghna Bank.

Ferhat was the first from outside the Sikder family to be appointed as chairman in December 2023 in a long time after the Sikder Group took control of the bank in 2009.

When he presented the proposal on a merger amid scams in March, the board of directors was split.

At that time, the Bangladesh Bank reportedly began mediation between National Bank, the first Bangladeshi private bank founded by a set of entirely local sponsor directors in 1983, and United Commercial Bank Limited or UCB, another bank formed the same year.

The National Bank initially appeared to agree with the Bangladesh Bank on a possible merger with another bank, but its directors finally decided not to set the plan in motion for now, which Fehat had earlier confirmed.

As many as 18 sponsor directors, including AKM Abu Taher, Abu Taher Mia, Zainul Haque Sikder, Khalilur and Mozazzam Hossain, launched the bank in 1983.

Through changes brought to the board in 2009, Sikder Group Chairman Zainul took control of the bank. The directors of other families were then dropped from the board one by one and Zainul’s wife and children were made directors.

After Zainul’s death in February 2021, his wife Monowara Sikder became chairman. Hosaf Group Chairman Moazzam and his son Mabroor Hossain were removed from the board in August 2022, which established absolute control of the Sikder family over the bank. KDS Group Chairman Khalilur was still a director of the bank.

But Zainul’s children Ron Haque Sikder, Rick Haque Sikder and Parveen Haque Sikder started a dispute over the control of the business empire their father left behind. Monowara appeared to have failed to tackle the crisis, which affected the bank as well.

In this situation, an incident of Tk 1.5 billion money laundering allegedly by NBL directors from the Sikder family through credit cards, and loan scams were unearthed.

As the bank sank deeper into the crisis, the board was reformed over allegations of rules violations, and Ferhat took over as chairman in December.

Only one member of the Sikder family was kept on the board while Moazzam was brought back at that time.