BB identifies 10 weak banks, merger expected imminently

In a pragmatic move to get rid of the prevailing crisis in the country’s banking sector, the Bangladesh Bank (BB) has finalised a list of nine weak banks and those mergers with stronger banks are expected immediately.

The nine weak banks are Padma, ⁠AB Bank, ⁠National Bank, ⁠One Bank, ⁠ICB Islamic Bank, Bangladesh Development Bank Ltd (⁠BDBL), ⁠Basic Bank, ⁠National Bank of Pakistan, ⁠Rajshahi Krishi Union Bank and ⁠South Bangla Agriculture Bank, a source in the BB said on Monday.

The merger will take place within the current year and except for these nine banks, no bank will be merged with any bank having sound financial condition, said the source.

Of the 10 banks, a merger has recently taken place between Exim and Padma and the crisis-ridden Basic Bank is all set to merge with City Bank to improve its financial condition.

Besides, Bangladesh Development Bank Ltd (BDBL) is in the process of being amalgamated with the state-run Sonali Bank, while Rajshahi Krishi Unnayan Bank is with Bangladesh Krishi Bank.

After a meeting held at the BB headquarters in Dhaka on March 4, Abdur Rouf Talukder, governor of the central bank, told reporters that there are two ways of mergers, according to central bank sources.

One of the ways is concerned banks can discuss among themselves and make decisions to merge.

The other way is that weak banks will merge with sound financial companies under the Prompt Corrective Action (PCA) framework introduced by the central bank.

Meanwhile, while talking to the reporters at his office, Mezbaul Haque, spokesperson of the BB, said the authorities of several financially struggling banks are in talks with stronger banks regarding their potential mergers amidst the prevailing financial challenges.