No more banks to be merged for the time being: Bangladesh Bank

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Bangladesh Bank has said that no more banks will be merged for the time being. The regulatory body has said, after assessing the results and experience of the process that has begun in merging five banks so far, the decision will be taken about merging other weak banks too. Meanwhile, the initiative to merge 10 state-owned and private banks and reduce them to five, is in progress.

Bangladesh Bank spokesman Mezbaul Haque said, `No bank outside of these five banks will be merged anew for now. Our own capacity in this regard is also an important factor. It requires three audit firms to audit one bank. There is a lack of good audit firms in the country. A decision to merge further banks may be made only on the basis of the experience of these five banks.’

At a meeting with top bank executives on 31 January this year, Bangladesh Bank advised that initiative be taken to merge weak banks.

Bangladesh Bank governor Abdur Rauf Talukdar recommended that the managing directors of the strong and the weak banks start discussing the matter among themselves. Similar directives were issued on 4 March to a delegation of Bangladesh Association of Banks (BAB), an association of private banks entrepreneurs.

At this meeting, Abdur Rauf Talukdar said that seven to ten weak banks may be merged with stronger banks within this year.

After that, the central bank in March this year, summoned top officials of EXIM Bank and recommended a merger with the crisis-ridden Padma Bank. The bank showed interest and the central bank gave its go-ahead. On 14 March the boards of EXIM Bank, run on lines of Islamic banking, and Padma Bank, agreed to the merger. Then in the presence of the governor, an MoU was signed between the two banks to this end.

On 3 April a decision was taken to merge two government-sector banks. The decision was taken to merge Rajshahi Krishi Unnayan Bank (RAKUB) with Bangladesh Krishi Bank, and Bangladesh Development Bank Limited (BDBL) with Sonali Bank.

Then on 8 April a decision was taken to merge the problem-ridden BASIC Bank with City Bank.

Finally, on 9 April before the Eid holidays, a decision was taken to merge the crisis-afflicted National Bank with the private sector United Commercial Bank. These decisions were taken at a meeting of the top persons of the concerned banks held at Bangladesh Bank.

Bangladesh Bank in the meantime has drawn up rules and regulations concerning the voluntary and compelled merging of weak banks with stronger ones. ♦

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