Economy Desk: Sharia-based Exim Bank has decided to merge with the troubled Padma Bank. A Memorandum of Understanding (MoU) is likely to be signed on Monday between the two private sector banks regarding this merger. This is the first decision to merge two banks after Bangladesh Bank’s recent initiative to merge weaker banks.
It is reported that the MoU between the two banks will be signed at Bangladesh Bank, where Governor Abdur Rauf Talukder will be present. In addition to the officials, entrepreneurs from the two banks will also be present.
The issue of a merger with Padma Bank was decided in the board meeting of Exim Bank last Thursday. The Board of Directors of Padma Bank has also decided on the merger.
However, how this merger process will be completed will be decided by the lawyers of the two banks in accordance with Bangladesh Bank’s policy and consultation. A settlement agreement today will be the next step in the merger process.
In a meeting with a delegation of the Bangladesh Association of Banks (BAB) on March 4, the governor said that 7 to 10 weak banks may be merged with strong or good banks within this year. If the weak banks do not merge voluntarily during this period, they will be forced to merge next year.
Earlier, in a discussion with the top executives of the bank on January 31, Bangladesh Bank suggested merging the weak bank. In that meeting, MDs of good and weak banks were also advised to start discussions among themselves with a view to mergers.
According to Bangladesh Bank sources, the central bank will soon formulate a policy to complete the merger of good banks with weak banks. The merger process will be completed under that policy.
According to a source, the merger of Exim Bank and Padma Bank has been suggested by the central bank. These two banks were chosen first because the entrepreneurs of the two banks had a joint business. Similar decisions will be made by other weak banks in the coming days if the merger initiative does not create any volatility in the financial markets.
It is known that Padma Bank has defaulted on loans of about Tk 3.5 thousand crores, which will be bought by an asset management company. As a result, the bank’s assets (loans and investments) that have deteriorated will no longer exist. After that, Exim Bank will start operations with the good assets. As a result, there is no fear that EXIM Bank’s index will deteriorate.
The former Farmers Bank was approved as a fourth-generation bank in 2013. Among the fourth-generation banks, this bank has seen major financial scandals within a few years of its inception. Then came major changes in the bank’s board of directors. Farmers Bank was renamed Padma Bank. In 2017, several government banks and organizations joined the ownership of this bank. 60 percent of the bank’s loans are now in default.
Exim Bank was founded in 1999. At present, it is an Islamic-style bank. The bank was listed on the stock market in 2004.
