Staff Reporter :
Bangladesh Bank (BB) has announced plans to identify weak banks by March next year, followed by a decision on potential mergers.
Mezbaul Haque, the central bank’s Executive Director and Spokesperson, disclosed this decision yesterday, following a meeting between BB Governor Abdur Rouf Talukder and a delegation from the Bangladesh Association of Banks (BAB), headed by Chairman Nazrul Islam Mazumder.
In the aftermath of the meeting at the central bank’s headquarters, Haque addressed the media, drawing parallels with international practices where banks were often merged through the owners’ initiative or regulatory intervention. He emphasized the preference for owners to initiate mergers voluntarily, with the central bank intervening only when necessary for the sector’s welfare.
Furthermore, Haque stressed that BB may decide to merge banks if it deems it necessary for the banking sector’s overall health. Currently, there are 36 listed banks and 25 non-listed banks operating in the country.
Chairman Nazrul Islam Mazumder of the Bangladesh Association of Banks (BAB) expressed willingness to support such moves, citing examples of bank mergers in other countries. He affirmed BAB’s commitment to acting in the national interest.
Mazumder, who also serves as the Chairman of Exim Bank, expressed initial concerns upon reading about the proposed bank mergers in the newspaper. However, following a detailed discussion with the governor, these concerns have been addressed satisfactorily.
In July 2023, Bangladesh Bank was granted the authority to initiate forced mergers between banks through the amended Bank Company Act- 2023.
This authority is exercised when the board of directors and management are found to be involved in activities contrary to the interests of depositors.
The amended Act empowers the central bank to take various measures to consolidate or reorganize any banking company if it fails to implement the recovery action plan.
Additionally, Bangladesh Bank’s Prompt Corrective Action Framework, slated for implementation in March 2025, is designed to guide mergers based on performance and financial indicators as of December 2024.
According to reports, approximately 21 out of 61 banks may fall into the weak banks category under this policy.
