Bangladesh Bank said no lender will be forced into a merger, even as the government advances plans to consolidate several struggling banks.
“The central bank will not bring any bank under merger against its will,” spokesperson Md Arief Hossain Khan told TIMES of Bangladesh on Monday evening. His comments followed a high-level meeting at the finance ministry on Sunday that reviewed potential legal challenges and resistance from bank sponsors.
“Legal challenges could arise not only from sponsor shareholders but also from depositors,” said Arief Hossain, who also serves as executive director of Bangladesh Bank. “The finance ministry has declined to be involved in such legal matters, leaving the responsibility with the central bank.”
Some sponsor-directors have demanded that control be handed back to them instead of being forced into consolidation, Arief Hossain added. “If the sponsors can inject sufficient capital and improve financial health on their own, the central bank and the government will have no objection.
“They should stand on their own. No one will be forced into a merger.”
The meeting, chaired by economic adviser Salehuddin Ahmed, was attended by senior government and central bank officials, including finance secretary Khairuzzaman Majumder, NBR chairman Abdur Rahman Khan, and deputy governor Md Kabir Ahmed. Governor Ahsan H Mansur joined virtually.
A six-member taskforce headed by Ahmed has been formed to plan and oversee the resolution process. Officials said Sunday’s meeting marked the formal start of bank consolidation, with five lenders expected to merge into the country’s largest state-run Islamic bank.
The government has agreed to inject 202 billion taka in capital, targeting completion of the Tk350 billion institution within six weeks.
Earlier, from September 2 to 4, the central bank met with boards and management of the affected lenders. First Security Islami Bank, Union Bank and Global Islami Bank agreed to the plan, while Exim Bank and Social Islami Bank opposed it.
First Security Islami, Union, Global Islami and Social Islami are controlled by S Alam Group, while Exim Bank is run by NASA Group’s Nazrul Islam Mazumder, former chairman of the Bangladesh Association of Banks. Combined, the five institutions have non-performing loans exceeding 77 percent, after large sums were siphoned off through related-party lending, according to central bank officials.
