United Commercial Bank (UCB) is likely to take over trouble-ridden National Bank Ltd (NBL), according to officials of the lenders.
Troubled state-owned BASIC Bank is likely to be acquired by private sector lender City Bank as the central bank is forging full steam ahead with its plan to engineer the takeover of weak banks with stronger ones.
The merger guideline for banks and financial institutions is being hailed as a major step towards fixing the problem in the financial sector, which has been weighed down by massive default loans and weak corporate governance.
Bangladesh Development Bank Ltd (BDBL) will be merged with Sonali Bank while Rajshahi Krishi Unnayan Bank (Rakub) will be taken over by Bangladesh Krishi Bank (BKB), according to a central bank official.
The guideline comes four months after the BB issued the Prompt Corrective Action (PCA) framework to give a procedural direction for mergers and acquisitions amidst the deteriorating financial condition of some banks and financial institutions.
The government should come up with a clear guideline complying with the global best practices before compelling banks to merge, the World Bank has said.
The WB said before initiating any merger processes, detailed guidelines on mergers and acquisitions need to be issued, allowing banks a clear idea about the process involved
There are four main reasons why banks fail: credit risk, interest rate risk, foreign exchange risk, and liquidity risk (bank run).
Initially, it is the general stock investors who might be at the receiving end of the process while the loan defaulters, whose misdeeds are largely responsible for Padma Bank’s current misfortunes, might come out victorious.
United Commercial Bank (UCB) is likely to take over trouble-ridden National Bank Ltd (NBL), according to officials of the lenders.
Troubled state-owned BASIC Bank is likely to be acquired by private sector lender City Bank as the central bank is forging full steam ahead with its plan to engineer the takeover of weak banks with stronger ones.
The merger guideline for banks and financial institutions is being hailed as a major step towards fixing the problem in the financial sector, which has been weighed down by massive default loans and weak corporate governance.
Bangladesh Development Bank Ltd (BDBL) will be merged with Sonali Bank while Rajshahi Krishi Unnayan Bank (Rakub) will be taken over by Bangladesh Krishi Bank (BKB), according to a central bank official.
The guideline comes four months after the BB issued the Prompt Corrective Action (PCA) framework to give a procedural direction for mergers and acquisitions amidst the deteriorating financial condition of some banks and financial institutions.
The government should come up with a clear guideline complying with the global best practices before compelling banks to merge, the World Bank has said.
The WB said before initiating any merger processes, detailed guidelines on mergers and acquisitions need to be issued, allowing banks a clear idea about the process involved
There are four main reasons why banks fail: credit risk, interest rate risk, foreign exchange risk, and liquidity risk (bank run).
Initially, it is the general stock investors who might be at the receiving end of the process while the loan defaulters, whose misdeeds are largely responsible for Padma Bank’s current misfortunes, might come out victorious.
Both banks are weak as per a Bangladesh Bank health index of banks and it is very difficult to get any positive result by merging two weak banks, said Fahmida Khatun, executive director of the Centre for Policy Dialogue.