National Bank board decides not to merge with UCB
This decision was taken at a meeting of the bank's Board of Directors on Saturday (27 April), people familiar with the meeting told The Business Standard.
The National Bank Board of Directors has decided not to merge the bank with United Commercial Bank (UCB).
At a meeting on Saturday, the bank's Board of Directors reached the decision, people familiar with the matter told The Business Standard.
"The board of National Bank had verbally announced that the bank would not go for the merger. On Saturday, the board met again and announced its final decision regarding the merger. Everyone including the chairman of the board agreed to this opinion," a National Bank official told TBS on condition of anonymity.
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"Without any discussion, the central bank decided to merge National Bank with UCB. On 9 April, the last working day before Eid, fear spread among the depositors and officials after knowing this decision. Many people started withdrawing money from the bank," the official added.
According to the official, 200 branches of the National Bank out of 211 are now making profits.
"Some branches in Dhaka are in losses due to high defaulted loans. We have started collecting money from the defaulters," the National Bank official further said.
According to him, all the National Bank officials have been given an action plan to improve the overall index of the lender, but it will take a few more years to improve the indicators.
At a meeting held on 9 April with Bangladesh Bank Governor Abdur Rauf Talukdar in the chair, it was decided that National Bank Limited would be merged with UCB. Stakeholders of both the banks were present there.
The central bank decided to merge some banks to resolve the financial sector crisis. Last December, it issued a Prompt Corrective Action (PCA) framework for the banking sector.
In the light of this, it was decided to merge weak banks with the strong ones based on four indicators - defaulted loans, capital situation, management and liquidity situation.
If there is no voluntary merger by December 2024, weak banks will be compulsorily merged from March 2025, according to a central bank decision.
On 4 April, the Bangladesh Bank issued a policy on how to merge banks.
However, it was decided to merge some banks without following this policy, spreading a wave of uncertainty in the banking sector.
The panic has slowed down the merger process after the preliminary decision of the central bank to forcefully merge five of the weakest banks.
Apart from one of these five banks, the remaining four banks do not want to go for the merger, according to the higher authorities.
The decision-making officials of the four banks said that the decision had to be taken due to the pressure of the central bank.
