Private sector banks EXIM Bank and Padma Bank have decided against proceeding with their merger, a decision disclosed on Tuesday (24 December) at the Dhaka Stock Exchange (DSE).
Earlier, on 14 March, EXIM Bank's board had approved a resolution to acquire Padma Bank Limited.
Following this, a Memorandum of Understanding (MoU) was signed between the two banks at the Bangladesh Bank headquarters on 18 March, formally initiating the merger process.
At the time of the agreement, Nazrul Islam Mazumder, chairman of EXIM Bank and the Association of Bankers, Bangladesh, assured stakeholders that individual depositors of Padma Bank would be able to access their funds through EXIM Bank without delays.
Additionally, he guaranteed that no employees of Padma Bank would lose their jobs due to the merger.
However, EXIM Bank has now decided to withdraw from the planned merger, leaving the future of Padma Bank uncertain.
Padma Bank, originally launched in 2013 as The Farmers Bank, has faced persistent challenges since its inception.
In 2017, Chowdhury Nafeez Sarafat took over as chairman, but the bank continued to be plagued by widespread irregularities, prompting government intervention in early 2018.
To stabilise the struggling institution, state-owned entities Sonali Bank, Agrani Bank, Janata Bank, Rupali Bank, and the Investment Corporation of Bangladesh (ICB) injected Tk715 crore in capital.
Furthermore, state-owned banks invested nearly Tk1,000 crore in Padma Bank through subordinated bonds and fixed deposits.
Despite these substantial efforts, Padma Bank’s financial position continued to deteriorate, largely due to its inability to recover non-performing loans, leading to significant capital erosion.
This reversal by EXIM Bank casts doubt on the future of Padma Bank and raises concerns over the recovery of the substantial investments made by state-owned institutions.
