A deal has been signed between the state-owned Sonali Bank with another state-owned bank, Bangladesh Development Bank Limited (BDBL).
The deal was signed in the presence of Bangladesh Bank Governor Abdur Rouf Talukder and other officials of the central bank and the two state-owned banks on Sunday (12 May).
"There is no reason for BDBL employees to worry following its merger with Sonali Bank. The bank will become stronger; Bangladesh Bank will start the next activities with the appointment of an audit firm,” Sonali Bank Managing Director Afzal Karim said following the signing.
"Among the four indicators of BDBL, there is the only weakness in the recovery of defaulted loans. If there was time, this problem could have been overcome; however, the merger has to be done on the advice of Bangladesh Bank," said BDBL Chairperson Shamima Nargis.
The first decision to merge BDBL and Sonali Bank was taken on 3 April of this year following the Bangladesh Bank's effort to improve the image of the country's entire banking sector by reducing its numbers through merger.
According to the Bangladesh Bank, troubled banks will be compulsorily merged with good banks starting in March next year. A Prompt Corrective Action (PCA) Framework based on four indicators has been announced to identify weak banks before mergers. The central bank has pledged support for any banks that decide to merge themselves by December this year.
In 2009, Bangladesh Shilpa Bank and Bangladesh Shilpa Credit Corporation merged to form the Bangladesh Development Bank Limited.
The new bank was saddled with the debts of its predecessors.
In December, BDBL's defaulted loans stood at Tk982 crore - 42.46% of disbursed loans.
