The Bangladesh Bank has taken an initiative to merge two more private sector banks as part of its ongoing steps to mitigate the fallout of various plagues like loan scam, default loans, lack of good governance, irregularity and corruption in the sector.
The authorities of better performing United Commercial Bank Ltd. have been asked to take steps to merge with crisis-ridden National Bank Ltd.
Central bank governor Abdur Rouf Talukder held a meeting with a member of the board of directors and managing director of the UCB on Tuesday, said sources from the Bangladesh Bank.
UCB was advised to initiate the merger process in absence of any representative of National Bank in the meeting, the source said.
Though the matter was under discussion among the board of directors of National Bank, the bank authorities have not yet said anything about this formally.
Independent directors of National Bank are in favour of merging the bank with any better performing bank while the shareholder directors seek some time to see if they could improve the bank’s condition.
Though there is bifurcation among the members of the board of directors of the bank, the government wants to merge it with another bank. That is why the central bank has held the meeting. But no relevant side wants to speak to the media formally in this regard.
Wishing not to be named, one of the owners of UCB told Prothom Alo, “We (UCB) were proposed on behalf of the Bangladesh Bank to think about merger with National Bank. We shall see what we can do. Our board will take the final decision upon checking the documents of the National Bank."
With this, decisions were taken over the last one month to merge 10 banks so far.
Earlier, in December last year, the Bangladesh Bank formed a new board of directors for crisis-ridden National Bank Ltd., owned by Sikder Group, dismantling its previous board.
The order issued by the central bank governor said the members of the board of directors of the bank have been found to be involved in approving loan disbursal requests violating laws and regulations, unwarranted interference in the bank’s management, gathering the bank shares within one family misusing authority, creating obstacles in election or reelection of directors, financial irregularities despite the board’s knowledge of the matter, deterioration in the bank’s financial position due to weakness in the board’s policies, and the board’s involvement in violating good governance and discipline and taking actions actions undermining the interests of the depositors. That is why the board was dissolved at the recommendation of Bangladesh Securities And Exchange Commission (BSEC) to protect the interests of depositors and the national interest.
Monwara Sikder, Ron Haque Sikder, Rick Haque Sikder, Naimuzzaman Bhuiyan and Murshid Kuli Khan were removed. Instead of them, former professor of Institute of Business Administration (IBA) at Dhaka University Syed Farhat Anwar, former executive director of Bangladesh Bank Md Sirajul Islam and former managing director of Southeast Bank M Kamal Hossain were appointed as independent directors.
Besides them, Parvin Haque Sikder was made a director as a shareholder, entrepreneur director Khalilur Rahman, entrepreneur shareholder director Moazzem Hossain and Md Shafique Rahman was made a director as a representative of Sikder Insurance Company.
According to the Bangladesh Bank, at the end of December last year, the amount of defaulted loan of National Bank stood at Tk 117.2 billion which was 29 per cent of total loan the bank disbursed. The bank had a Tk 120 billion deficit in security deposit at the end of last year.
At the same time, the defaulted loan of UCB was about Tk 26 billion (5 per cent of total loan).