Padma Bank set to merge with Exim Bank following BB decision

Padma Bank set to merge with Exim Bank following BB decision

Dhaka, Mar 14 - Padma Bank, the fourth-generation bank struggling with toxic loans, is merging with Exim Bank to become first such lender to implement a recent decision of the central bank.  

The decision to take over the troubled Padma Bank was taken on Thursday at a meeting of shariah-based Exim Bank's Board of Directors, said an official of the Exim Bank.

"We have already finalised the draft of the MoU that will be signed on Monday [18 March] in the presence of the Bangladesh Bank governor," said Nazrul Islam Majumder, chairman of Exim Bank.

When asked about the merger, Padma Bank Chairman Afzal Karim told UNB that the matter has been discussed. A final decision will be announced formally, he said.

No date has been finalized yet.

The sources close to the development said that a formal approval from Bangladesh Bank has to be taken now in this regard. As per the directives of the central bank, the merger will be done step by step.

In a report titled 'Bank Health Index and Heat Map' of the BB, a total of 38 banks in the country have been identified as weak banks.

Of these, 12 banks are in very bad condition, and 9 banks have already moved into the red zone. The other 3 are located in the yellow zone i.e., very close to the red zone.

After media reports on the health of the banks prepared by the Financial Stability Division of the central bank the weak banks are facing questions from their clients and depositors.

Padma Bank is the renamed version of the Farmers Bank which was established in 2013 but collapsed within three years of operation amid huge financial irregularities and toxic loans.

Bangladesh Bank changed the name the Farmers Bank in 2019.-UNB