Bank Asia set to take over Bank Alfalah this week

 
Bangladesh Bank (BB), the central bank of Bangladesh, has recently taken up a merger initiative as a desperate resort to rescue the country's tattered and ravaged banking sector. The central bank has in the meantime declared a merger policy too though top executives of a number of banks and some reputed economists have expressed mixed reactions over the central bank's formula regarding banks' merger. Even financial experts including two former Governors of Bangladesh Bank have said that merger cannot recover banks from financial woes and perils overnight. It will take at least two years and it is all the more important to establish good governance and rule of law in the banking sector, economists have remarked. Merger alone cannot pull banks out of their existing disastrous plight, veteran financial scholars have meanwhile told reporters of different media outlets including The Asian Age.

Financial sources have informed that according to merger regulations, a state-owned bank can merge only with another state-owned bank complying with the statutory procedure. On the other hand, a private bank can reportedly merge only with another private bank following the regulatory norms and principles.

The State Bank of Pakistan has granted in-principle approval to Bank Alfalah Limited to facilitate Bank Asia Limited in conducting due diligence of operations in Bangladesh as the Pakistani entity looks to sell 100% of its assets and liabilities to the Bank Asia which is a private bank in Bangladesh. Sources associated with banking administration have stated that Bank Asia is all set to take over Bank Alfalah within this week.

Bank Alfalah is one of the largest commercial banks in Pakistan. It shared the development in a statement to the Pakistan Stock Exchange (PSX) on Friday (17 May). The statement says, "We are pleased to inform you that the State Bank of Pakistan has granted in-principle approval to Bank Alfalah Limited (BAFL) to facilitate Bank Asia Limited (Bank Asia) in conducting the due diligence of BAFL's operations in Bangladesh, in view of the prospective sale of 100% of the assets and liabilities attributable to BAFL's Bangladesh operations to Bank Asia."

"The consummation of the proposed transaction is subject to detailed due diligence, execution of transaction documents and receipt of regulatory and third-party approvals and consents," the statement from Bank Alfalah mentions. 

Bank Asia announced its intention to acquire Bank Alfalah's operations in Bangladesh last month. It will be Bank Asia's third acquisition of foreign bank assets in Bangladesh.

>>Sarwar Chowdhury, AA