EXIM Bank refuses to merge with Padma Bank

 
EXIM Bank, a Shariah-based private financial institution, has decided to withdraw from the merger process with Padma Bank.

On Tuesday, the bank informed the Dhaka Stock Exchange, or DSE, about this decision. However, Padma Bank claims to be unaware of this development.

On Monday, EXIM Bank's board of directors decided not to proceed with the merger process with Padma Bank.

The bank cited the current changed circumstances in the country as the reason for its inability to take responsibility for Padma Bank at this time. They suggested that Padma Bank might wait for "better times" for a rethink of the latest turnaround.

Facilitated by Bangladesh Bank, the two banks signed a Memorandum of Understanding, or MoU, in March, as part of a broader initiative to reform the banking sector by merging weak banks with stronger ones.

Explaining the decision, EXIM Bank's Managing Director Mohammad Feroz Hossain told bdnews24.com, "Many things in the country have changed. At this moment, we [EXIM Bank] cannot take responsibility for Padma Bank. The board has decided against it. If Padma Bank waits, the matter can be revisited in better times." When asked whether the decision was discussed with Padma Bank or Bangladesh Bank beforehand, he declined to comment.

But Padma Bank said there was no discussion about EXIM Bank's withdrawal during their latest board meeting on Monday.

The meeting was the first for Padma Bank's board after the change in government. Mujibur Rahman, managing director of Janata Bank and an ex-officio director of Padma Bank, attended it.

Mujibur told bdnews24.com, "We have discussed new initiatives to turn around the bank, focusing on recovering non-performing loans. There was no discussion about EXIM Bank's decision. The board is not even aware of their decision."

Bangladesh Bank announced the merger initiative in December last year as part of a plan to reduce the number of banks. On Mar 18, under the central bank's mediation, EXIM Bank and Padma Bank signed the MoU to merge.

However, following the fall of the Awami League government in August amid student and public protests, the situation changed.

Financial weaknesses in EXIM Bank, previously considered a "good bank" under Bangladesh Bank's supervision, began to surface.

The merger process stalled, and in October, EXIM Bank's newly appointed Chairman Nazrul Islam Swapan told bdnews24.com: "What can I say? The bank has been left hollow. We are managing, and although there is a liquidity crisis, it is not as severe as in other cases. We have managed to stabilise somewhat."

He added, "We are waiting for better times. Once the bank improves, we can revisit the issue of taking responsibility for Padma Bank or the merger."
He had suggested waiting at least four to five months to see any improvement before making further decisions.

Despite this, both Padma Bank and EXIM Bank completed audits as part of the merger process and submitted reports to Bangladesh Bank.
Since signing the MoU in March, Padma Bank has essentially stopped collecting deposits and issuing new loans. Following the resignation of its managing director, the bank is currently operating with an acting head.

Facing a financial crisis due to a lack of deposits, Padma Bank recently requested Tk 13 billion in liquidity support from the central bank.