Sonali Bank, BDBL Sign MoU For Merger

Sonali Bank PLC and Bangladesh Development Bank PLC (BDBL) have signed a memorandum of understanding (MoU) to begin the process of merger between the two state-owned banks. The development comes as the merger issue of weak banks and financial institutions is getting attention from policy levels in recent times after the Bangladesh Bank unveiled a roadmap and plan to rescue the weak financial institutions and banks through merger.

Md Afzal Karim, Sonali Bank CEO and managing director, and Habibur Rahman Gazi, BDBL managing director, inked the MoU at an event at the central bank on Sunday.

Bangladesh Bank Governor Abdur Rouf Talukder along with other high-ups was also present on the occasion.

“Depositors' money will remain secure and no employees will lose their jobs,” Afzal Karim told reporters after the MoU signing.

BDBL Chairman Shamima Nargis said, among four indicators, the bank’s only weakness was in the recovery of defaulted loans. “If time had been given, this problem could have been overcome. But the merger has to be done on the advice of the Bangladesh Bank.”

The first decision to merge the BDBL with the Sonali Bank was taken on 3 April. The board of directors of the two banks approved the merger plan.

The BDBL was established through the merger of Bangladesh Shilpa Bank and Shilpa Rin Sangstha in 2009. The financial indicators of the bank did not improve even after the merger.

According to the Bangladesh Bank data, at the end of December 2023, Sonali Bank's total outstanding loans stood at Tk93,096 crore. Among the amount, Tk13,150 crore or 14.13% was defaulted. However, there is no capital shortfall due to the deferral facility.

Of the BDBL’s total loan, Tk982 crore or 42.46% was defaulted till December last. Even if no income is received against this amount of loan, the bank has to calculate interest against the entire deposit.

Earlier, the Padma Bank PLC signed an MOU to merge with the Shariah-based private commercial bank, Exim Bank PLC.