Weak banks to merge after passage of Law: Finance Minister

Summary:

Problem-ridden banks can be merged with the state-owned banks to keep them salvaged once after the law is passed.

Content:

A weak bank is one whose liquidity or solvency is impaired unless there is a major improvement in its financial resources, risk profile, strategic business direction, risk management capabilities and quality of management.

So, this kind of weak banks want to merge with other banks just for the betterment of their operation, then that will be possible as confirmed by the Finance Minister.

Finance Minister AHM Mustafa Kamal said Wednesday, “The Law Merger and Acquisition is at draft stage. We will take it to the parliament. The merger will start when the law is passed.”

He kept the statement in front of the newsmen after a virtual meeting of the cabinet committee on government purchase. He also confirmed that the banks eager to get merged with each other would be given permission once a law is passed.

The meeting was held with the World Bank Officials in Washing DC, at the sidelines of the spring meetings of the World Bank and International Monetary Fund.

It can be assumed that the existing law can be amended later if necessary to facilitate merger. The merger was necessary as some of the private banks were not operating well and could do well if they merged with the stronger ones.

If the stronger banks decline to merge with the weaker ones, then the central bank will take steps to protect the merger. The merger is also recommended by the experts and economists as the merger of banks can bring discipline in this sector as the number of the weak and useless banks is excessive.

Merger can also help the banking sector under complete automation to ensure transparency and accountability, as stipulated by the Finance Minister.

The former Finance Minister Abul Maal Abdul Muhith also discussed merger on several occasions.

The idea of merger recently came into the attention of the Finance Minister when a private bank, Padma bank applied to get merged with any of the financially strong state-owned banks in July.

Later, the application was sent by the Financial Institution Division of the Ministry of Finance to the central bank for its opinion on it. Although the Finance Minister did not himself did not get the application as told by himself to the newsmen.

It is now confirmed that the government itself wants to merge the banks to save them from catastrophe. If the problem-ridden private banks can be merged with the state-owned banks, the weak banks can be salvaged.

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