BB to design new law for bank mergers, acquisitions

The Bangladesh Bank is working to formulate a "Bank Resolution Act" for mergers, acquisitions, liquidation or recapitalisation of banks.

A central bank committee has been working for the past two years to make the draft of the law, which is expected to come to light soon.

Bangladesh Bank Governor Ahsan H Mansur also hinted at the impacts of the act at the 3rd Bangladesh Economic Summit, organised by Bangla daily the Bonik Barta at the Pan Pacific Sonargaon in the capital.

"Under the act, it will be possible to take policy decisions for merger, acquisition, liquidation or recapitalisation of any bank," he said.

The central bank chief discussed the topic at a time when half a dozen banks are struggling to repay depositors.

BB officials said that the banking regulator is now finding alternative ways to support some ailing banks as their situation is not improving despite the fact that they can avail liquidity from the inter-bank money market.

The BB will not take any rushed decision on mergers and acquisitions under the current governor, the officials said.

The Bank Resolution Act was also discussed at a meeting between managing directors and CEOs of 17 banks and the BB governor at the central bank headquarters yesterday.

The managing directors and CEOs of Sonali Bank, Agrani Bank, Janata Bank, Rupali Bank, BRAC Bank, Mutual Trust Bank, City Bank, Dhaka Bank, Dutch-Bangla Bank, Eastern Bank, Pubali Bank, Prime Bank, NCC Bank, Mercantile Bank, Premier Bank, Jamuna Bank, and Southeast Bank were present at the meeting.

The BB's department of offsite supervision organised the meeting.

One of the participants said some banks are likely to face mergers or be acquired soon.

BB asks banks to provide liquidity support to crisis hit-banks

The central bank governor also asked the representatives of the 17 banks to provide liquidity to crisis-hit banks under a BB guarantee.

Other issues discussed at the meeting included the current situation of the foreign exchange market, remittance inflow and overdue foreign payment.

After the meeting, Husne Ara Shikha, executive director and spokesperson of the central bank, said the governor asked banks with excess cash to provide liquidity support to the ailing banks.

The BB chief also warned some banks about overdue foreign payments, asking them to to settle them in any way.

He also asked lenders to be cautious about causing volatility in the foreign exchange market, Shikha said.

Overdue foreign payments have come down to around $400 million now from $2 billion, a meeting source said.