The ailing non-bank financial institution Union Capital is going to merge with the Prime Bank as the central bank has approved the bid, according to  Bangladesh Bank (BB) officials.

"We have primarily approved the merger on Tuesday as they wanted to merge and applied to us," said Md Mezbaul Haque, executive director and spokesperson of the Bangladesh Bank.

The BB will send letters to them today in this regard, he added.

The development comes as the issue of merger of weak banks and financial institutions is getting attention from policy levels in recent time  after the  BB unveiled a roadmap and has planned to rescue the weak financial institutions and banks through merger.

Azam J Chowdhury, former chairman of Prime Bank, has taken the initiative of merger of Union Capital with Prime Bank,  said another central bank official.

Union Capital was a reputed financial institution until 2017 but it has been struggling to repay deposits since 2018.
The problems in the NBFI surfaced as it faced problem in returning the deposit of Tk 100 crore kept by the British American Tobacco Bangladesh (BATBC).

As of September last year, Union Capital's total disbursed loans stood at Tk 1,263 crore, of which Tk 545 crore or 43.12 percent was defaulted, BB data showed.

A.N. M. Golam Shabbir, deputy managing director (DMD) of Union Capital working as MD and CEO (current charge) told The Daily Star that they applied to the central bank for merger but yet to receive any formal letter in this regard.

East Coast securities, an arm of the East Coast group, owned by Azam J Chowdhury,  was the sponsor director of Union capital  till july last year.