Padma Bank, which has been struggling with the burden of toxic loans for years, will merge with EXIM Bank. It will be the first bank merger in Bangladesh.

"We decided to acquire Padma Bank during our board meeting today," Nazrul Islam Mazumder, chairman of EXIM Bank, told The Daily Star.

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BB to step in if banks don’t merge voluntarily by Dec

EXIM Bank's board has already taken the decision at a meeting, said a senior official of Padma Bank.

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Weak banks to merge with strong lenders in a year

The banks will sign a memorandum of understanding next monday at the central bank headquarters in the presence of Bangladesh Bank Governor Abdur Rouf Talukder to start the process of the merger.

Padma Bank, born as Farmers Bank in 2013 after the government approved licences for nine new banks, faced survival challenges just three years after its inception. Its ownership and management underwent a significant overhaul in 2017 to prevent total collapse, as Muhiuddin Khan Alamgir, a former presidium member of the Awami League, stepped down as chairman.

To rescue Farmers Bank from financial distress, the government stepped in with a financial lifeline. Upon its rebranding to Padma Bank in 2019, it reported a colossal amount of soured loans. 

In January, Chowdhury Nafeez Sarafat resigned from Padma Bank as its chairman amid speculations over a merger plan. 

In addition to Padma Bank, other crisis-ridden banks will be merged with stable banks, such as City and Eastern Bank, according to the managing director of a private bank. 

ICB Islamic Bank, Commerce Bank, AB Bank, BASIC Bank, National Bank, Janata Bank and Krishi Bank are among the weak banks in Bangladesh.