State-owned Sonali Bank and Bangladesh Development Bank Ltd (BDBL) have taken a significant step towards merging, as they signed a memorandum of understanding (MoU) on Sunday at the Bangladesh Bank head office. The merger, announced by the central bank on April 3, aims to address challenges faced by BDBL, particularly in recovering defaulted loans from its customers. Following the signing ceremony, BDBL Chairman Shamima Nargis emphasized the necessity of the merger, citing the bank’s struggles with reducing non-performing loans.
As reported, Nargis highlighted the progress made in improving BDBL’s performance indicators, including a reduction in non-performing loans from 41% to 34%. However, she acknowledged that achieving a further reduction to 5%-10% within six months would be challenging without cooperation from defaulting customers. Despite concerns raised by some BDBL employees against the merger, Nargis asserted that the decision was made by the boards of both banks after careful consideration of various factors.
Sonali Bank Managing Director Afzal Karim reassured BDBL employees that the merger would strengthen both institutions. He explained that Sonali Bank’s significantly larger deposit amount compared to BDBL would minimize the impact on the former. Karim also highlighted the manpower shortage faced by Sonali Bank, indicating that BDBL employees need not fear any adverse effects from the merger.
Moving forward, the Bangladesh Bank will oversee the next steps of the merger process, including the appointment of an audit firm. Despite initial concerns and uncertainties, both Sonali Bank and BDBL are optimistic about the merger’s potential to enhance their operations and serve their customers more effectively in the future.
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