Commercial banks are given until this yearend for voluntary merger through choosing partners on their own or face forced amalgamation under Bangladesh Bank move on reforms.
In a press briefing to dispel speculations centering round the central bank's possible steps on mergers and acquisitions as part of its financial- sector reform recipe, BB spokesperson Md Mezbaul Haque Tuesday said the banking regulator would execute the amalgamation initiatives with utmost priority given to interests of the depositors.
"There are two options now remaining open for the banks-either get merged within themselves voluntarily or face forced merger by the BB," he said to clear the mist.
The central bank's spokesperson said the BB had already circulated the PCA (prompt corrective action) framework through which each bank can know financial health of the bank by putting the fundamentals into the framework.
If any bank is confident enough that they will be able to correct themselves within the stipulated timeframe and meet the requisite compliance with the PCA framework, the bank does not need to worry too much about the possible merger, he said.
"But if any bank finds them in extremely difficult situation to meet the PCA compliance within this year, they should start searching for potential partners for voluntarily merger by this coming December," he told reporters.
Mr Haque, also an executive director of the central bank, said the BB's PCA-framework execution would start in March next year based on the annual audited financial statements for the period ending December 31, 2024.
Before going for forced mergers, he said, the central bank will appoint certified or well-recognised audit firms to reassess their financials and choose partners for merging the weak banks.
"But we (the central bank) want to ensure everyone that the interests of the depositors will be well taken care of. The weak bank can become strong bank through the merger while strong banks can be stronger banks," he said about the merits of the move, evidently coming amid reports of umpteen problems some of the banks are riddled with.
About the recent media reports over the banks in the red, yellow and green zones, he said BB's various departments assess various components regularly for financial-risk management, which is not for publishing in the media.
After release of the media reports, the BB spokesperson said, there are many speculations now in the market. Some say these banks in the red zone will be merged.
"But it is not a real health indicator of banks. It is a predicted simulation model that we use for our internal assessment. Health indicator is the balance sheet and audited financial statement of a bank," he said.
"The merger-related discussion is now going based on the list of the media reports. The list is made on assumption. And the BB will not take any merger-related decision based on the list."
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