Experts see merger of sick banks, firms as a saviour

FE Report | Monday, 9 September 2019

Merger and acquisition could be an effective solution to the problems facing the country's moribund banks and financial institutions (FIs), analysts observed on Sunday.
To this regard, they said, the regulatory body should be well-equipped to properly monitor this process through modernising relevant acts and policies.
The experts made the observations at a two-day workshop on 'Merger and Acquisition (M&A): A Possibility in Bangladesh' hosted by Prime Bank Investment Limited (PBIL) at a city hotel.
PBIL managing director and CEO Dr Md Tabarak Hossain Bhuiyan moderated the inaugural session where Dhaka University business faculty dean Prof Shibli Rubayat Ul Islam addressed as the chief guest.
Alex Shteriev, managing partner of the Canada-based Beacon Mergers & Acquisitions, and Sirajul Islam Mollah, chairman of Prime Bank executive board, also spoke.
In his speech, Mr Rubayat said multiple banks, FIs, corporate companies and industries in the country have been facing difficulties, thanks to a lack of proper management.
Despite huge prospects of the financial sector, it has been hard for many companies to compete in the market with dominant companies, rapid technological advances and lack of skilled professionals.
Terming M&A a new concept here, Mr Rubayat said, "If we can understand M&A properly, many troubled companies can be saved and many jobs be kept."
He said the merger of companies could be an effective solution to the ailing ones, thus saving money and better use of resources and equipment.
Referring to the merger of Robi and Airtel, Mr Rubayat said many foreign firms are interested in investing in Bangladesh via acquisition of local companies.
For this, he said, policy constraints should be removed.
However, Mr Rubayat said the regulatory body should be very careful to deal with M&A so that incidents like 'forced acquisition' do not take place.
Speaking at a technical session, Mr Tabarak said M&A is a strategy to have a competitive advantage in the market and save relatively weak companies from dying.
Interested companies can expand businesses through getting merged with similar companies, he added.
However, Mr Tabarak pointed out that there is a 50-per cent chance of success in a merger.
Larger the business, larger the chance of a lasting merger, Mr Shteriev added with the PBIL CEO.
Mr Tabarak further said that M&A as a strategy has proved to be a key driver in the corporate sectors of the developed economies.
Highlighting the need for corporate changes, he said Bangladesh has placed great emphasis on the M&A strategies.
The PBIL chief executive said this year's fiscal budget said of amending the Bank Company Act for amalgamation, merger and absorption of banks legally.
Against this backdrop, PBIL hosted the event to highlight the fundamental aspects of M&A to the local corporate stakeholders and create its awareness.
PBIL will also conduct training in merger and acquisitions in future.
A memorandum of understanding was signed between PBIL and Beacon to work together in this field.

[email protected]