Exim Bank has decided to merge with Padma Bank Limited to form a single entity, confirmed a source at the bank’s board meeting. The decision was made this morning at Exim Bank’s board meeting, where it was also decided to hold a press conference on Monday regarding the merger. This will mark the first voluntary merger in the country, distinguishing it from previous mergers. A Memorandum of Understanding will be signed between the two banks on Monday, with the Bangladesh Bank governor and ABB present at the signing. The Padma Bank name will cease to exist, and the new single entity will be named Exim Bank.
A source from the meeting also disclosed that the Bangladesh Securities and Exchange Commission (BSEC) had been informed, although BSEC top officials claimed to have not received any letter regarding the matter. Notably, while Exim Bank is listed on the stock market, Padma Bank is not.
Chowdhury Nafeez Sarafat, chairman of Padma Bank, resigned on January 31. Following his resignation, state-owned banks, including Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, and Investment Corporation of Bangladesh, provided a bailout of Tk715 crore to Farmers Bank, in which Padma Bank had invested. However, despite these investments, the bank’s capital erosion continued due to failure in recovering funds from defaulters.
In July 2021, Md Ehsan Khasru, the then-managing director of Padma Bank, submitted a merger or acquisition proposal to the finance ministry due to substantial defaulted loans, deposit repayment inability, and significant losses. Despite the proposal, the merger did not materialize.
Later, in September 2021, Padma Bank announced an agreement with US-based investment bank DelMorgan and Company for a $700 million investment. However, the funds did not materialize, and reports suggest that Padma Bank withheld information about accumulated losses exceeding Tk900 crore from foreign sources.
In February 2023, the Investment Corporation of Bangladesh (ICB) decided to withdraw investments from Padma Bank due to no return on investment in five years. The state-owned investment corporation is now seeking strategic investors to sell its shares in Padma Bank.
In October of the previous year, the parliamentary standing committee on the Ministry of Environment, Forests, and Climate Change directed relevant officials to take necessary actions to recover Tk536 crore, which had been parked as FDR in 2015. Despite failing to repay the FDR, Farmers Bank reportedly obtained an extension of eight additional years from the Ministry of Environment in December 2022 to settle the debt.
As of the conclusion of 2023, Padma Bank’s outstanding loans amounted to Tk5,740 crore, of which Tk3,550 crore were default loans, indicating a limited capacity for the bank to reimburse depositors. Additionally, the bank recorded a capital shortfall of Tk607 crore at the end of September 2023.
