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Bangladesh's private commercial lender Bank Asia is set to acquire local operations of leading Pakistani bank Alfalah, incidentally amid waves of mergers and acquisitions in the banking industry's reshuffle here.
The matter of big acquisition deal between banks of the two countries separated five decades back through the Bangladesh liberation war transpires in Pakistani media reports.
The Pakistani media outlets disclosed the development citing information that the Pakistani bank shared through a notice to the Pakistan Stock Exchange (PSX) on Wednesday.
It will be the second acquisition move for Bank Asia to take over the leftover Bangladesh operations of a Pakistani bank after Muslim Commercial Bank Limited (MCB) Bangladesh chapter.
"The Board of Directors of Bank Alfalah Limited (BAFL) has accorded its in-principle approval for the non-binding indicative offer received from Bank Asia Limited, Dhaka, Bangladesh, to acquire the bank's Bangladesh operations/assets and liabilities," reads Bank Alfalah notice.
As per BAFL's notification, the transaction is subject to compliance with all applicable laws and regulations and obtaining necessary regulatory approvals.
"We will now seek approval from the State Bank of Pakistan (SBP) for Bank Asia to commence due diligence on Bank Alfalah, Bangladesh," the departing bank says in its communication.
Incorporated in 1999, Bank Asia expanded operations with the purchase of the Bank of Nova Scotia branches and Muslim Commercial Bank Limited's (MCB) Bangladesh operations.
BAFL is one of the largest banks in Pakistan, with a network of over 1,024 branches across more than 200 cities in the country, and an international presence in Afghanistan, Bangladesh, Bahrain, and the UAE.
As per Alfalah's latest financial results, the bank posted a consolidated after- tax profit of Pak Rs36.09 billion during the year 2023, which is over 96-percent higher than its earnings in the preceding year.
Bank Alfalah Bangladesh has been providing banking services with its seven branches -- five in Dhaka, one in Chattogram and the other one in Sylhet.
Sources at Bank Asia say the commercial bank is going to hold a meeting of its board of directors next Sunday where "the issue will be largely discussed before disclosing the mater in detail".
"However, acquisition of banks is an activity which is not part of the current discussion of the merger of weak banks with strong banks," according to one of the bank sources.
The banking industry in the country passes through merger regime after the central bank, as part of the government-framed financial-sector reform recipe, initiated the amalgamation process in recent times.
Under the amalgamation drive, the Bangladesh Bank (BB) received five proposals for mergers before giving a pause. Of the proposed merger bids, EXIM Bank aspires to take crisis+ridden Padma Bank while state-run Sonali Bank to assimilate BDBL and Bangladesh Krishi Bank plans to take Rajshahi Krishi Unnayan Bank.
On the other hand, private commercial City Bank to take over state-owned BASIC Bank and United Commercial Bank to take National Bank.