‘Acquisitions of weak banks by stronger ones detrimental to banking industry’

A noted economist has proposed the establishment of 'super banks’ instead of bank mergers and acquisitions, arguing that acquiring weak banks by stronger ones is detrimental to the banking industry.

Dr. Zia Hasan, an economist and project researcher under the education and research ministry of the German federal government, came up with the proposal at a webinar, organised by the Forum for Bangladesh Studies on Saturday.

Centre for Policy Dialogue’s (CPD) Executive Director Dr. Fahmida Khatun, economist and international affairs director of Sydney Policy Analysis Centre in Australia Jyoti Rahman, and head of Southeast Asia at the Global Labour Organisation Dr. Niaz Asadullah, spoke at the event. Journalist Monir Haidar moderated the webinar.

In his address at the event, Dr. Zia Hasan said the central bank can establish three separate super banks to overcome the present situation of the banking industry in Bangladesh.

He suggested the formation of one super bank consisting of all Islamic or Shariah-based weak banks

“The second super bank may be formed by incorporating all weak general banks,” the economist suggested. “And, the third super bank can be formed by merging all state-owned commercial banks.”

He believed that the existing move to merge with comparatively stronger ones would be harmful to the economy.

Dr. Hasan feared that under the present move, the central bank may print money or issue bonds, adding such matters will impact the economy significantly.

He said the common people will pay as a consequence of such mergers through inflation and other means. But the shareholders who plunder the money will be protected

jasimharoon@yahoo.com