National Bank may merge with UCB

In the latest development regarding mergers in the banking industry, sources at Bangladesh Bank (BB) said that the crisis-ridden National Bank is likely to be merged with United Commercial Bank (UCB) PLC.

 

The preliminary decision over amalgamating the first-generation National Bank comes after a meeting between the central bank's and UCB's high-ups held at the BB headquarters on Tuesday, where BB governor Abdur Rouf Talukder was present.

 

Seeking anonymity, a BB official said the UCB authority showed interest in taking over the weakling national bank, which the banking regulator gave the green signal for.

 

The official said that now, the authorities of both banks can start the merger process after getting approval from their boards.

 

The central bank sources said UCB executive committee chairman Anisuzzaman Chowdhury and managing director and CEO of the bank, Arif Quadri, were present in the meeting.

 

According to the central bank's statistics, the National Bank's advance-to-deposit ratio (ADR) increased alarmingly to reach 101.23 per cent until October 2023, against the ceiling of 87 per cent for a conventional bank.

 

The ratio was 95.66 per cent and 94.12 per cent in 2022 and 2021, respectively.

 

BB data also showed that the volume of non-performing loans rose to 35.90 per cent at the end of October last year, a significantly higher percentage than the 25.36 per cent and 13.45 per cent recorded in 2022 and 2021, respectively.

 

On the other hand, its capital shortfall, another key indicator to assess the financial health of any financial institution, had jumped over Tk 33.0 billion by October this year.

 

The figures were Tk 1.85 billion and Tk 4.57 billion, respectively, in the previous two calendar years, 2022 and 2021.

 

As a result, the once-profitable first-generation private bank has stepped into negative territory in recent years. As of October 2023, its net loss stood at Tk 9.31 billion.

 

The volume of net loss was calculated at Tk 9.89 billion in 2022, although the bank made a net profit of Tk 1.44 billion in 2021.

 

Simultaneously, the bank had a shortfall in maintaining SLR from September last year, while the accumulated shortfall in maintaining CRR rose over Tk 35.0 billion.