Cenbank issues bank merger policy for first time
If a weak or distressed bank merges with another, the financial indicators of the acquiring bank, such as capital, liquidity, non-performing loans (NPLs), etc, may be diluted
The Bangladesh Bank (BB) has issued a bank merger policy for the first time, clearly specifying what such mergers will result in.
The regulatory body will provide policy support to the acquiring bank, according to a central bank circular issued today (4 April).
If a weak or distressed bank merges with another, the financial indicators of the acquiring bank, such as capital, liquidity, non-performing loans (NPLs), etc, may be diluted.
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In order to keep the bank's operations smooth and protect the stability of the banking sector, the central bank will provide the following policy support as needed:
Exemption will be given for a certain period of time to maintain minimum capital conservation, CRR (Cash Reserve Ratio), SLR (Statutory Liquidity Ratio), LCR (Liquidity Coverage Ratio), NSFR (Net Stable Funding Ratio).
A certain period will be given to adjust the total loss of the weak bank with the income of the acquiring bank or to convert it into "goodwill".
Liquidity facilities will be provided on a priority basis under the existing facilities.
The BB will provide cash support by purchasing long-term bonds of the bank.
To increase capital, assistance will be given on issuing shares, perpetual bonds and subordinated bonds.
