After changing its name and merging with Exim Bank, the journey of Padma Bank, formerly known as Farmers Bank, came to an end on Monday.
However, it will take about 3-6 months to complete this merger process, according to sources in the two banks, and Bangladesh Bank.
The two banks will now be audited by a third party.
After finalizing the accounts of liabilities and shares, the Bangladesh Bank will approve the merger, and then Padma Bank will cease to exist.
Until then, the two banks will continue their operations separately.
Over the years, more than a dozen Bangladeshi banks have been struggling to stay afloat due to default loans, scams, embezzlements, lack of transparency and accountability. Finally Padma Bank signed a memorandum of understanding (MOU) with the Shariah-based Exim Bank to initiate the process of merger on Monday morning.
The MoU was signed by Padma Bank Managing Director Tarek Reaz Khan and Exim Bank Managing Director Mohammad Feroz Hossain, in the presence of Bangladesh Bank Governor Abdur Rouf Talukder on Monday.
Afzal Karim, chairman of Padma Bank and managing director of Sonali Bank, said the merger will take three to six months for completion.
According to Bangladesh Bank spokesperson and Executive Director Md Mezbaul Haque, the bank will undergo an audit once the merger is complete, according to the guidelines of the Office of the Stock Exchange and Registrar (RJSC).
They will have to get the approval of the Bangladesh Bank to start banking operations anew, he added.
Haque also said that the guidelines and policies for any exemption from the merger process will be outlined by the Bangladesh Bank.
"There is already a guideline set in place. We just have to update it. This is a new experience for us," he added.
“Exim Bank and Padma Bank entered into an MoU to merge on the basis of mutual agreement. Now they will formally apply for a merger. After that we will audit with the auditing company, and the liability will be fixed,” he explained.
'For the betterment of the country'
After the signing ceremony, Exim Bank Chairman Md Nazrul Islam Mazumder said: "It is a historic decision for the betterment of the country. Exim Bank is taking over Padma Bank. We have come together for a merger, not an acquisition. Exim Bank will pay off Padma Bank's liabilities. The name of Padma Bank will not exist after the merger."
He also said that depositors' money will be safe in Exim Bank and officials of Padma Bank will not be affected after the merger, but no directors at Padma can hold the position of director at Exim.
As a fourth generation bank, Farmers Bank commenced its banking operation on June 3, 2013.
By an order on January 29, 2019, Bangladesh Bank changed the name of Farmers Bank Limited to Padma Bank Limited, after the bank failed to pay its liabilities due to numerous bad loans and instances of embezzlement.
