The state-run Bangladesh Development Bank PLC (BDBL) has garnered primary approval from its board to initiate discussions for a merger with another state financial institution, Sonali Bank. 

Officials within BDBL confirmed the institution’s formal expression of interest for the merger, with the board decision forwarded to the regulatory authorities at the Bangladesh Bank. 

Managing Director and CEO of BDBL, Md Habibur Rahman Gazi, elaborated on the board’s decision, highlighting the urgency of the matter following an emergency meeting held on April 8.

The groundwork for the merger was laid during a high-level meeting convened at the Bangladesh Bank headquarters in Dhaka on April 3, where representatives from Bangladesh Development Bank, Sonali Bank, and Bangladesh Bank deliberated on the strategic implications of the merger. 

While the merger proposal signifies a progressive step towards enhancing operational synergy and optimizing resource utilization, industry insiders caution against overlooking the challenges posed by non-performing loans (NPLs). 

Despite the formation of Bangladesh Development Bank Ltd. through the merger of Bangladesh Shilpa Bank and Bangladesh Shilpa Rin Sangstha in 2009, the institution continues to grapple with a substantial burden of bad loans.

In December, BDBL’s NPLs amounted to Tk 9.82 billion, constituting 42.46% of disbursed loans. In comparison, Sonali Bank reported loans totaling Tk 930.96 billion, with Tk 131.50 billion classified as non-performing, accounting for 14.1% of total credits disbursed, as per data from Bangladesh Bank.