Bank Asia to acquire Bank Alfalah’s local operations

Bank Asia signed a memorandum of understanding (MoU) with Bank Alfalah to acquire the latter's operations in Bangladesh, subject to regulatory approval and the completion of legal formalities.

The MoU was signed on May 28, according to a disclosure from Bank Asia on the Dhaka Stock Exchange yesterday.

The acquisition is contingent upon approval from the Bangladesh Bank, the State Bank of Pakistan, and other relevant regulatory bodies, as well as compliance with legal and procedural requirements and the execution of definitive agreements, the disclosure said.

In a separate filing with the Pakistan Stock Exchange, Bank Alfalah confirmed that its board of directors had approved the proposed sale of its operations in Bangladesh to Bank Asia.

The Dhaka-based bank will move forward with the acquisition once all necessary regulatory clearances are secured and definitive agreements are signed, the disclosure added.

Industry insiders estimated the initial acquisition cost at around Tk 600 crore.

According to Bangladesh Bank guidelines on mergers and acquisitions of banks, the acquiring bank must retain all employees of the acquired organisation for a minimum period of three years.

Bank Asia is poised to comply with that stipulation, according to the bank's officials.

The sale process began in April last year, the officials added. They also said legal formalities for the actual transfer of assets and liabilities from one bank to the other are pending, while core banking system migration must also be aligned.

The audit and valuation of Bank Alfalah's Bangladesh operations are being conducted by PricewaterhouseCoopers (PwC) Bangladesh, a UK-based multinational tax, audit, and consulting firm.

Bank Asia began its journey in 1999 and is a pioneer in agent banking services in Bangladesh.

If the acquisition of Bank Alfalah's Bangladesh operations is completed, it will be the third such acquisition by Bank Asia during its 26 years in operation.

In 2001, the private commercial bank acquired the operations of the Canada-based Bank of Nova Scotia in Dhaka – the first of its kind in the banking history of Bangladesh, according to Bank Asia's website.

It later took over the Bangladesh operations of Muslim Commercial Bank Ltd, a renowned Pakistani bank.

Bank Alfalah is incorporated in Pakistan, with its main capital base coming from Abu Dhabi Investment Funds. Over 51 percent of its equity is held by the Abu Dhabi Royal Family.

Bank Alfalah started operations in Bangladesh in 2005. It currently has seven branches in the country.