Merger can cure banking woes: analysts

The government should take initiatives to revise the merger and acquisition related rules and regulations with a view to giving a boost to the financial sector, analysts said yesterday.

A time-befitting policy will also help the country’s banking sector now plagued by a liquidity crisis and weak corporate governance, they said at the inaugural session of a two-day workshop styled ‘Merger and Acquisition – A Possibility in Bangladesh’.

Prime Bank Investment Ltd (PBIL), a subsidiary of Prime Bank, organised the event at the Radisson Blu hotel in the capital.

The recent liquidation of People’s Leasing and Financial Services, a non-bank financial institution, was a cautionary signal for the financial sector, said Shibli Rubayat Ul Islam, dean of the Faculty of Business Studies at Dhaka University.

“Merger and acquisition can be one of the important strategic tools for revitalising the financial sector and expanding business in the context of Bangladesh.”

The stage is now set to welcome the merger and acquisition advisors to come forward and begin the process.

“Reportedly, there are several other NBFIs in vulnerable positions,” he said, adding that mergers and acquisition can play an important role in overcoming this alarming situation.

The concept of mergers and acquisitions is relatively new in the Bangladeshi context but such deals have been common in other parts of the world for a long time.

Bangladesh can be said to be lagging behind in this area.

“We have seen a lot of interest from foreign investors in merger and acquisition as well as joint venture deals in the telecom, energy, food sectors and so on. There is so much potential.”

“But we have to be very careful and need to reform the rules due to misuse or bad sides of merger and acquisition,” Islam added. The country’s banking sector has been facing some sorts of challenges in recent years: some banks are doing well while some are passing through a difficult situation, said M Farhad Hussain, chairman of PBIL.

“A time-befitting policy for mergers and acquisition will help the banking sector to mitigate its challenges,” he said.

Atique Islam, vice-chancellor of North South University; Md Shirajul Islam Mollah, director of Prime Bank; Md Tabarak Hossain Bhuiyan, managing director of PBIL; and Alex Shteriev, managing partner of Beacon Mergers and Acquisition, also spoke, among others.