Depositors are gathering at different banks to withdraw their hard earned money, as a kind of panic has spread in the entire banking sector centring the process of mergers taking place between strong and weak banks, or the private and public sectors.
The mergers are necessary to fill the central bank's objective of initiating a process of consolidation in Bangladesh's highly-fragmented banking industry, aimed at reducing the number of banks in the country, which for a number of years now has been far too high.
In a sense, the government is trying to rectify its past mistakes - in particular the overly laissez-faire approach to handing out banking licenses.
For example, just based on the five merger proposals so far received by the central bank, if all of them were to succeed, or at least be approved, the number of banks in Bangladesh would come down by 6 - almost 10% of the number of bank currently in operation.
But there has been no effort to explain this to the public in these terms. Rather they are seeing a string of random (to them) mergers being announced, where the decisions to merge often don't make sense on the surface, in a landscape where such mergers are unprecedented.
The sense of knowing something is happening, but not knowing what it is, has driven the sense of panic among the public, who feel some decisions of Bangladesh Bank are being forcefully imposed on the sector, while Shapla Chattor's decision to impose a ban on beat reporters entering the central bank, alongside whatever purpose it served the decisionmakers, has also raised people's doubts about the authorities' intentions to remain transparent.
BASIC Bank to merge with City Bank in strategic consolidation move
That in turn could only exacerbate the sense of panic, which hsn gotten to the point of people withdrawing their deposits from certain banks, said sources at some respected banks.
They said most of the depositors are suffering from the dilemma of whether or not to keep money in the bank. Some are withdrawing money from the bank due to fear.
This list also includes some institutional depositors. A Shariah-based private bank has received 12 deposit refund applications in the last week. Each is a capital FDR. Already, Basic Bank has lost more than Tk2000 crore of deposits recently at the news of merging this bank with private sector City bank.
About Tk100 crores have been withdrawn from BDBL. The situation is almost the same for other banks in the list of mergers.
When asked to know, the Acting Managing Director (MD) of BASIC Bank, Abu Md. Mofazzal told UNB, "Since 2015, BASIC Bank is also a state-owned bank like Sonali and Janata."
Top execs of merging bank cannot hold posts at acquiring entity: Bangladesh Bank
He explained that various government institutions and organizations have deposited money in BASIC Bank. With the news of merger with private sector players, these institutes have started withdrawing the money.
“Various institutions have already withdrawn more than Tk2000 crore of deposits. Because they think that BASIC Bank is going to become a private bank,” BASIC acting MD pointed out.
He said for this reason, the board of directors decided BASIC Bank would send a letter to the government to merge with a government bank.
A senior official of National Bank told UNB on condition of anonymity that it is becoming difficult to retain deposits, ever since the old board was dissolved and a new board was formed.
The new board should be given at least six months’ time. A decision to merge now will not be good for the bank, the official said.
The top management of UCBL is saying the same thing, which bank is scheduled to merge the National Bank.
A senior official of the bank said, like other banks, there is panic in UCB. Because, the depositors are seeking money back.
BDBL to merge with Sonali Bank while BKB with RKUB
Meanwhile, Basic Bank does not want to merge with the private sector City Bank. They want to merge with a government bank. The board of directors of the bank has given an official letter to the government stating this.
However, the BB spokesperson and other officials working on bank mergers have not agreed to comment in this regard.
The panic among employees of these banks (that are in line for merger) is driven by a sense of uncertainty over their futures. Many apprehend being made redundant once the merger process is completed. It means many of the mid-to-lower ranked employees are already fishing for new opportunities, although these are relatively scarce to come by. Nevertheless their search is on.