Cenbank begins asset quality review of 3 more banks
Ernest & Young and KPMG, funded by the Asian Development Bank, completed an AQR of six banks
The Bangladesh Bank has launched an asset quality review (AQR) of three more banks — IFIC Bank, National Bank, and AB Bank — as part of its ongoing forensic audits into troubled financial institutions.
Confirming the matter to The Business Standard, several central bank officials said Global auditing firm Deloitte, assigned to conduct the reviews, began the process with a visit to IFIC Bank's headquarters, accompanied by Bangladesh Bank officials, yesterday (20 August).
They further said this process will determine the future of these banks, whether they will be merged, acquired, dissolved, or strengthened with new capital.
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In July, a decision was made to conduct an AQR of 11 more banks in the second phase, funded by the World Bank.
The list includes AB Bank, Bangladesh Commerce Bank, Al-Arafah Islami Bank, IFIC Bank, Islami Bank Bangladesh, Meghna Bank, National Bank, NRB, NRBC, Premier Bank, and UCB.
Central bank officials stated that the AQR would clarify the actual amount of default loans, provision shortfalls, capital deficits, and the overall state of deposits and loans for these banks. It will also help determine the amount of capital required to merge the banks.
Previously, Ernest & Young and KPMG, funded by the Asian Development Bank, completed an AQR of six banks. That review revealed that the bank's dire financial condition, with default loans four times higher than previously reported.
However, ICB Islamic Bank has been kept out of the merger process due to its foreign ownership. Bangladesh Bank has made a preliminary decision to merge the remaining five Islamic Shariah-based banks into a single new entity.
According to central bank officials, a preliminary plan has been drafted to spend Tk35,000 crore to merge these five banks. Of this amount, Tk20,000 crore will be sought from the government as an investment.
There are also plans to take a loan from the Deposit Insurance Fund and seek assistance from international organisations like the IMF and the World Bank. Bangladesh Bank will soon send a formal letter to the government to seek its consent on the proposed plan.
