Union Capital might merge with Prime Bank soon
It is yet pending final decision
Union Capital Limited, a non-banking financial institution, might be merging with Prime Bank soon.
It is yet pending final decision, said Prime Bank Chairman Tanzin Chowdhury.
He said, "We want to bring the company out of loss through business sharing. I believe that the organisation will return to its previous position within a year by providing advisory and technical support.
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"We have been seeking advice on this from the regulatory authority for a year. But since there is no policy, the work has not progressed much."
He said Prime Bank has decided to merge with Union Capital on the advice of the Bangladesh Bank.
In this case, there may be some change in the name of the organisation, he added.
The bank's chairman commented that no major change will take place, but it will only be a facelift.
Union Capital is now in loss as most of the funds are used in margin loans and they have been unable to accept deposits or disburse loans for two years now.
"We have audited the organisation and found that they are now in fund crisis. So we want to support the organisation with technical and advisory services along with funds," said Tanzin Chowdhury.
He believes that this will restore the confidence of depositors and shareholders.
According to Bangladesh Bank, Union Capital has incurred a loss of Tk628 crore in the last five years. The financial institution is in crisis mainly due to incurring loss after excessively investing in the stock market.
Union Capital provided a loan of Tk473 crore to its subsidiary Unicap Investments Limited. Against this huge amount loan, there has been no recovery for a long time. Apart from this, some other loans are also stuck.
As a result, in many cases, Union Capital is not able to return the depositor's money on time.
At present, Prime Bank has deposits of Tk34,000 crore and until last December, the debt stood at Tk31,302 crores. Out of this, Tk1,050 crores or 3.35% have become defaulters. The bank made a net profit of Tk402 crore in 2022. The net profit in 2021 was Tk311 crore.
