'Regulatory support must for National Bank to restore depositors' confidence'

Highlight:

• "It wasn't just mismanagement – it was theft," says the new chairman about the bank's past.
• The central bank also bears some responsibility for failing to supervise.
• Three paths to recovery: fix management, restore depositor confidence, and recover bad loans.
• Awaiting Bangladesh Bank's approval to appoint a new MD.
• National Bank has a stronger asset base than many peers.
• Countrywide presence and among the top banks in remittance earnings.
• Depositor patience and central bank support are crucial to recovery.

It's been eight months since I stepped in as the Chairman of National Bank, and I'll be honest—this is not a bank in normal shape. We're still struggling with a broken management structure and tight liquidity. But we're working hard to fix things, and with the right support, I believe we'll be back on track within six months.

After I left the bank years ago, it fell under the control of a particular family. What followed wasn't just poor management—it was outright theft. For instance, a 12-storey building near the Sonargaon intersection that should've cost at most Tk180 crore ended up being paid for at Tk580 crore. That's not an error; that's embezzlement. And unfortunately, that was not an isolated case.

A systemic failure

The banking system also shares the blame. The Bangladesh Bank had one of its senior officials serving as an observer on the National Bank's board during that time. If there was such blatant misuse of funds, why didn't the regulator act? I'm not accusing anyone of taking bribes, but the central bank's oversight clearly fell short.

Some are now calling for weak banks to be shut down or merged. But they forget that, in our country, banks are the lifeline of investments. Because our capital market is so underdeveloped, businesses—especially in the export sector—depend heavily on bank loans. So when banks face instability, the whole economy suffers. Until the capital market matures, this imbalance will persist.

Our recovery roadmap

We have a three-pronged recovery strategy. First, we need to overhaul our management. After taking charge in September, we tried working with the existing team till December. But it didn't work. Our managing director resigned, followed by the deputy managing director. That shook the structure badly. Since March, we've applied to the central bank to appoint a new MD. As soon as we get that approval, we'll restructure the top management within 15 days.

Second, we must restore confidence among our depositors. Many have already moved their money to other banks—you can tell from the deposit growth elsewhere. But no bank can survive if everyone tries to withdraw funds at once. I humbly request depositors—unless you absolutely need the money, please don't withdraw. We are working hard to regain your trust.

Infographic: TBS

Yes, the central bank is helping us, but more support is needed. We've stopped the corruption. The money they're lending us is being used to ensure depositors can get their funds back—nothing else. Around the world, central banks have helped revive struggling banks. Ours must do the same.

Third, we are focused on recovering loans. At present, nearly 60% of our loans are classified as non-performing. That's huge. But let's be fair—many borrowers are struggling too. Even the Bangladesh Bank Governor has acknowledged that these businesses need time to get back on their feet. Unless we fix the banking sector, the economy won't recover. It's all connected.

Structural reform and downsizing

Our biggest weakness lies at the top, not among junior staff. Once we get regulatory clearance for the MD appointment, we'll rebuild our leadership. But that's not all. We'll also need to cut excess staff. We're overstaffed, and our board agrees that the entire bank needs to be streamlined.

And to be clear, nowhere else in the world does a private bank need central bank permission to hire a managing director. This is regulatory overreach. Until we have a politically accountable government, there's no mechanism to hold regulators accountable. That must change.

Why depositors should stay

Despite all the problems, National Bank still has strong foundations. Our asset base is stronger than many other banks. We have branches and sub-branches across the country. We rank among the top banks in remittance earnings. We have the infrastructure and the reach—we just haven't been able to use it properly due to weak leadership.

The central bank and the government have repeatedly said that no depositor will lose their money. There's a sovereign guarantee behind that. And with our current steps to recover loans and cut costs, I believe we're moving in the right direction.

To all our depositors: you are the real owners of this bank. If you stay with us a little longer, I promise—we will get back on our feet and make National Bank strong again.

This interview was conducted by The Business Standard's Staff Correspondent Sakhawat Prince