Exim Bank shares slip below face value on news of merger

Export Import (Exim) Bank shares slipped 3% below their face value on Monday on the news of its merger with problematic Padma Bank.  

On Monday, the two private banks signed an MoU, under which Padma Bank will merge with Exim Bank, in line with a central bank directive. 

The Bangladesh Bank has called on weak banks to merge voluntarily with the stronger ones by this December or face forced merger later.  

On the same day Exim Bank signed the MoU, its shares dropped to Tk9.70 at the Dhaka Stock Exchange (DSE), with a 3% decline from the face value of Tk10.

During the previous session, the shares were traded at the face value. 

According to the DSE, Exim Bank's share trading started at Tk 10 yesterday, but closed at Tk9.70 at the end of the day.  

The news of merger had a knock-on effect on the capital market, with a total of 23 banks witnessing a decline in their share prices on Monday. 

However, shares of only five banks increased, while another eight bank shares remained unchanged.

Earlier on Sunday, Exim Bank disclosed price sensitive information with regard to the merger. The general investors got the news officially through the capital market.

Chairman of Exim Bank Nazrul Islam Majumdar told reporters "Every index of Exim Bank is in a good position, I hope it will be good." 

None of nearly 1,200 Padma Bank employees will lose their job, he also assured. 

"All will be working for Exim Bank. Besides, there will be no loss to the depositors and shareholders. Everything will continue as before," Nazrul Islam told the media. 

Several banks have merged in Bangladesh before. Most of them were government banks with one being a private lender. The experience of those mergers was not very pleasant.

Exim Bank had paid a 10% cash dividend to its shareholders for 2022 and it posted net profit of Tk372 crore that year.

At the end of September last year, its net profit stood at Tk229 crore, which was Tk226 crore during the same period one year ago.