[🇧🇩] Banking System in Bangladesh

Source: https://thefinancialexpress.com.bd/views/bank-mergers-navigating-challenges-seizing-opportunities

Bank mergers: navigating challenges, seizing opportunities
MD. TOUHIDUL ALAM KHAN
Published :
Apr 08, 2024 22:03
Updated :
Apr 08, 2024 22:03

In the ever-evolving landscape of Bangladesh's financial sector, a profound transformation is underway, driven by strategic mergers guided by the Bangladesh Bank. These mergers represent a pivotal moment, promising to reshape the banking industry's future while addressing pressing challenges. However, beneath their surface lies a complex interplay of factors that demand a comprehensive understanding and strategic navigation.

Think of two banks standing at opposite ends of a spectrum: one embodies strength, stability, and resilience, while the other grapples with weaknesses and vulnerabilities, struggling against the tides of economic uncertainty. As the Bangladesh Bank issues directives for a merger, its aim is clear: to build a unified entity that harnesses the strengths of both while mitigating their weaknesses. This endeavour holds immense promise, but it also poses significant challenges that warrant careful consideration and meticulous planning.

At the heart of bank mergers lies the issue of stability. By integrating weaker banks with their stronger counterparts, the overarching goal is to reinforce the financial sector's foundation, making it more robust and resilient in the face of market volatility. Stronger banks bring to the table a wealth of resources, including robust risk management practices and substantial capital reserves, which serve as a bulwark against systemic risks. However, achieving this stability is contingent upon navigating valuation intricacies and overcoming integration hurdles.

Operational efficiency stands as another cornerstone of bank mergers. Through consolidation, banks aim to streamline their operations, eliminate redundancies, and optimise resource utilisation. This not only translates into cost savings but also fosters a culture of efficiency and innovation within the merged entity. Yet, the path to operational excellence is rife with challenges, particularly concerning the integration of disparate systems, processes, and organizational cultures.

One of the most formidable challenges in bank mergers is cultural integration. Each bank boasts its own unique organisational culture, shaped by its history, values, and operating principles. Merging these distinct cultures requires finesse, empathy, and effective communication to bridge gaps and foster a sense of unity and purpose within the combined entity. Failure to address cultural disparities can lead to internal friction, hampering productivity and eroding employee morale.

Despite the potential benefits, bank mergers inevitably give rise to concerns. Chief among these is the threat of job losses, as mergers often result in workforce rationalisation and redundancies. To allay fears and safeguard employee interests, the Bangladesh Bank has instituted guidelines mandating job security for employees of merged entities for a stipulated period. While this measure provides a degree of reassurance, it also introduces complexities related to organisational culture and performance management.

Regulatory supervision plays a pivotal role in ensuring the integrity and efficacy of bank mergers. Regulatory bodies must enforce compliance with guidelines and regulations governing mergers to safeguard the interests of stakeholders. This entails conducting thorough due diligence assessments to identify potential risks and issues and implementing legal provisions to hold accountable those responsible for past misconduct, including defaulters and unethical bank employees.

As Bangladesh's banking sector undergoes a profound transformation through mergers and acquisitions, it stands at a crossroads, brimming with both challenges and opportunities. By navigating these challenges with foresight, resilience, and strategic planning, the sector can emerge stronger, more resilient, and better equipped to meet the evolving needs of its customers and drive sustainable economic growth.

Md. Touhidul Alam khan is the Managing Director & CEO of National Bank Limited.​

 

[Saif]

Importance of training for banks

Every year, National Training Day in Bangladesh is observed on January 23. This year, Bangladesh observed the 30th anniversary to emphasise the importance of training for human resource development, skill enhancement, and economic growth. Over the years, Bangladesh Institute of Bank Management (BIB

thefinancialexpress.com.bd

Importance of training for banks

Md Ezazul Islam

Jan 23, 2026 23:19
Updated :

Jan 23, 2026 23:19

Every year, National Training Day in Bangladesh is observed on January 23. This year, Bangladesh observed the 30th anniversary to emphasise the importance of training for human resource development, skill enhancement, and economic growth. Over the years, Bangladesh Institute of Bank Management (BIBM) has standardised training for bank officials to disseminate knowledge and develop human capital. A substantial budget is allocated to training and the transformation of basic skills into advanced technology-driven modules, focusing on financial analytical skills, digital literacy, leadership, and team building.

Training and development are important because they build capability, confidence, and consistency - both at individual and organisational levels. It improves knowledge and skills, productivity and performance, boosts confidence and motivation, ensures consistency and standards, encourages adaptability to change, supports career growth and retention, which drives organisational success. In 2026, training remains a critical investment for organisational sustainability amid rapid technological shifts.

There are numerous training institutes at the national and private levels to perform these activities. BIBM is one of the national-level apex training institutes for the banking and finance fraternity.

Training for bank officials is more prevalent because banking is a highly regulated industry, where regulations, circulars, operations, and local and international standards are changing rapidly with technological advances. For example, the recent regulatory decision to implement IFRS-9 for expected credit loss calculation and loan-loss provisioning, effective from 2027, and risk-based supervision has been in place since January 1 2026. Bankers need to prepare themselves by 2026, with training a must to increase dexterity and adaptability.

BIBM plays a pivotal role in providing training, conducting research on these contemporary issues, and disseminating knowledge through seminars and symposia. Since 1974, BIBM has trained a total of 121,605 officers from banks and financial institutions, and in 2025, the number of attendees in training programs was 5,240.

However, the upcoming HR operational trends include a hybrid work model, a transition from employee well-being to a healthy organisation, cybersecurity threats, power skills, embracing the Gig Economy, DEI (Diversity, Equity and Inclusion), reskilling and upskilling, and keeping the human touch alive. BIBM designed the Academic Calendar 2026 with these issues in mind, and we will unveil it today (January 24, 2026).

One important part is that COVID-19 shifts the mentality of corporate talent in HR management. Most of the organisations (88 per cent) around the world encouraged their employees to work from home, 97 per cent organisations controlled and cancelled their official travelling, 70 per cent have taken a cost-cutting approach, 50 per cent stop new hiring, 32 per cent started virtual meeting newly. Also, 48 per cent allowed their employees to take sick leave, and 20 per cent increased paid time off (PTO). These attitudes shift the methods and modality of employees' training and development, which is one of the key challenges of training.

Globally, organisations allocate an average of 2 per cent to 5 per cent of their total operating budget for employee training and development. The general instruction from leaders is to allocate 1 per cent to 3 per cent (up to 5 per cent for high-growth sectors) of an employee's total yearly salary toward their individual training. In Bangladesh, the government does not mandate a fixed "percentage of salary" that must be spent on training for every employee.

The training budget utilisation rate for FY 2024-25 for government officials is 82.75 per cent, while in the banking sector it is 46.57 per cent. BIBM has a budget for employees' training and development, but the low realisation needs attention for proper strategic planning.

Post-training utilisation (PTU), sometimes termed as training transfer rate, remains a significant challenge for the organisation. Globally, only 12 per cent of employees actually apply new skills from Learning & Development (L&D) programs to their daily work. We rarely consider the PTU for short-term training and development, while in the medium and long term, it remains meagre.

Moreover, while approximately 70 per cent of employee skills are learned through direct on-the-job experience, 20 per cent are acquired through developmental relationships such as mentorship and coaching, and only 10 per cent of workplace skills are derived from formal coursework or training sessions. Hence, developing workplace skills through off-the-job training is a challenge for the banking sector as well. Here, we need to integrate practical and critical cases into the training, alongside the latest changes in banking policies and regulations, which are more predominant.

The trained employees face obstacles in utilising the knowledge they have gained through training and development due to outdated equipment or a lack of management support. Top management needs to align the employees' knowledge with their area of work.

Further, the right selection of employees for the right training program is also important; otherwise, the need for training will raise questions about its efficacy.

Over the top, top management considers training and development a cost centre, which needs to be shifted to the investment centre. Training and development in the short run may seem like a cost centre, but in the long run, it is an investment.

Hence, training as an investment centre, designing a complex organisational structure for the hybrid flexible work model, balancing family-work life, upskilling and reskilling the employee knowledge and skills, right selection of employees for the right training program, proper PTU, budget utilisation, long-term strategic plan, and empowering employees by increasing power skills are the keys to organisational sustainability. To address these issues, BIBM has already included training, workshops, research projects, and lecture programs that other banks and finance companies should emulate to enhance organisational resilience and sustainability.

Dr Md Ezazul Islam, Director General, Bangladesh Institute of Bank Management (BIBM).​