National Bank MD Resigns After One Year, Joins AB Bank Amidst Financial Crisis
Adil Chowdhury, the Managing Director (MD) of National Bank, has resigned after just one year of his three-year contract, citing the bank's financial difficulties. He is set to join AB Bank as its new MD, a move that has already been approved by Bangladesh Bank. Chowdhury previously served as President and MD of Bank Asia before joining National Bank. Approximately 30 other officers who joined National Bank under Chowdhury's leadership over the past year are also moving with him to AB Bank, having already received their appointment letters. Chowdhury submitted his resignation on July 27, which became effective on July 31. National Bank's Chairman, Professor Malita Mehjabin, stated that the bank is seeking a new MD focused on improving the bank, regaining customer confidence, and recovering non-performing loans. She also indicated that individuals withholding bank funds would face consequences. National Bank has been in crisis due to previous irregularities and alleged embezzlement, resulting in a high rate of non-performing loans, continuous losses, and difficulties for customers withdrawing funds. The bank's financial performance has deteriorated significantly over the past year, with interest income from loans dropping from 460 crore taka to 302 crore taka year-on-year. Investment income also saw a sharp decline from 591 crore taka to 46 crore taka. Consequently, the bank incurred a net loss of 2,042 crore taka from interest expenses and a total operating loss of 1,923 crore taka in the first six months of the current year, with overall losses reaching 2,294 crore taka. The bank attributes the decline in interest income to overdue rescheduled loans and reduced investment income to a lack of treasury bond earnings. National Bank's non-performing loans currently stand at 56.44% of its total loan portfolio, amounting to approximately 24,000 crore taka, with a security provision deficit of around 20,000 crore taka. In 2024, the bank reported a loss of 1,706 crore taka and continues to operate at a loss. Senior officials expressed the need for an MD who can actively engage with top defaulting clients to recover funds and collaborate effectively with all staff levels, a trait they felt was lacking in the outgoing MD. Despite these challenges, National Bank recently received special permission from Bangladesh Bank to commercially rent out one of its under-construction 'Twin Towers' buildings, with the expectation that rental income will help alleviate some of the financial strain.
The departure of National Bank's MD, Adil Chowdhury, to AB Bank, another financially strained institution, highlights a recurring pattern of leadership mobility within Bangladesh's banking sector, particularly during periods of economic distress. This situation raises questions about the sustainability of banking governance when key personnel frequently move between struggling entities, potentially carrying operational strategies or challenges with them. The substantial non-performing loans and significant financial losses at National Bank suggest systemic issues that extend beyond individual leadership, pointing to the need for robust regulatory oversight and fundamental reforms in credit risk management and corporate governance. The chairman's focus on recovering loans and restoring customer confidence is critical, but the bank's ability to attract and retain effective leadership committed to long-term recovery, rather than short-term fixes, will be a key determinant of its future stability. The strategy of generating rental income from new construction, while a pragmatic short-term measure, does not address the core problems of loan quality and profitability.
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