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The Commercial Bank of Ceylon Limited (Commercial Bank) and Credit Agricole Indosuez (CAI) entered into a Memorandum of Understanding (MoU) yesterday for the acquisition by the Commercial Bank of CAI's banking operations in Bangladesh (CAI Bangladesh), subject however to the approval of their respective regulatory authorities, a joint statement from Commercial Bank of Ceylon Limited and Credit Agricole Indosuez said.

The MoU signed in Colombo formalises an agreement between the two institutions, under which the Commercial Bank will acquire CAI Bangladesh's principal office in the capital city of Dhaka, together with their branch office in the port city of Chittagong and two booths. Once the regulatory approvals are duly obtained in both countries, the two banks intend signing the Sale and Purchase Agreement in Dhaka, concluding the transaction.

Though the proposed acquisition will be on the basis of a fully-fledged-branch operation, Commercial Bank will do its best to preserve the national identity of the Bangladesh operation and its unique banking traditions, inherited from CAI.

Credit Agricole Indosuez's intended disposal of CAI Bangladesh despite its positive contribution to the Credit Agricole Group is part of CAI's global re-positioning to develop essentially into a major European Wholesale Bank with an International Network at the service of large Corporate and Financial Institutions, CAI Bangladesh Country Manager Gerard Marchand said.

CAI Bangladesh has been in operation since 1981 and is the second largest foreign bank in Bangladesh. It is also a well capitalised and profitable bank in Bangladesh, with healthy financial ratios. CAI Bangladesh has a highly diverse customer base comprising mainly of multinationals and large corporates and a very dynamic and skilled staff. Commercial Bank is very pleased to absorb the entire staff, who are willing to continue in service after the acquisition, he said.

The Commercial Bank's intended acquisition of CAI Bangladesh is part of the bank's stated goal of becoming a regional player, with a focus on the SAARC region, Commercial Bank Managing Director Amitha Gooneratne said. The transaction, on completion, would represent the Commercial Bank's first acquisition of a banking operation outside Sri Lanka. It is the intention of Commercial Bank to develop the retail banking capabilities of the CAI- Bangladesh after the acquisition, whilst retaining its current strengths in trade finance. The International Finance Corporation (IFC), which made a strategic investment of 15% in the capital of Commercial Bank recently, has pledged its fullest co-operation to the proposed Bangladesh operation.

Credit Agricole Indosuez is Credit Agricole S.A.'s 100% owned Corporate and Investment Banking subsidiary specialised in Capital Market and Financing activities as well as Private Banking. Credit Agricole, one of the largest banks in France, has historic links with the banking sector which date back to the establishment in 1894 of local and regional banks for loans to farmers throughout France.

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