Trading of shares in five troubled Islamic banks suspended ahead of merger
The trading of shares in the five Islamic banks set for merger has been suspended, effective immediately, according to official statements from the Dhaka Stock Exchange. The banks in question are First Security Islami Bank, Union Bank, Global Islami Bank, Social Islami Bank, and EXIM Bank.
This decision comes after the Bangladesh Bank formally notified the boards of these banks that they are non-viable under the Bank Companies Act. The Bangladesh Securities and Exchange Commission (BSEC) also issued a directive to relevant authorities, citing concerns over the banks' financial health.
Despite the suspension, depositors' funds are safe, according to Ahsan H Mansur, Governor of the Bangladesh Bank. Small depositors (those with up to Tk2 lakh) can expect to withdraw their funds within a month, while larger depositors will receive their money in phases.
The central bank's intervention aims to consolidate the failing institutions and ensure the stability of the banking sector. This move follows the dissolution of the banks' boards and the appointment of administrators by the Bangladesh Bank, with five BB executive directors taking on the role.
The administrators will review the banks' assets and liabilities before completing the merger process, which is expected to take around one to two years. The new bank will be stronger than its predecessors, with the goal of maintaining functional banking operations and ensuring the security of deposit accounts.
However, equity investors face a grim outlook, as the Governor confirmed that under the Bank Resolution Ordinance, sponsor directors' and ordinary retail shareholders' shares will effectively become zero. Bondholders, who have invested over Tk4,000 crore in the banks, are expected to recover their funds, with further details to be provided by the BB.
The merger is anticipated to create the country's largest Islamic bank, with assets of Tk2.20 lakh crore and a paid-up capital of Tk35,000 crore, marking a significant milestone in Bangladesh's banking history.
