BB board finalises decision to merge 5 Islamic banks

The board of Bangladesh Bank has finalised the decision to merge five crisis-hit Islamic banks and appoint administrators to oversee the merger.

The decision was taken at a special board meeting on Tuesday (16 September), chaired by BB Governor Ahsan H Mansur, said BB spokesperson Arif Hossain Khan.

According to the government's plan, Exim Bank, Social Islami Bank, First Security Islami Bank, Union Bank, and Global Islami Bank will be consolidated into a new state-owned entity, provisionally named 'United Islami Bank'.

"Under the Bank Resolution Ordinance, temporary administrative teams comprising multiple members will be appointed to each bank to oversee the process," Arif said.

At the meeting, the board has also decided to forward the draft amendment of Bangladesh Bank Order, 1972 to the Advisory Council for final approval.

"It is not yet clear which provisions have been added or omitted in the draft, but since the final approval rests with the Advisory Council, the draft has been sent there," the spokesperson said.

Four of the banks — First Security, Union, Global, and Social Islami — have long been under the control of the S Alam Group, while Exim Bank is owned by Nazrul Islam Mazumder, chairman of Nassa Group.

According to Bangladesh Bank data, the combined default loans of the five banks stand at around Tk1.47 lakh crore — about 77% of their total outstanding loans.

Among them, Union Bank is in the worst condition with 98% of its loans defaulted, followed by First Security Islami Bank 96%, Global Islami Bank 95%, Social Islami Bank 62% and EXIM Bank 48%.