Bangladesh Bank to detail merger plan for five struggling Islamic banks

Bangladesh Bank will soon send a letter to the government detailing the funds needed for the merger of five troubled Islamic banks and the fate of their shares, following a decision at a central bank meeting yesterday.

At a press conference, Governor Ahsan H Mansur said discussions on the mergers were ongoing and that an official announcement would follow in due course. He assured depositors there was no reason to panic, as all deposits would be returned.

Under the newly enacted Bank Resolution Ordinance 2025, the BB has initially decided to merge Social Islami Bank, Global Islami Bank, First Security Islami Bank, Union Bank, and EXIM Bank. Four of the banks’ chairmen attended the meeting, chaired by Mansur, alongside Deputy Governor Md Kabir Ahmed and other senior BB officials. Those present included Mohammad Abdul Mannan of First Security Islami Bank, Md Fariduddin Ahmed of Union Bank, Mohammed Nurul Amin of Global Islami Bank, and M Sadiqul Islam of Social Islami Bank.

However, EXIM Bank Chairman Md Nazrul Islam Swapan said he was not invited, claiming his bank’s financial position was stronger than the others. “We are not interested in the merger,” he told The Daily Star. “We repeatedly requested the central bank to exclude us, but our plea was rejected.”

BB Executive Director and spokesperson Areif Hossain Khan said the meeting was part of efforts to expedite the merger process. A chairman present at the meeting, speaking on condition of anonymity, said the government would announce the move within days and issue letters to the banks. Union Bank Chairman Fariduddin added that the BB governor had sought their opinions and assured them the process would be carried out lawfully.

The central bank will set up an office at Sena Kalyan Bhaban in Motijheel to oversee the merger. The five banks again sought liquidity support from the BB, but the regulator refused, saying no fresh funds would be provided during the process.

The decision to merge the lenders was made in June after a forensic audit by KPMG and Ernst & Young revealed their non-performing loans were four times higher than reported. Once the merger begins, the banks will be placed under temporary government control.

The move is part of the interim government’s broader plan to stabilise the banking sector, backed by the Bank Resolution Ordinance, which grants Bangladesh Bank expanded powers to address distressed financial institutions.