BB plans to consolidate five Islamic banks into a single entity

Bangladesh Bank Plans Major Islamic Bank Merger Under New Resolution Law

Bangladesh Bank is set to merge five financially troubled Islamic banks in what would mark the country’s most significant banking sector consolidation in recent years. According to sources familiar with the plan, the formal merger process will commence in July and is scheduled for completion by October 15.

Central bank spokesperson Arief Hossain Khan confirmed that a meeting regarding the merger had taken place, although he declined to provide further details. The meeting, held at the central bank headquarters, brought together Governor Ahsan H Mansur and the managing directors and chairmen of the five banks: Social Islami Bank, Global Islami Bank, First Security Islami Bank, Union Bank, and EXIM Bank.

Officials say that five joint task forces—comprising Bangladesh Bank officials and skilled personnel from each institution—will lead the integration process over the next three and a half months. Once the merger begins, the banks will be brought under temporary government control. Current managing directors will be removed, and a new board will be constituted, including members from the existing boards and representatives from various sectors. The new entity will operate under the direct oversight of the central bank.

This initiative is part of the caretaker government's broader strategy to restore stability in the banking sector, enabled by the recently passed Bank Resolution Ordinance 2025. The law grants the central bank expanded authority to restructure distressed financial institutions.

At present, six banks are under the resolution framework, with five now in the final stages. ICB Islamic Bank has been excluded due to foreign ownership. “The central bank is expected to merge these five banks by October under the new ordinance,” said Mohammed Nurul Amin, chairman of Global Islami Bank. He noted that Governor Mansur discussed key elements of the legislation during the meeting.

Institutions able to convincingly demonstrate their capacity for self-recovery may be exempt from the merger. Otherwise, they will be subject to the resolution process under the ordinance, Amin added.

“Currently, five banks have been identified for consolidation into a single, stronger Islamic bank. The meeting was aimed at initiating that process and outlining a roadmap,” he said.

Mohammad Abdul Mannan, chairman of First Security Islami Bank, described the meeting as an initial step, saying the central bank briefed them on the proposed plan.

Momentum for the merger built earlier this year when Bangladesh Bank hired two international firms to conduct asset quality reviews of the banks. The assessments—now nearing completion—are expected to provide a clear picture of the institutions’ true financial positions.

Through this consolidation, the central bank aims to restore depositor confidence and enforce financial discipline in a sector long marred by poor governance, insider lending, and capital shortfalls.