Among the five banks listed for merger, two--Exim Bank and Social Islami Bank--have expressed reluctance, requesting additional time to execute turnaround strategies.
The other three banks--First Security Islami Bank, Union Bank, and Global Islami Bank--have agreed to the merger process and formally requested the Bangladesh Bank to proceed.
Bangladesh Bank has been steering the merger process through a series of high-level meetings led by Governor Ahsan H. Mansur.
On Tuesday, officials met with First Security Islami Bank; Wednesday saw discussions with Exim Bank and Union Bank; and on Thursday, the central bank met with Global Islami Bank and Social Islami Bank.
The combined capital deficit and non-performing loans of these five banks exceed Tk 286,000 crore, highlighting the gravity of the situation. To initiate the merger, Bangladesh Bank plans to establish a special fund of approximately Tk 35,000 crore, potentially financed by various state-owned institutions pending government approval. If foreign financing is secured, the required fund could rise to Tk 60,000 crore. After consolidation, the merged entity may be named United Islami Bank or Al Fatah Bank.
Exim Bank has already presented a turnaround roadmap, but the central bank has requested a revised, more specific plan. Exim Chairman Nazrul Islam Swapan said, "We have presented a roadmap of how to move forward, how to turn around. Bangladesh Bank has asked us for a more specific plan. We will present it in the next meeting."
The stakes are high: the combined defaulted loans of the Sharia-based banks slated for merger exceed 77 per cent, far above the 30 per cent threshold that international standards consider grounds for liquidation or restructuring.
Union Bank Managing Director Farid Uddin highlighted the urgency, saying, "Depositors are coming to take money. We are unable to give it. Therefore, the sooner a decision is made about these banks, the better. In this case, these banks may be merged, restructured, or something else."
He also pointed to massive irregularities, noting that S Alam had taken Tk 28,000 crore from Union Bank under untraceable names, creating complications in repaying depositors.
First Security Islami Bank Chairman Mohammad Abdul Mannan echoed concerns about depositor protection while supporting the merger process. He revealed that S Alam had taken Tk 38,000 crore anonymously from the bank, contributing significantly to its current difficulties.
Social Islami Bank Founder Director Major (Retd) Dr Rezaul Haque emphasised the bank's readiness to recover and grow if given time.
"If we can mobilise remittances from expatriates and utilise our branches, sub-branches, agent banking, and booths effectively, we will be able to turn around," he said. He added that preparations are underway to open branches in Mecca and Jeddah, Saudi Arabia, reflecting a broader vision for the bank's future.
