Bangladesh Bank (BB) has granted a Letter of Intent (LOI) for establishing a new state-backed bank, United Islami Bank Plc, merging five financially weak Islamic banks.
The LOI, issued on Sunday with several conditions, comes after the government formally applied for approval last Wednesday.
The proposed merger will consolidate five financially struggled Islamic banks-- Social Islami Bank PLC (SIBL), First Security Islami Bank PLC (FSIB), EXIM Bank PLC, Global Islami Bank PLC and Union Bank PLC, under one umbrella.
The next step for the proposed bank is to obtain registration from Registrar of Joint Stock Companies and Firms (RJSC), after which Bangladesh Bank will issue the final banking license.
Initially, the bank will operate under government ownership. The seven-member board of directors will be led by Nazma Mobarek, Secretary of Financial Institutions Division, while the other members are senior government officials, although changes are expected before final approval.
A high-level meeting was held on Saturday at Ministry of Finance to discuss the bank’s launch, funding and operational matters, attended by Finance Adviser Dr. Salehuddin Ahmed, Bangladesh Bank Governor Dr. Ahsan H. Mansur and senior finance ministry officials.
Last week, Bangladesh Bank dissolved the boards of five merging banks and appointed administrators to oversee the transition.
The authorized capital of new United Islami Bank is set at Tk 35,000 crore, with the government contributing Tk 20,000 crore and Tk 15,000 crore coming from depositors converted into shares. Once established, it will become the largest bank in Bangladesh by capital base.
SH
