Anis A. Khan, former chairman of Bangladesh Bankers Association (ABB), currently managing partner of AAZ & Partners, says the success of the merger depends on more than financial integration
Anis A. Khan, who previously led the Bankers Association of Bangladesh, now serves as managing partner at AAZ & Partners. He shared his thoughts on the proposed merger involving five Islamic banks, stressing the need for transparency and significant governance reforms for it to succeed.
In an interview with Business Standard, Khan discussed the merger of Security Islami Bank, Global Islami Bank, Union Bank, Social Islami Bank, and Exim Bank. He characterized the initiative as a daring regulatory move, but emphasized that its success hinges on more than just merging finances.
“Public funds, especially in the current fiscal climate, must be used with utmost transparency and accountability. The injection of TK20,000 crore raises valid concerns regarding moral hazard and governance integrity,” he stated.
He elaborated, saying that revival calls for more than just financial support; it necessitates profound governance reform and a break from previous practices. There need to be safeguards ensuring the new board isn’t overly influenced by political or business interests.
“Rebuilding public trust in Islamic banking demands a distinct change from past methods and an earnest commitment to ethical management,” he added.
Key Driver
Khan spotlighted three principal drivers for the merger: mitigating systemic risks, improving asset quality, and regulatory reforms.
According to him, the five banks currently facing liquidity challenges and depositor panic are grappling with bad debts and inadequate governance.
“Initial estimates indicate the need for around 35,000 crore to consolidate these banks, with assistance from the government and the Deposit Insurance Trust Fund,” he said. He mentioned that this merger is enabled by the Bank Resolution Ordinance 2025, empowering the Bangladesh Bank to restructure struggling institutions.
The planned regulatory changes include regular audits, financial disclosure, enhanced transparency, and stricter enforcement of corporate governance standards to prevent future banking crises.
Anis also pointed out the strategic repercussions of the merger. The new entity is expected to become Bangladesh’s largest lender, valued at TK2.2 lakh crore, potentially reshaping the competitive landscape of Islamic banks.
Initially, he indicated that the merged bank would operate as a state-owned “bridge bank” to ensure seamless operations before transitioning back to stable private ownership.
He acknowledged that many issues would arise with various stakeholders. Rebuilding depositor trust will take time, yet he expressed optimism that employees might retain their jobs despite potential branch restructuring.
Moreover, he noted that existing committees would be reorganized, with new leadership appointed under the central bank’s oversight.
However, he cautioned that injecting TK20,000 crore into banks facing immunity risks could normalize that immunity.
“If the new board isn’t insulated from political and business interests, the merger could end up integrating those influences rather than remedying them,” he said.
In the context of a challenging budget, allocating TK20,000 crore raises substantial prioritization concerns. “Can the state afford this without compromising essential public services?” he questioned.
“This merger needs to be more than a technical adjustment. It must restore credibility, foster transparency, and show that reforms are tangible, not just talk,” he concluded.
