Bangladesh Bank Approves Merger of Five Sharia-Based Banks
Bangladesh Bank has finalized the merger of five struggling Sharia-based banks into a single entity called ‘United Islamic Bank.’ This decision clears the last regulatory barriers for the new bank to start operations.
The board of directors of the central bank gave their approval on November 30, marking an important step in establishing the largest state-run Islamic bank in the country.
The banks being merged are First Security Islamic Bank, Global Islamic Bank, Union Bank, Export-Import Bank, and Social Islamic Bank.
Prior to this, on November 9, the Ministry of Finance issued an initial approval, known as a letter of intent (LoI). This followed a government application requiring various regulatory measures under the Banking Companies Act, including name clearance from the Registrar of Joint Stock Companies (RJSC) and the establishment of a current account.
With this final agreement, the newly combined banks will be able to officially commence operations. Central bank officials noted that detailed guidelines regarding depositor payments, profit margins, and salary structures will be released soon.
In the initial settlement phase, general depositors will be permitted to withdraw up to Tk 200,000, with retail depositors receiving priority.
On November 5, the central bank took control of these five banks, dissolving their existing boards and appointing officials from the central bank to oversee their management. The managing directors of these banks have also been asked to resign.
According to unpublished draft data from the central bank, the merger will cost approximately Tk 35,000 billion, with Tk 20,000 billion coming directly from the government, ultimately sourced from taxpayers. Additionally, Tk 10,000 billion will be drawn from the Deposit Insurance Fund, subject to legal adjustments for its use as loans. The remaining Tk 500 billion is expected to be funded by multilateral lending agencies such as the IMF, World Bank, and ADB, as part of larger financial sector reforms.
Even the external funding will eventually fall on taxpayers to repay.
The draft indicates that small savers will be given early payments to help maintain their confidence. However, large institutional deposits from companies and government bodies will be converted into shares of the new bank.
