Bangladesh Bank on Wednesday appointed administrators to run five financially weak Shariah-based banks.
Governor Dr. Ahsan H Mansur gave this information in a press briefing on the day.
Administrators will take charge of Exim Bank, Social Islami Bank, First Security Islami Bank, Union Bank and Global Islami Bank.
The governor said: “A review of the current financial condition of the banks has shown that they are not being managed sustainably due to capital shortages and irregularities. Therefore, these banks will be run by appointing administrators. Business activities will not be closed; customer money and deposits will be protected.”
The administrators will work to restructure the banks and restore their activities under the direct supervision of Bangladesh Bank. No officers and employees will be laid off; they will receive salaries and allowances as before, he further said.
The Bangladesh Bank governor also said that the central bank has already started special audits to bring transparency to the financial condition of these banks.
If necessary, alternative measures such as mergers or restructuring may also be taken in the future, Mansur added.
Bangladesh Bank also dissolved the boards of directors of the five Shariah-based banks, informing them of the decision in a letter to the respective managing directors (MDs) on Wednesday.
The contracts of the officers holding the posts of Managing Director (MD) have also been cancelled.
Administrators appointed
Meanwhile, temporary administrations are being formed in these five banks, under the leadership of senior officials of the central bank.
The following have been appointed as administrators:
- Exim Bank: Bangladesh Bank Executive Director Md Shawkatul Alam
- Social Islami Bank (SIBL): Executive Director Md Salah Uddin
- First Security Islami Bank (FSIB): Executive Director Muhammad Badiuzzaman Didar
- Global Islami Bank: Bangladesh Bank Director Md Moksuduzzaman
- Union Bank: Director Mohammad Abul Hashem
Each administrator team has been included with a few additional and joint director-level officers of Bangladesh Bank, who will coordinate from the human resources, information technology, finance, operations and audit departments.
Social Islami Bank
Administrator Salah Uddin is led by Dr. Mohammad Bazlul Karim, Md. Rashedul Islam, Rowshan Akhtar, Abdul Ati, and a team of Joint Directors of the Finance Department (FSSSPD).
Union Bank
Director Mohammad Abul Hashem is accompanied by Md. Al-Mehedi Hasan (Internal Audit), Kazi Abdul Mannan (Taka Museum), Md. Tariqul Islam (BFIU) and Sagar Hossain (BRD).
First Security Islami Bank
Executive Director Badiuzzaman Didar will be accompanied by Mohammad Ansarul Kabir (BRPD), Mohammad Faisal Khan (Islamic Banking Department), Md. Omar Farooq (DBI-3) and Bishwajit Kumar Dey (Cyber Security Unit).
Global Islami Bank
Director Moksuduzzaman will be accompanied by Mohammad Shahjahan (FID), Mohammad Abdullah Al Mamun (FEPD), Md. Shariful Islam (PSD) and Md. Kausar Pathan (BRD).
Exim Bank
Executive Director Shawkatul Alam will be accompanied by Sheikh Ahmed Jami (HRD), Md. Raisul Islam (BFIU), Md. Abdul Awal Chowdhury (BRD) and Masuma Begum (CIB).
Central bank sources said that these administrators will start the work of restoring financial discipline, preventing irregularities and reforming the management structure of the banks concerned.
Bangladesh Bank governor said: “This administrative step has been taken to ensure the stability of the banking sector and protect the interests of depositors. The administrators will perform their duties until the situation normalizes.”
It is learned that during the Awami League government, four of these banks were owned by S Alam Group, and one bank was owned by Nazrul Islam Majumder.
At that time, there were allegations of huge amounts of money being withdrawn from the banks anonymously, which led to their financial condition becoming fragile.
According to central bank sources, the work of formulating the structure, capital system and management policies of the merged bank will begin after the appointment of the administrator.
‘Shares of five banks now worth zero’
The value of the shares of the sponsor shareholders and general investors of the five banks that are going to be merged will now be considered zero. No one will get any compensation, Bangladesh Bank governor Ahsan H Mansur also said at the briefing.
“The net asset value of the five banks has now reached a negative level. The maximum deficit against the face value of Tk10 has reached Tk450. As a result, the share value of these banks is practically zero. No one, sponsor shareholders or general investors, will get compensation.”
Regarding defaulters, the governor said that depositors with less than Tk2 lakh will be able to withdraw their money quickly. The process of refunding others will be determined in phases.
He urged everyone not to panic and withdraw money.
“Market-based interest rates will be maintained against deposits in the merged banks and no employee of the bank will lose their jobs.”
