Finance ministry dismisses rumours over Islamic banks merger

Business Report :

The finance ministry has rejected “baseless rumours” circulating on social media that investors would be harmed by the planned merger of five Shariah-based commercial banks.
The ministry said no decision had been taken that would undermine investor interests, according to a press release on Monday.

“The matter is completely rumoured and baseless. Everyone is requested to be careful about such misleading rumours,” it said.

The government has already approved the consolidation of First Security Islami Bank, Union Bank, Global Islami Bank, Social Islami Bank, and Exim Bank into a new state-run Islamic lender named Sammilito Islami Bank Limited.

Under the merger, all assets and liabilities of the five listed banks will be transferred to the new entity.

Earlier on Thursday, the Advisory Council gave its policy approval to merge five distressed Islamic banks into a single Shariah-based state-owned entity.
The council’s meeting, chaired by Chief Adviser Prof Muhammad Yunus, endorsed the proposal to form a unified Islamic bank by combining those 5 banks , according to sources at the finance ministry.

According to finance ministry officials, the paid-up capital of the proposed new shariah bank has been set at Tk 35,200 crore.

Initially, the merged institution will operate as a state-owned bank under the ownership of the finance division.
The government plans to gradually transfer its ownership to the private sector once the bank stabilises and achieves operational efficiency.
It will be named United Islamic Bank or Integrated Islamic Bank. Besides, no employees from the merged banks will lose their jobs, and no customer will lose their deposits.

Between September 2023 and May 2025, deposits at these banks fell from Tk1.58 lakh crore to Tk1.36 lakh crore. Loans, however, kept growing, reaching Tk1.95 lakh crore.
Default loans ballooned to Tk1.47 lakh crore, an extraordinary 77per cent of their total loan portfolio. Union Bank’s non-performing loan ratio stood at 98per cent, First Security’s at 96per cent, Global Islami’s at 95per cent, Social Islami’s at 62per cent, and Exim’s at 48per cent.

According to Bangladesh Bank’s draft outline, the merger will cost Tk35,000 crore. Of this, Tk20,000 crore will come directly from government coffers, meaning taxpayers’ money. Another Tk10,000 crore will be drawn from the deposit insurance fund – requiring legal amendments to allow its use as a loan. 
The remainder, around Tk5,000 crore, is expected from multilateral development partners such as the IMF, World Bank, and ADB, as part of broader financial sector support.