Global Islami Bank agrees to merger amid sector reforms
As part of the
government's ongoing banking sector reform and consolidation process, Global
Islami Bank has agreed to a merger, announced its Chairman Mohammad Nurul Amin
following a Bangladesh Bank hearing today (4 September) morning.
According
to Amin, the bank's current loan portfolio stands at Tk14,000 crore, of which
Tk12,000 crore was borrowed by S Alam Group through various entities. Most of
these loans have been defaulted, with collateral covering less than 25% of the
exposure.
Earlier,
Union Bank and First Security Islami Bank had also consented to mergers.
Together, the two banks reportedly disbursed nearly Tk66,000 crore to S Alam
Group, much of which has also been defaulted.
EXIM Bank, however, has opted out of the immediate merger process. Its board
stated that the bank would require at least two more years before considering
such a move. EXIM's board was previously chaired by Nazrul Islam Majumdar.
Bangladesh
Bank has initiated week-long hearings with five financially weak banks as part
of the merger drive. So far, Union Bank, First Security Islami Bank, EXIM Bank,
and Global Islami Bank have participated. Social Islami Bank is scheduled to
attend the final hearing this afternoon.
During
the hearings, the chairmen highlighted their banks' financial positions. It was
revealed that the combined capital shortfall and non-performing loans of the
five banks exceed Tk2.86 lakh crore. To support the merger process, Bangladesh
Bank is planning to create a special fund of around Tk35,000 crore. Subject to
government approval, the fund will be financed by various state-owned
enterprises.