On Wednesday, November 5, Bangladesh Bank declared five financially distressed Shariah-based banks as defunct and dissolved their boards of directors.
The banks declared defunct are: First Security Islami Bank PLC, Global Islami Bank PLC, Union Bank PLC, Exim Bank PLC, and Social Islami Bank PLC.
Officials of Bangladesh Bank stated that these banks will be merged to form a new government-owned Islamic bank named “Sammlito Islami Bank”. As part of this process, the boards of the five banks have been dissolved today.
Bangladesh Bank noted that these banks have been in poor financial condition for a long time. Due to liquidity shortages, massive classified loans, provisioning deficits, and capital shortfalls, the banks have effectively become insolvent. Despite multiple liquidity supports, their conditions did not improve.
This afternoon, the Governor of Bangladesh Bank is expected to formally announce the matter to the media. The banks will operate under the Banking Regulation Ordinance.