Written by The Banking Post
Global Islami Bank has agreed to merge as part of the government’s ongoing banking sector reform and consolidation drive, its Chairman Mohammad Nurul Amin announced following a Bangladesh Bank hearing on Wednesday.
The bank’s loan portfolio stands at Tk14,000 crore, of which Tk12,000 crore was borrowed by S Alam Group through different entities. Most of those loans have defaulted, with collateral covering less than 25% of the exposure, Amin disclosed.
Earlier, Union Bank and First Security Islami Bank had also consented to mergers. Together, the two banks reportedly lent around Tk66,000 crore to S Alam Group, much of which has also gone into default.
EXIM Bank, however, has opted out of the immediate process. Its board stated the bank would need at least two more years before considering a merger.
Bangladesh Bank has launched week-long hearings with five financially weak banks as part of its reform push. So far, Union Bank, First Security Islami Bank, EXIM Bank, and Global Islami Bank have appeared, while Social Islami Bank is scheduled for the final session later today.
During the hearings, the chairmen admitted to massive financial weaknesses. The combined capital shortfall and non-performing loans of the five banks exceed Tk2.86 lakh crore.
To facilitate the mergers, Bangladesh Bank is planning a Tk35,000 crore special fund, subject to government approval. The fund would be financed by state-owned enterprises.
