Written by The Banking Post
The planned merger of five struggling Islami banks could drag down the Dhaka Stock Exchange (DSE) by about 59 points, as their possible de-listing threatens to erase Tk 20 billion from the market.
First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, and Exim Bank are set to be consolidated into a single state-owned Shariah-based lender under the Bank Resolution Act-2025. The Bangladesh Bank has already begun the formal process, expected to conclude within six weeks.
Currently, the five banks have a combined free-float market value of more than Tk 16 billion. If de-listed, index points tied to those shares will vanish. “If these banks are delisted, the market will take a major hit as most of their shares are free float,” said Md Sajedul Islam, managing director of Shyamol Equity Management. He added, however, that the government had no alternative but to rescue the banks.
Market analysts warn the move could shake foreign investors’ confidence, as four of the banks have overseas stakes. The sector’s market capitalisation could shrink by 2.75 per cent, though banking would still remain the DSE’s largest segment.
Others argue the new entity will likely stay listed. “International best practice is that merged banks remain quoted in the stock market under a new name or ticker, preserving shareholder value,” said Akramul Alam, head of research at Royal Capital.
Bangladesh Bank officials said depositors and small investors would be fully protected, though details are still being worked out. “It’s difficult to say exactly how the process will unfold, but it will be carried out with utmost caution and transparency,” assured Arif Hossain Khan, the central bank’s spokesperson.
The merger is expected to cost Tk 352 billion, with Tk 202 billion coming from the government and the rest mobilised from institutions and converted deposits. Regulators say the bailout is aimed at reviving the banks’ financial health and stabilising the sector, once dominated by politically connected businessmen S Alam and Nazrul Islam Mazumder.
