Bangladesh Bank plans to merge five troubled Islamic banks in what could be the country’s largest financial sector consolidation in recent memory. The formal merger process will begin in July and is expected to be completed by October 15, according to officials familiar with the plan.
Arief Hossain Khan, spokesperson for the central bank, confirmed that a meeting on the subject took place. “We heard that the agenda of the meeting was the merger,” he said, but declined to elaborate.
A high-level meeting was held yesterday at the central bank headquarters between Governor Ahsan H Mansur and the managing directors and chairmen of the five Islamic banks — Social Islami Bank, Global Islami Bank, First Security Islami Bank, Union Bank, and EXIM Bank.
According to officials, five joint teams, comprising Bangladesh Bank representatives and qualified staff from each bank, will begin work on the integration process and continue over a three-and-a-half-month period. The banks will come under temporary government control after the merger process starts.
The current managing directors will be removed, and a new board will be formed, drawing from existing board members and representatives from different sectors. The merged entity will operate under the central bank’s direct supervision.
The move is part of the interim government’s broader efforts to stabilise the banking sector under the newly enacted Bank Resolution Ordinance 2025, which gives the central bank expanded powers to resolve distressed financial institutions.
Six banks are currently in the resolution pipeline, with five now in the final stage. ICB Islamic Bank has been excluded from the process due to its foreign ownership.
“The central bank is likely to merge these five banks by October this year under the ordinance,” said Mohammed Nurul Amin, chairman of Global Islami Bank. He said Governor Mansur discussed key aspects of the new ordinance during the meeting.
Those who can confidently prove they can recover on their own may be considered for exemption. Otherwise, the resolution process under the ordinance will begin, according to Amin.
“Now, five banks have been identified. They could be consolidated into one larger Islamic bank. The meeting was held to initiate that process. A roadmap has been discussed,” he said.
Mohammad Abdul Mannan, chairman of First Security Islami Bank, described the meeting as a “preliminary step,” adding that Bangladesh Bank informed them of the plan.
The merger effort gained momentum after Bangladesh Bank appointed two international firms in January to conduct asset quality reviews of the banks. The review, which is now nearing completion, aims to assess the actual financial condition of the institutions.
The central bank’s plan is expected to restore depositor confidence and instil discipline in a sector long plagued by mismanagement, insider lending and capital shortfalls.
