First Security Islami Bank backs BB's bridge bank plan

First Security Islami Bank has announced its support for the formation of a "bridge bank" to be created through the merger of five struggling banks. 

The decision was confirmed by the bank's chairman, Mohammad Abdul Mannan, following a meeting with the Bangladesh Bank governor, Ahsan H Mansur, today (2 September).

Speaking to journalists after the meeting, Mannan said, "We agree with the decision taken by the Bangladesh Bank. The central bank will look after the protection of depositors."

A bridge bank is a temporary financial institution created by a central bank to take over and operate a failed bank or some failed banks.

Mannan disclosed that three separate audits had confirmed that the S Alam Group secured Tk38,000 crore in loans through anonymous accounts, as it was unable to borrow in its own name. "This failure to recover the loans has pushed the bank into a serious crisis."

The meeting with First Security Islami Bank was part of a series of pre-scheduled consultations with the five banks in question. The Bangladesh Bank had previously planned meetings with Exim Bank and Social Islami Bank, which were postponed due to the governor's illness. 

Meetings with Union Bank and Global Islami Bank are scheduled for today and tomorrow, respectively. New dates for Exim and Social Islami Bank will be announced later.

City Bank announces Tk650 crore venture capital fund

Meanwhile, in a separate development at the central bank, City Bank Managing Director and CEO Mashrur Arefin announced a landmark Tk650 crore venture capital fund to support the country's startups. 

The fund, which marks a major shift in how startups are financed in Bangladesh, will provide equity-based investment rather than loans.

"Our goal is to help fulfil the dreams of startups. We will invest, not impose a loan burden," Arefin said. He added that the fund will initially be overseen by the Bangladesh Bank's SME department, with a new board consisting of bankers to be formed to manage it.

The bankers will be nominated by the Association of Bankers, Bangladesh (ABB), he said. Arefin estimated that it may take three to four months for the fund to be fully operational, though preparatory work has already begun.

The City Bank CEO expressed optimism about the new fund, stating, "The heads of our country's startups are bursting with ideas. Even if one out of a hundred startups succeeds, our money will be recovered. We must remember that we are investing, not lending."

According to officials, a separate Tk500 crore refinance fund has been created by the central bank. Under the scheme, banks will be able to take funds at a rate of 0.5% and lend to startups at 4%.