Global Islami Bank agrees to merger amid sector reforms

As part of the government's ongoing banking sector reform and consolidation process, Global Islami Bank has agreed to a merger, announced its Chairman Mohammad Nurul Amin following a Bangladesh Bank hearing today (4 September) morning.

According to Amin, the bank's current loan portfolio stands at Tk14,000 crore, of which Tk12,000 crore was borrowed by S Alam Group through various entities. Most of these loans have been defaulted, with collateral covering less than 25% of the exposure.

Earlier, Union Bank and First Security Islami Bank had also consented to mergers. Together, the two banks reportedly disbursed nearly Tk66,000 crore to S Alam Group, much of which has also been defaulted.

EXIM Bank, however, has opted out of the immediate merger process. Its board stated that the bank would require at least two more years before considering such a move. EXIM's board was previously chaired by Nazrul Islam Majumdar.

Bangladesh Bank has initiated week-long hearings with five financially weak banks as part of the merger drive. So far, Union Bank, First Security Islami Bank, EXIM Bank, and Global Islami Bank have participated. Social Islami Bank is scheduled to attend the final hearing this afternoon.

During the hearings, the chairmen highlighted their banks' financial positions. It was revealed that the combined capital shortfall and non-performing loans of the five banks exceed Tk2.86 lakh crore. To support the merger process, Bangladesh Bank is planning to create a special fund of around Tk35,000 crore. Subject to government approval, the fund will be financed by various state-owned enterprises.