Merger-bound Islami banks bounce back as govt quells investor fears

Shares of the five Islami banks slated for a government-enforced merger rebounded sharply today (14 October) after the government dismissed social media rumours claiming that investors might incur losses from the merger plan.

Social Islami Bank led the rally with a 10% jump to close at Tk4.40, followed by Exim Bank, which gained 8.57% to Tk3.80. First Security Islami Bank rose 7.69% to Tk2.80, while Union Bank and Global Islami Bank advanced 5.88% and 5.56% respectively, closing at Tk1.80 and Tk1.90.

TBS Infograph

The rebound came after weeks of steep declines between August and mid-October, when the Bangladesh Bank announced its plan to merge the five lenders into a single Islami bank.

Investor sentiment deteriorated amid growing concerns over the fate of general shareholders, as the Bank Company Act offers no explicit provision for compensating them in the event of a merger or liquidation.

The Ministry of Finance, in a statement issued on 13 October, dismissed as "baseless and misleading" the social media rumours suggesting potential investor losses.

The ministry further clarified that no decision had been made that would undermine investor interests, emphasising that protecting shareholder value remains a key priority in the merger process.

Earlier, on 9 October, the Advisory Council, chaired by Chief Adviser Muhammad Yunus, approved the merger of First Security Islami Bank, Global Islami Bank, Union Bank, Exim Bank, and Social Islami Bank. The move will create a new state-run Islami bank with a paid-up capital of Tk35,000 crore—the largest in the country's banking sector.

Following the decision, Shafiqul Alam, press secretary to the Chief Adviser, assured that no employees would lose their jobs and all depositors' funds would remain safe.

The Finance Division also confirmed it would pursue legal action against individuals involved in financial irregularities at the five banks.