Social Islami Bank chairman leaves merger decision to cenbank, director opposes move

Highlights

• SIBL chairman says merger decision lies with Bangladesh Bank
• Director Rezaul Haque strongly opposes merger move
• Chairman cites loans to S Alam Group but says collateral is strong
• Director argues SIBL's condition is not bad, recalls past dividends

Different opinions have emerged within Social Islami Bank Ltd (SIBL) regarding its possible merger under Bangladesh Bank's restructuring plan.

While Chairman Mohammad Sadiqul Islam said the matter rests with the central bank, Director Major (retd) Dr Md Rezaul Haque opposed the idea, arguing the bank's condition does not justify a merger.

Today (4 September), Bangladesh Bank held its final round of preliminary meetings with SIBL after earlier discussions with four other Islamic banks, including Global Islami Bank, whose representatives expressed agreement in principle with any central bank decision on merger.

Several deputy governors attended the meeting in person, while Governor Ahsan H Mansur joined online.

Speaking to journalists after the meeting, Chairman Sadiqul said, "Today's meeting did not directly address bank mergers. We presented our financial condition, and Bangladesh Bank shared its financial stability report with us.

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"We are in principle aligned, but the final decision lies with the Bangladesh Bank."

However, Director Rezaul took a different position, telling the central bank in a written statement that SIBL could recover without a merger if given interest-free liquidity support to the entrepreneur shareholders.

When asked about the merger, he said, "Our bank is not in bad shape. Why should we merge? During my time, we gave up to 20% cash dividends between 2012 and 2016, alongside nationwide CSR activities. I request the chairman not to agree to a merger."

Addressing concerns about large loans, Sadiqul admitted that S Alam Group had borrowed around Tk6,000 crore from SIBL but insisted this was manageable compared to other banks.

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"We hold nearly 35% collateral against these loans, which is stronger than many banks. Around 60% of our defaulted loans can be rescheduled with some regulatory support," he added.

Sadiqul also acknowledged that hidden liabilities tied to S Alam had surfaced later, creating pressure on the bank. "These are challenges that take time to resolve, but we have explained our situation to the Bangladesh Bank."

When asked about a letter reportedly sent to the finance ministry seeking a one-year delay in any merger decision, the chairman said it was a personal application by an individual, not a formal position of the bank.