Five merging banks see shares hit record lows, Tk926cr erased in last 3 months

Highlights:

• Five Islamic banks lost Tk2,274 crore market value since 2024
• Share prices plunged up to 73%, hitting record lows
• Merger driven by defaults, weak fundamentals, shaken investor confidence
• Depositors guaranteed safety, but shareholders face uncertain compensation
• Regulators confirm no legal provision to reimburse shareholders
• Entire banking sector strained by irregularities, defaults, and sponsor exits

The five Islamic banks set to merge have seen their share prices plummet over the past year following last year's political change, with Tk926 crore in their total market value wiped out in just three months (July-September) amid sharp sell-offs by anxious equity investors.

On 30 September 2025, the five banks' shares hit record lows, with First Security Islami Bank at Tk2.6 against a face value of Tk10, Global Islami Bank at Tk1.8, Union Bank at Tk1.9, Social Islami Bank at Tk4.4, and EXIM Bank at Tk4.0.

Among them, Social Islami Bank suffered the steepest fall, losing Tk342 crore in market capitalisation over the three months, according to Dhaka Stock Exchange (DSE) data.

But if the timeline is stretched back to August 2024 – when the Awami League government fell – the loss more than doubles. In the past 13 months, the combined market value of these five banks shrank by a staggering Tk2,274 crore. Exim Bank alone accounted for nearly Tk600 crore of that decline, while Global Islami Bank lost Tk483 crore.

As per the market valuation of total shares, the combined market value of the five banks stood at Tk4,043 crore on 4 August 2024, the day before the fall of the Awami League government. 

At that time, their share prices ranged between Tk6.1 and Tk8.1. By 30 September 2025, however, prices had fallen to between Tk1.8 and Tk4.4 per share.

During this period, some banks saw their share prices drop as much as 73%, while the lowest decline was 38%. From the fall of the Awami League government until 30 September this year, the total market value of the five banks slated for merger decreased to Tk1,769 crore. 

Once considered attractive for their steady dividends, bank shares have now lost their appeal. Even though they are trading at the lowest prices in Bangladesh's stock market history, investors remain reluctant to buy.

Both the government and Bangladesh Bank have reassured depositors that their funds are safe. But questions loom over the fate of ordinary shareholders

The merger, coupled with weak fundamentals and shaken investor confidence, continues to cast a shadow over the sector – leaving equity investors to ask: what's next?

It is not just the five banks facing merger, but the entire banking sector that is in distress. Rampant irregularities and the relentless rise in defaults have plunged the industry into crisis. Against this backdrop, investors have steadily withdrawn from bank shares.

Adding to the turmoil, several sponsors have recently sold off their holdings in listed banks, relinquishing stakes they had once invested in during the banks' formation.

Of the five Islamic banks in question, First Security Islami Bank, Global Islami Bank, Union Bank and Social Islami Bank were largely controlled by the Chattogram-based S Alam Group, which gradually amassed ownership by buying shares on the secondary market under various company names. The group then placed its nominees on bank boards and secured loans – many of which have since defaulted.

Now, burdened by mounting defaults and shaken depositor confidence, the Bangladesh Bank has stepped in to merge five troubled Islamic banks into a single entity. The central bank says the consolidation is aimed at creating one stronger Islamic bank.

Fate of the ordinary shareholders in limbo

Both the government and Bangladesh Bank have reassured depositors that their funds are safe. But questions loom over the fate of ordinary shareholders. A government committee has been formed to guide the process, with stakeholders expecting clarity once its report is published.

Asked whether general investors would be compensated for their shares, Finance Adviser Salehuddin Ahmed told TBS: "It is certain that investors will get their due money back. But these investors are equity holders. What will happen in their case – I will not comment on that right now."

Mohammed Nurul Amin, an independent director and chairman of the Board of Directors of Global Islami Bank, said, "In a bank merger, depositors and preferential shareholders are given priority. Ordinary shareholders or general investors in listed companies usually receive nothing. However, there are rules for compensating those ordinary investors."

He added, "Investors have demanded either compensation or shares in the new bank that will be formed. Discussions are ongoing regarding how to compensate the investors."

Commenting on the continuous decline in share prices, he said, "Banks that cannot return depositors' money are kept running only through liquidity support from the central bank. But due to the merger, even that support has been stopped. The banks are also failing to recover defaulted loans, so the operations of some banks have effectively come to a halt. Under these circumstances, share prices are bound to fall."

A senior central bank official said, "According to the Bank Companies Act, when a bank comes under a merger, there is no provision for returning funds to capital market shareholders."

The official further added that a meeting was recently held with the chairman of the Bangladesh Securities and Exchange Commission, the governor of Bangladesh Bank, and officials from the Bank Resolution Department. 

During the meeting, the BSEC chairman asked whether there was any possibility of returning funds to shareholders. The governor's office clarified that under the law, there is no such provision. Any government funds that are being provided will be used to reimburse depositors at the individual level, the official added.

Five banks' assets and liabilities

Exim Bank: As of June 2025, the total liabilities of Exim Bank stood at Tk59,552 crore, including Tk39,270 crore in deposits and other liabilities, Tk2,090 crore in bonds, and Tk4,253 crore in other liabilities. Its balance sheet showed Tk4,814.68 crore invested in government and other securities, and Tk54,168 crore in general investments, mostly loans to the private sector and bills purchased.

First Security Islami Bank: As of June 2025, First Security Islami Bank had total assets of Tk67,859 crore, comprising cash, placements with banks and financial institutions, investments in government securities and equity, and loans to industries. General investments, essentially loans to industries, amounted to Tk62,432 crore, and fixed assets were around Tk1,300 crore. Against these assets, total liabilities were Tk41,299 crore, mostly term deposits of Tk27,884 crore from individual and institutional clients. The bank also had bond liabilities of approximately Tk750 crore.

Global Islami Bank: Total assets of Global Islami Bank stood at Tk18,961 crore at the end of June 2025, with Tk14,706 crore in investments, mostly loans to industries. Of these loans, Tk12,287 crore were classified as bad or loss. At the end of June, the bank was required to maintain provisions of Tk12,410 crore but had only Tk3,537 crore, leaving a shortfall of Tk8,881 crore, according to its half-yearly statement. Liabilities totalled Tk22,745 crore, including Tk12,504 crore in deposits, mostly term deposits of Tk10,640 crore, and only Tk205 crore in fixed assets.

Social Islami Bank: As of June 2025, Social Islami Bank had total assets of Tk46,460 crore, primarily consisting of Tk2,606 crore in government securities and shares, and Tk38,682 crore in loans to industries. Fixed assets, including premises, furniture, and fixtures, totalled Tk407.81 crore. Liabilities amounted to Tk44,885 crore, including Tk28,152 crore in deposits from individual and institutional clients, and Tk1,200 crore in subordinated and perpetual bonds.

Union Bank: Union Bank has not yet published its 2024 financial statements or half-yearly financials for 2025. Its third-quarter report for 2024, as of September, showed total assets of Tk30,315 crore, including Tk1,019 crore in stock investments and Tk27,876 crore in loans to industries. Total liabilities were Tk28,715 crore, including Tk22,966 crore in deposits and other liabilities and Tk170 crore in bonds.