Exim Bank has formally applied to exit the state-owned Sammilito Islami Bank PLC to reconstitute itself as a separate entity. The former board of this bank, led by its former chairman Nazrul Islam Swapan, submitted a written application to Bangladesh Bank on Monday.
Swapan confirmed the development to TIMES, stating, “We have submitted the application to Bangladesh Bank, and they have accepted it.” The move was initiated under Section 18(a), a legal provision that allows former shareholders the opportunity to regain control of the bank.
This represents the second instance of a bank seeking to de-merge from Sammilito Islami Bank PLC, following a similar application by Social Islami Bank (SIBL) on 27 April.
These consecutive actions within a short timeframe have raised significant questions regarding the future of the merged banking structure.
Sammilito Islami Bank was established on 21 December last year as the country’s sole state-owned Shariah-based bank.
It was formed through the merger of five institutions – Exim Bank, First Security Islami Bank, Global Islami Bank, Union Bank, and SIBL – which were at the time struggling with money laundering, high levels of non-performing loans (NPLs), and liquidity crises.
At the start of the process on 5 November, Bangladesh Bank declared the shares of these five banks as “ineffective” and valued at zero.
The then governor Ahsan H Mansur had explained that the shares had turned negative when liabilities were measured against assets, and the “zeroing” of shares followed international standards.
However, the decision drew criticism as it was applied to publicly listed banks without seeking the opinions of investors.
The legal path for the current applications was paved when Section 18(a) was incorporated during the transition of the Bank Resolution Ordinance into law, granting former shareholders a route to return.
According to sources, Exim Bank’s proposal includes a comprehensive plan for new capital infusion, the improvement of liquidity, and the reduction of non-performing loans. The bank also aims to restore discipline by reducing risky assets.
In comparison, SIBL’s earlier proposal set a target to reduce its NPL rate to 25% by December this year, alongside a recovery plan and a request for long-term liquidity support.
