Exim Bank has declined to join a planned merger of struggling Shariah-based banks in Bangladesh, opting instead to implement its own recovery plan. The decision was conveyed to Bangladesh Bank at a meeting on Wednesday, where the bank presented its roadmap for recovery.
“We have outlined how we intend to move forward. Bangladesh Bank has asked for greater specificity, which we will provide in the next round of talks,” Exim Bank Chairman Nazrul Islam Swapan told TIMES of Bangladesh after the meeting.
The central bank has been holding a series of back-to-back meetings with five crisis-hit banks — First Security Islami, Global Islami, Union, Exim, and Social Islami — as part of efforts to stabilize the sector.
Exim Bank’s decision to pursue an independent recovery plan comes amid widespread financial difficulties within the group.
More than 77 percent of the five banks’ total loans are classified as non-performing, which is well above the international threshold of 30 per cent that usually triggers restructuring or resolution.
Following the meeting with Exim, Bangladesh Bank requested more detailed information on the bank’s proposed recovery strategy. No date has been set for the next meeting with Exim Bank, although the central bank plans further talks with other struggling banks in the coming days.
Earlier on Wednesday, Union Bank met with the central bank, following a similar meeting with First Security Islami on Tuesday. Both banks agreed to the merger plan outlined by Bangladesh Bank.
Meetings with Global Islami and Social Islami are scheduled for Thursday. Bangladesh Bank Governor Ahsan H Mansur joined the meeting with Exim Bank virtually, accompanied by four deputy governors and senior officials from the resolution department.
Exim Bank’s decision not to join the merger initiative comes amid growing concerns over the health of its financial position.
According to Bangladesh Bank, Exim Bank currently faces a capital shortfall of Tk910 crore.
As of September 2024, the bank had reported non-performing loans of Tk3,579 crore, accounting for 6.91 percent of its total loans. However, a recent Asset Quality Review (AQR) report by the central bank later revealed a much higher non-performing loan ratio of 48.20 percent, totaling Tk25,101 crore.
Despite these challenges, Exim Bank has received liquidity support from Bangladesh Bank, amounting to a maximum of Tk9,950 crore.
In the past year, the bank posted a loss of Tk409 crore, marking one of the highest losses among the banks in the merger process. The bank currently operates 155 branches nationwide, with a customer base of approximately 1.5 million.
Exim Bank shares, with a face value of Tk10, closed 4.65 per cent higher at Tk4.65 on Wednesday on the Dhaka Stock Exchange.
