Employees of five Shariah-based banks being merged into Sammilito Islami Bank are set to face reductions in salaries, allowances and staff benefits as administrators move to curb operating costs amid a prolonged liquidity crisis.
As part of the transition process, Bangladesh Bank on Thursday released Tk350 crore in liquidity support to help the distressed institutions meet payroll and essential expenses, said officials involved in the process.
According to Bangladesh Bank Assistant Spokesperson Shahriar Siddiqui, the cuts are temporary and intended to stabilise expenditure until the merged entity introduces a new payment structure.
He said the timeline for enforcing the reductions or introducing the new structure is yet to be finalised.
Staff of Exim Bank, First Security Islami Bank, Global Islami Bank, Union Bank and Social Islami Bank are among those affected.
Curbing operational costs across the institutions has become the immediate priority, Siddiqui said, adding that the banks had been paying salaries from depositors’ money despite having negative income.
“Last year, First Security’s income was negative, yet they paid Tk650 crore in salaries from depositors’ funds,” he said.
He said protecting jobs is more urgent at this stage than maintaining full salaries.
People involved in the restructuring said a uniform salary scale is expected to remain in place across the five banks until Sammilito Islami Bank begins commercial operations.
Administrators, they said, are now working to align all posts under a single structure during the interim period.
On 5 November, Bangladesh Bank declared the five banks financially ineffective, dissolved their boards and removed their managing directors.
New administrators were appointed the same day.
On 9 November, the central bank board chaired by Governor Ahsan H Mansur granted a preliminary licence to establish Sammilito Islami Bank, a new state-owned Shariah-based institution that will absorb the five distressed banks.
The new bank will be created with Tk35,000 crore in capital, of which the government will provide Tk20,000 crore.
Small deposits up to Tk2 lakh will be paid back by the new bank under the deposit insurance scheme, while larger deposits will be paid back gradually.
Institutional depositors will be offered equity shares of the new bank, in exchange for, while the existing shareholders of the five banks ended penniless as the central bank announced the share’s value as “zero”.
