Shariah Banks on the Brink: Employees Face Pay Cuts as Merger Looms

A major shake-up in Bangladesh’s banking sector is underway as five Shariah-based banks, all in financial turmoil, prepare to merge into a single institution. The banks—First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, and EXIM Bank—are facing massive liquidity problems, and the merger is seen as a desperate attempt to salvage what remains of their operations. However, the cost of this merger will be felt directly by the employees, who are expected to see significant cuts to their salaries and benefits.

These five banks, which collectively employ around 16,000 people, have struggled for months to meet their financial obligations. The banks requested Tk 1,000 crore in emergency liquidity assistance from the Bangladesh Bank, but the central bank approved just Tk 350 crore, earmarked specifically for paying employee salaries. This suggests that the financial crisis is far more serious than previously acknowledged, with the banks relying heavily on depositor funds to pay wages.

The financial situation at these institutions is dire. First Security Islami Bank, for example, reported a negative operating income of Tk 4,308 crore last year, while posting a net loss of Tk 5,450 crore. The bank’s mounting losses have forced it to dip into depositors’ funds to cover staff expenses, which raises serious concerns about the sustainability of the bank and the security of its customers’ money. This has led the central bank to intervene, approving the merger in an attempt to prevent a collapse of the banking sector.

However, the employees at these banks are unlikely to benefit from this merger. In fact, many are expected to see their pay and benefits slashed in order to reduce operational costs. An official from the Bank Resolution Department confirmed that measures are being taken to reduce staff expenses, which will likely result in salary cuts and a reduction in benefits.

The financial stress on employees is already palpable, with workers at Union Bank revealing that they are facing difficulties in accessing their salaries. While the wages are transferred to employees’ accounts, many have been unable to withdraw the funds, causing frustration and financial hardship among the staff.

Despite ongoing support from Bangladesh Bank, which has extended over Tk 35,300 crore to these struggling banks since the installation of the interim government, the institutions remain on shaky ground. The merger may offer a temporary solution, but it is unclear how long it will take for these banks to recover, or if they ever will.

For the employees caught in the middle of this crisis, the future remains uncertain. The merging of these banks will undoubtedly lead to further financial strain for the staff, with many facing the harsh reality of reduced salaries and benefits in the coming months.