Shareholders Suffer Heavy Losses After Bank Merger

The shareholders of five Shariah-based banks merged into Sammilito Islami Bank PLC have been officially asked to declare their shares as having zero value, following a central bank assessment that revealed the net asset value (NAV) of these shares is negative. The directive, issued today by Bangladesh Bank, marks a critical step in the country’s ongoing banking sector reform.

The five banks—First Security Islami, Social Islami, Global Islami, Union, and EXIM—have all been instructed to write down their shareholders’ stakes to zero, as per the Bank Resolution Ordinance 2025, according to Areif Hossain Khan, executive director and spokesperson of Bangladesh Bank. “Our assessment clearly indicated that the share values of these banks were negative,” Khan said. “Consequently, the shareholders’ stakes are now considered to be nil.”

This decision follows a November announcement by Bangladesh Bank Governor Ahsan H Mansur, who had indicated that shareholders of the merged banks would not receive any stake in the new entity. At that time, the net asset value per share of the five banks ranged from Tk 350 to Tk 420 in negative territory. “The central bank does not take these shares into consideration, as they carry zero liability. No shareholder of the merged banks will receive any compensation,” Mansur added.

The financial implications for shareholders are significant. The total loss based on the face value of the stocks is estimated at approximately Tk 4,500 crore, while the market value of the holdings, reflecting the fact that shares had been trading well below face value, is around Tk 1,022 crore. Following Bangladesh Bank’s merger order, trading of these banks’ shares was suspended last month by both the Dhaka and Chattogram stock exchanges.

On 30 November, Bangladesh Bank granted the final licence to Sammilito Islami Bank, officially creating the country’s largest state-owned Shariah-based lender. The bank’s authorised capital will be Tk 40,000 crore, comprising 4,000 crore shares of Tk 10 each, while the paid-up capital will total Tk 35,000 crore.

Of this paid-up capital, Tk 20,000 crore will be provided by the government as Class-A shares. An additional Tk 7,500 crore will be converted from the permanent deposits of other depositors in the transferring banks, designated as Class-B shares. The remaining Tk 7,500 crore will be sourced from deposits of other institutional depositors, excluding banks, financial institutions, and multinational companies, forming Class-C shares.

Bangladesh Bank emphasised that this merger is part of a broader reform programme launched in September 2024, aimed at restoring governance, strengthening accountability, and re-establishing discipline in the country’s banking sector, particularly among Shariah-based institutions.

This restructuring is seen as a decisive effort to stabilise the banking sector while signalling a zero-tolerance approach to poorly performing institutions.

Key Facts: Sammilito Islami Bank Merger

The restructuring underscores Bangladesh Bank’s commitment to restoring stability and investor confidence in the Shariah-based banking sector.