Central bank calls meeting amid uncertainty over SIB

Bangladesh Bank Governor Mostaqur Rahman has called the administrators of the state-owned Sammilito Islami Bank (SIB) to a meeting on Wednesday.

The meeting, scheduled for 2pm at the BB Headquarters, comes amid growing uncertainty among depositors and employees about the bank’s operational structure and recent legislative changes, bdnews24.com reports.

The SIB was formed on Dec 21 last year by merging five financially troubled Shariah-based private banks: Exim Bank, First Security Islami Bank, Global Islami Bank, Union Bank, and Social Islami Bank (SIBL).

In November, the shares of these banks were declared null and void to facilitate the state-owned merger.

Although operating under a single license, the five constituent banks continue to conduct banking activities separately.

The central bank previously decided that independent operations would continue until their core banking software is integrated into a unified system.

Decisions regarding staff rationalisation and branch consolidation are pending this technical transition.

The bank is currently grappling with a leadership crisis.

Following the formation of the BNP-led government in February, the Muhammad Yunus-led interim government-appointed chairman Mohammad Ayub Mia resigned on Mar 16.

Since then, the post of chairman has remained vacant.

Furthermore, the bank lacks a managing director.

The landscape of the merger shifted significantly in April with the passage of the Bank Resolution Act in parliament.

The legislation included Section 18(A), which allows former shareholders to repurchase stakes under specific conditions.

Following this, the former sponsor-directors of SIBL applied to exit the merger.

Rumours are also circulating in the banking sector that two other constituent banks may seek to withdraw under the new legal provisions.

"This is a routine meeting scheduled under the resolution framework," Mohammad Shahriar Siddiqui, a director at the BB, told bdnews24.com.

The SIB has an authorised capital of Tk 400 billion and a paid-up capital of Tk 350 billion.

Of the paid-up capital, the government provided Tk 200 billion, while the remaining Tk 150 billion is slated to come from the Deposit Insurance Fund.