ICB Islamic Bank: Retail investors to get nothing if govt refuses to revive it

General investors are highly unlikely to get back anything out of their investments in ICB Islamic Bank unless the government provides it with necessary funds and overhauls it.

Presently, general investors constitute a 25.42 per cent stake in the bank, while institutions hold 21.65 per cent shares, sponsor-directors 52.76 per cent and the government 0.17 per cent.

The stock has traded at below the face value of Tk 10 each share on the bourses for the last two years. On Thursday, it closed at Tk 3.5 per share, the lowest among 36 bank stocks.

Investors have not received any dividend for more than two decades. It issued rights shares at a ratio of 1:1R in 2003 for the last time.

"Unofficially, the bank is now bankrupt," said Dr. Ahsan H Mansur, executive director at the Policy Research Institute (PRI), adding that general investors have hardly anything to hope for.

The government should either take over the bank or liquidate it, he said.

But if the bank is liquidated, general investors will come at the bottom of the priority list at the time of settling dues.

Any financial support from foreign investors may reenergize the lender and general investors may be benefitted from that but such a possibility is slim considering the risks that loom large, said Mr Mansur.

The bank saddled with huge liabilities amid its operational failure has again become a subject of discussion as its different branches situated in Dhaka and in some district headquarters have failed to pay back money to depositors.

Abdul Hamid Mahbub, who went to the bank's Moulvibazar branch to withdraw Tk 55,000 on May 14, returned home empty-handed.

Two days later, he received Tk 20,000 only following posts on social media regarding the bank's inability to pay back depositors' money. That money was given to Mr Mahbub after a correction in his cheque.

Depositors like Mahbub should be repaid first if the bank is liquidated. Institutional investors also stay ahead of general investors.

The amount of classified loans of ICB Islamic Bank was Tk 6.86 billion, 87 per cent of the total outstanding loans, as of December 2023.

In January this year, the central bank turned down the bank's plea for a liquidity support worth Tk 500 million without any collateral. The bank already has a liability worth Tk 4.25 billion with the central bank.

The BB has reportedly labelled ICB Islamic Bank as being out of operation due to liquidity crunch.

Talking to the FE, Managing Director of ICB Islamic Bank Muhammad Shafiq Bin Abdullah said they were trying to get financial support from the government to revive the bank.

He expressed optimism about government support, saying other banks have got financial help.

Mr Abdullah refused to make any comment when asked if sponsor-directors would inject any fund into the failing institution.

Md. Ashequr Rahman, managing director of Midway Securities, insisted that the bank should be revived with funds and policy support, given the loss of trust in the sector.

"Any bankruptcy would affect the entire financial ecosystem."

Mr Rahman pointed to depositors' frantic attempts to withdraw funds from different banks and said they were purchasing gold or preferring to keep cash with themselves.

"The government should take over ICB Islamic Bank to avert adverse impacts," Mr Rahman added.

Fund support will, however, not serve the purpose unless the company is restructured alongside punitive actions taken against those responsible for the present situation.

The company's latest financial statement for January-March 2024 reveals that its expense in salary and allowance was Tk 59.49 million during the period.

The bank's net investment income was Tk 61.67 million in the negative during the quarter as it paid Tk 109.35 million in interest to depositors for the three months.

The annual financial results were as grim for 2023.

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