Islami Bank to issue new shares, sell S Alam Group's seized ones

Islami Bank PLC is set to raise Tk 200 billion from the stock market by issuing new shares.

Besides, shares belonging to S Alam Group, which were seized by Bangladesh Bank (BB), will be sold to investors to generate capital, aiming to bolster money circulation and alleviate the ongoing cash crunch.

Islami Bank Chairman Obaidullah Al Mansur made the announcement during a press conference held at the central bank on Monday. BB Governor Dr Ahsan H Mansur was present.

The governor highlighted that the S Alam Group had taken 80% of Islami Bank's loans after taking over ownership in 2017.

"Considering its assets, Islami Bank is larger than 10 other problem-prone banks combined. Once Islami Bank makes a turnaround, it will create significant space for the economy to recover," Dr Mansur said.

Chairman Al Mansur said that S Alam Group's activities had severed the bank's correspondence relationships with foreign banks and the original foreign sponsors of the bank. "The current board has re-established communication with the former foreign sponsors from the Middle East and IFC to strengthen their involvement with the bank," he added.

Efforts have also been made to recover Islami Bank's assets from companies linked to S Alam Group, including opening Letters of Credit (LCs) with a 100% LC margin requirement.

He said that S Alam Group and S Alam Limited are separate entities.

BB Governor Dr Mansur reiterated the government's policy of not shutting down companies, regardless of ownership, as investments and employment generated by these entities are vital for the economy.

"All these industries contribute to GDP and economic growth, so the central bank is focused on ensuring the production sector continues to operate smoothly," Dr Mansur stated.

Chairman Al Mansur expressed optimism about Islami Bank's future, saying, "The bank will be stronger than before within the next two years."