A growing cloud of uncertainty surrounds the fate of general shareholders in five troubled Islamic banks undergoing a government-backed merger, as conflicting statements from regulatory and governmental authorities have left investors in limbo.
The banks involved – First Security Islamic Bank, Social Islami Bank (SIBL), Exim Bank, Global Islamic Bank, and Union Bank – are slated to be consolidated into a single, commercially operated Sharia-compliant institution, tentatively named either “United Islamic Bank” or “Sammilita Islami Bank.”
The merger, approved by the Advisory Council of the interim government on October 9, aims to stabilise the financial sector by consolidating institutions with significant non-performing loans and negative equity.
Yet, the question of whether ordinary shareholders will receive any compensation for their holdings remains unresolved – and increasingly contentious.
Contradictory statements fuel investor anxiety
On November 5, Bangladesh Bank Governor Dr Ahsan H Mansur held a press conference stating that the equity value of shares in the five banks had fallen below zero, effectively rendering them worthless. “No compensation will be given to anyone,” he declared.
The announcement triggered an immediate sell-off in the stock market, with share prices of the affected banks plunging further.
However, the very next day, November 6, Bangladesh Bank issued a clarifying notification: “The government may consider compensating small shareholders.” The reversal, though brief, reignited hope among retail investors – many of whom hold small parcels of shares as long-term savings.
This ambiguity persisted into Tuesday’s meetings of the Advisory Council Committees on Government Purchase and Economic Affairs at the Cabinet Division. Financial Adviser Dr Salehuddin Ahmed, when pressed by journalists, offered no definitive answer.
“Let’s see what can be done about them,” he said, when asked directly about compensation.
Pressed further, he deferred to Bangladesh Bank: “This is a question for Bangladesh Bank.”
When journalists pointed to the bank’s earlier statement that shares were valueless, Dr Salehuddin responded: “What the Governor said is not the final word. The final word is that the government will see.”
The Ministry of Finance, meanwhile, has attempted to reassure the public. On October 12, it issued a formal notice denying claims that investors would be harmed by the merger, asserting: “The government has not taken any decision that would harm the interests of investors. The government is seriously examining the interests of investors in the process of merging banks.”
Legal challenge filed in High Court
Amid the regulatory confusion, legal action has been taken. On Tuesday, Barrister Mahsib Hossain filed a writ petition in the High Court on behalf of Shahidul Islam, a retail investor and shareholder of Exim Bank.
The petition names the Secretary of the Ministry of Finance, the Governor of Bangladesh Bank, and both the Dhaka and Chittagong Stock Exchanges as respondents. It seeks an urgent court order to preserve shareholders’ rights, demanding that their existing shareholding ratios be honoured in the formation of the new merged entity.
“This is not merely about compensation – it is about the rule of law and the protection of property rights,” said Barrister Hossain, confirming the filing to Jagonews.
The writ argues that while the government may have the authority to restructure failing institutions, it cannot unilaterally nullify equity without due process or compensation, particularly when the state is actively facilitating the merger.
Regulatory silence and market impact
The lack of a unified, transparent policy has eroded investor confidence. Analysts warn that continued ambiguity could deter future retail participation in the capital markets and damage Bangladesh’s broader financial credibility.
Market observers note that the shares of the five banks have traded at minimal volumes since early November, with many investors holding in suspense, awaiting clarity – or a court ruling.
What’s next?
With the High Court now involved, and the government yet to issue a definitive policy, the path forward remains uncertain. While the Bangladesh Bank and Ministry of Finance continue to state that the matter is “under consideration,” investors are left with no clear timeline or criteria for potential compensation.
For now, the only certainty is this: the merger process will proceed – but whether those who invested in these banks will be left with nothing, or granted a fair resolution, remains a question for the courts and the cabinet to answer.