BB: Govt may consider compensating small investors

The government may consider compensating general investors who are at risk of being affected by the merger of five troubled Islamic banks, the Bangladesh Bank said on Thursday.

A press release by the central bank on Thursday night stated that if any investment is liquidated under the ‘Bank Resolution Ordinance 2025’, and if the shareholders suffer more than their actual losses, then there is a provision to provide compensation equivalent to the additional loss.

The Bangladesh Bank also said that after the resolution process is completed, a decision to compensate shareholders will be taken based on the valuation conducted by an independent professional valuation agency appointed by the central bank.

Earlier, Governor Dr. Ahsan H. Mansur announced at a press conference on Wednesday (November 5) that the share value of the shareholders of the five banks to be merged will now be considered zero.

Since this announcement, general investors have expressed their anger, demanded the resignation of the governor and announced a program to surround Bangladesh Bank.

The next day, Thursday, Bangladesh Bank issued a notification explaining the matter in detail. It said that the ‘Bank Resolution Ordinance’ has been formulated taking into account international best practices and technical assistance and opinions of the IMF, World Bank and FCDO.

The notification further stated that according to the results of the Asset Quality Review (AQR) and special inspection conducted by an international consulting firm, the aforementioned banks are in huge losses and their Net Asset Value (NAV) is negative.

As a result, the meeting of Bangladesh Bank’s Banking Sector Crisis Management Committee (BCMC) held on September 24 decided that the shareholders will have to bear the responsibility for the losses of these banks.

The notification said, “In the current context, there is no immediate opportunity to protect the interests of general investors. However, the government may consider providing compensation in the interests of small investors.”

Earlier, on Wednesday, Bangladesh Bank decided to dissolve the boards of directors of the five banks that are to be merged and appoint administrators. At the same time, the Dhaka Stock Exchange (DSE) on Thursday suspended the trading of shares of those banks until further notice through five separate notifications.

According to Bangladesh Bank, after the merger, the estimated capital of ‘Sammilito Islami Bank’ will be Tk35,000 crore – of which the government will provide Tk20,000 crore and depositors will be given shares worth Tk15,000 crore.

According to the central bank’s letter, in the first phase, after the administrators take charge, each depositor will be refunded up to Tk2 lakh from the ‘Deposit Protection Fund’. Larger depositors will get their money back in phases.

Incidentally, four of these five banks formed during the Awami League government were owned by the owners of the S Alam Group, and one bank was owned by Nazrul Islam Majumder.