SIBL seeks to break away from Sammilito Islami Bank

Social Islami Bank Limited (SIBL) has applied to Bangladesh Bank seeking to exit the merged state-owned Sammilito Islamic bank formed by combining five troubled lenders and to re-establish itself as a separate entity, in the first such move just four months after the merger on 21 December last year.

The application was submitted today (27 April) by the bank’s sponsor director and former chairman, Rezaul Haque. Former board director Zavedul Alam Chowdhury said, “We have applied under Section 18(ka) after the Bank Resolution Ordinance was enacted into law,” adding that the application was made on behalf of the previous board with the consent of its members.

Bangladesh Bank spokesperson and Executive Director Arif Hossain Khan said the proposal would be considered in accordance with the law once it is forwarded to the relevant department, adding that it was too early to comment further.

The merged entity was formed by combining five crisis-hit Shariah-based banks – EXIM Bank, First Security Islami Bank, Global Islami Bank, Union Bank and SIBL – amid concerns over money laundering, high non-performing loans and liquidity shortages.

At the start of the process on 5 November, Bangladesh Bank declared the shares of the five banks zero and classified them as “non-functional.” Then governor, Ahsan H Mansur, said the shares had turned negative when liabilities were assessed against assets, and were written down in line with international standards.

Later, when the ordinance was enacted into law, Section 18(ka) was incorporated, allowing former shareholders to re-enter, under which SIBL has now sought separation.

In its application, the bank proposed separation along with fresh capital injection, liquidity improvement and restoration of discipline in management. It said steps would be taken to reduce risky assets, strengthen recovery of defaulted loans and reinforce the capital structure.

The proposal states that, if given responsibility, the bank would reduce its non-performing loan ratio to 25% by December this year. It also plans to reactivate 22 suspended government accounts to recover around Tk500 crore.

SIBL has also sought Tk11,000 crore in liquidity support from Bangladesh Bank over the next 10 years. The application was signed by former directors Hakim Md Yusuf Harun Bhuiyan, Sultan Mahmud Chowdhury, Afia Begum and Zavedul Alam Chowdhury.