BB's NAV disclosure contradicts Islamic banks' claims

Investors misled

BABUL BARMAN AND FARHAN FARDAUS | Published: November 07, 2025 00:08:49

There is a huge gap in the net asset value (NAV) between what the troubled Islamic banks reported in their latest financial statements and what the Bangladesh Bank announced when it dissolved their boards on Wednesday.
BB Governor Ahsan H. Mansur, at a press briefing, said the NAV of the banks -- First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, and Exim Bank -- was negative, ranging between Tk 350 and Tk 420 per share. The merger of the banks began as the BB appointed administrators following the dissolution of the boards.
The new bank is called Sammilito Islami Bank.
Before the merger, however, four out of the five banks, excluding Global Islami Bank, reported positive net asset values -- two of them updated data until September this year, one until June this year, and one until September last year.
This is the backdrop to the BB chief declaring that the NAV of the bank shares had turned zero, and therefore shareholders were not going to receive anything from their investments in the bank stocks.
Meanwhile, the Dhaka Stock Exchange (DSE) suspended trading in the shares of the banks on Thursday. The day before, the total market capitalization of the stocks stood at Tk 13.2 billion.
Market analysts insist that investors had the right to know the real financial strength of the banks, which were listed on the stock market, before decisions such as suspension of share trading were made.
They argue that the latest financial statements published by the banks gave a wrong impression if the BB's claim about NAV is correct.
"As there is a public interest associated with the listed companies, information should have been disclosed more carefully and in a transparent way so that investors didn't get misguided," said Salim Afzal Shawon, head of research at BRAC EPL Stock Brokerage.
Proper and timely disclosures help investors take prudent decisions regarding investment, said Mr. Shawon, adding that the BB disclosed the grim picture of NAV just the day before share trading was suspended.
Saiful Islam, president of the DSE Brokers Association, emphasized the need for ensuring protection of retail investors.
"Institutional investors are capable of assessing risks to understand the actual situation, but retail investors rely on the statements officially approved by the authorities," said Mr. Islam.
The sudden disclosure of negative NAV caught retail investors off guard, he added. "Since general investors are not at fault, their shares should not be nullified."
Currently, general investors, institutions, and foreigners together hold between 45 per cent and 94 per cent of the banks' shares.
"I am deeply shocked. It's good that depositors are getting their money back, but my investment was also legal. Why shouldn't I be able to recover my money too?" said A. S. Chowdhury, who has invested in some of the bank stocks.
"I usually invest in shares for the long term - some stocks in my portfolio have been with me since their IPOs, and I only withdraw dividends," he added.
Many questions, no answers
The merger process has begun, raising many questions.
Investors are confused about whether the new bank will be listed or whether the Islamic banks will be delisted from the bourses.
Meanwhile, aggrieved by the consequences of the merger process, a group of retail investors staged a demonstration in front of the old building of the Dhaka Stock Exchange in the capital's Motijheel on Thursday after the day's trading session.
"If [the banks are] delisted, there will be a huge negative impact on the overall stock market," said Mr. Shawon of BRAC EPL, adding that delisting would also create a negative impression among foreign investors, as four out of the five banks have foreign stakes.
Abul Kalam, director and spokesperson of the Bangladesh Securities and Exchange Commission, told The FE, "We are working to protect the interest of general investors."
Earlier, the securities regulator wrote to the central bank, urging it to ensure the protection of the interests of general investors.
"Our stance remains the same," said Mr. Kalam in a telephonic conversation on Thursday.
Meanwhile, the central bank issued a statement, saying that the government is considering compensation for retail investors.
Post-merger largest bank
The post-merger entity is going to be one of the country's largest banks, requiring about Tk 352 billion. Of this, Tk 202 billion will come from the government, while Tk 150 billion will be mobilized from institutions and through the conversion of institutional deposits.
Among the five banks, four had been under the control of the controversial S. Alam Group until August 5 last year, while EXIM Bank was managed by Nazrul Islam Mazumder, founder of Nassa Group. Both Mr. Alam and Mr. Mazumder had strong ties to the previous regime and wielded significant influence in the banking sector.
Three of the banks had non-performing loan ratios above 90 per cent, underlining the urgent need for intervention. To avoid legal troubles, the Bank Resolution Ordinance-2025 gave extensive powers to the Bangladesh Bank for mergers and acquisitions.