A banking-sector overhaul recipe designed as mergers and acquisitions gets into gear with the crisis-stricken First Security Islami Bank (FSIB) first agreeing to accept the bailout.
Officials said the struggling unconventional bank's high-ups led by its Chairman Mohammad Abdul Mannan shared their decision at a meeting with Bangladesh Bank Governor Dr Ahsan H, Mansur and four deputy governors of the central bank on Tuesday at the BB headquarters.
The central bank asked the shariah-based commercial bank's top brass to give their feedback regarding the banking regulator's ongoing mergers move targeting five such unconventional banks where the liquidity crisis is "too severe" to pay back the depositors because of unprecedented rise in NPLs or non-performing loans.
Emerging from the meeting, FSIB Chairman Mr. Mannan said Bangladesh Bank presented an assessment of FSIB's fundamentals at the meeting with the governor, and that its findings were consistent with reports by an overseas auditor and the bank's own audit teams.
"There were no differences between the findings," he said.
He alleged that entities linked to the embroiled S Alam Group had "taken away" about Tk 380 billion worth of the bank's assets under various names in accordance with the findings in the bank's own audit reports.
A senior FSIB official, speaking on condition of anonymity, says the bank's board has already decided to proceed with a merger in line with the central bank's suggestion and conveyed that decision during the meeting.
A recent asset-quality-review report from Bangladesh Bank, dated 26 August, reveals that 99.5 per cent of FSIB's loans had gone bad by September 2024.
According to FSIB's latest reports, some recovery has been made, with nearly Tk30 billion of outstanding loans rescheduled over the past nine months.
Notwithstanding these salvage efforts, the default rate remains extremely high, with 95 per cent of the loans classified as non-performing at the end of June 2025.
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