ICB Islamic Bank to cause more pain if allowed to function

The beleaguered ICB Islamic Bank's accumulated losses surpassed Tk 20 billion by the end of 2023.
It has been in the red for long, and with time, instead of making any financial recovery, it piled up losses, intensifying the wounds.
As a result, the bank has emerged as one of the weakest banks, according to the Bangladesh Bank, based on four factors -- classified loans, capital adequacy, loan-deposit ratio, and provisioning or security reserves.
A bank official blamed the baggage inherited from its antecedent for current financial woes.
"ICB Islamic Bank should be liquidated as soon as possible," said Dr Ahsan H. Mansur, executive director of the Policy Research Institute of Bangladesh.
That may pose a risk to bank depositors, who are yet to be paid back.
According to Mr Mansur, allowing the bank to continue to operate will only cause more damage. "Today or tomorrow, the government will have to pay its depositors," he said.
The private commercial bank's losses jumped 124 per cent year-on-year to Tk 565 million in 2023, according to a stock exchange filing on Sunday.
The Shariah-compliant bank's net asset value per share reached Tk 19.36 in the negative in 2023 from Tk 18.51 in the negative in 2022.
Almost 87 per cent or Tk 6.87 billion of the bank's investments were classified by the end of 2023, the second highest among all banks that are operating in Bangladesh, shows the data of the Bangladesh Bank.
Earlier, the bank's auditor raised a red flag.
Examining the financial report for 2022, the auditor pointed out the lender's absurdly high negative capital adequacy ratio of 139 per cent while the minimum requirement is 12.50 per cent.
"These events or conditions, along with other matters, indicate that a material uncertainty exists that may cast significant doubt on the bank's ability to continue as a going concern," said its auditor.
Meanwhile, the central bank made an attempt to save the bank, which went in vain.
The BB in June 2006 dissolved the board of directors after detecting incidents of massive corruption.
To safeguard the interest of depositors, the central bank took over the board's full control and appointed a Bangladesh Bank executive director as the bank's administrator.
In August 2007, the central bank floated a tender to sell the majority of the bank's shares. Two bidders participated in the tender, leading to Swiss ICB Group walking away with the stake. The bank was renamed as ICB Islamic Bank in 2008.
The bank's irrecoverable state surfaced at a time when the BB's plan of mergers between weak and strong banks is making headlines. Most of the well-performing banks do not want to take the liabilities of weak banks.
Mr Mansur said the government should dissolve the board of ICB Islamic Bank immediately and ensure punishment of the people responsible for deteriorating the bank's financial condition.
On the pretext of complying with Shariah law, many banks have committed loan irregularities and they should be shut permanently, he added.
Meanwhile, the bank stock has traded at far below the face value of Tk 10 each share for years.
The stock price plunged 2.44 per cent further on Sunday to Tk 4 per share. The persistent share price fall dragged the bank's market value to Tk 2.72 billion whereas its paid-up capital is Tk 6.64 billion.

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