Bangladesh Bank has laid out a clear two-phase mechanism for depositors of five merging Shariah-based banks to recover their funds, prioritising small savers and ensuring the security of all deposits as the banks are consolidated into a single new entity.

Governor Dr Ahsan H Mansur provided the assurance while to UNB on Thursday, urging depositors to have ‘nothing to worry about’ as the central bank is committed to safeguarding their money.

No Compensation for Shareholders

Dr Mansur said the shares held by sponsor shareholders and general investors in the five banks undergoing merger will be valued at zero. No compensation will be provided to any shareholder.

“The net asset value (equity) of the five banks has now reached a negative state,” the Governor explained, adding that the maximum deficit, against the Tk 10 face value per share, stands at Tk 450, effectively rendering the shares worthless.

“Neither the sponsor shareholders nor the general investors will receive any compensation. Their investment equity has been wiped out due to the substantial deficit,” Dr. Mansur added.

However, while the shares currently hold zero face value, profits generated by the merged entity in the future will be distributed, according to central bank officials involved in the merger policy.

The five Shariah banks -- the five banks declared 'non-viable' and placed under the merger plan are First Security Islami Bank PLC, Global Islami Bank PLC, Union Bank PLC, EXIM Bank PLC and Social Islami Bank PLC (SIBL) -- are being merged into a single institution under a central bank decision aimed at stabilising the sector.

While depositors’ funds are fully protected, shareholders will bear the full impact of the banks’ negative equity, officials said.