Five Islamic banks set for merger have received initial approval, known as a Letter of Intent (LoI), from the Bangladesh Bank (BB) to operate under the name United Islami Bank.

The LoI was sanctioned today (9 November) during a special virtual board meeting of the central bank.

The merged entity will see Nazma Mobarek, secretary of the Financial Institutions Division under the finance ministry, appointed as the new chairman of its board, officials said. The board will also gain seven new directors: five representing the government and two from the private sector.

The central bank's decision followed an application submitted by the Financial Institutions Division last Wednesday seeking the LoI and the final licence.

A senior Bangladesh Bank official said, "The LoI was approved during an online board meeting presided over by Governor Ahsan H Mansur."

The official added, "We have issued the LoI. Now, the authorities must obtain approval for the name from the Registrar of Joint Stock Companies and resubmit it to the central bank to receive the final licence to commence banking operations."

A Bangladesh Bank executive director told TBS that the tenure of the newly appointed board will be a maximum of six months to one year. Following this period, the administrators appointed by the central bank to the five existing banks will conduct a full verification of all assets and liabilities before operations transition to the new bank.

"Subsequently, the Bangladesh Bank will appoint a chairman and a managing director (MD) from experienced market professionals, and the bank will be run independently," the executive director said.

Earlier, on 5 November, the Bangladesh Bank took control of the five Islamic banks – First Security Islami Bank, Global Islami Bank, Union Bank, Exim Bank, and Social Islami Bank – declaring their existing boards defunct and appointing five central bank officials as administrators in each. The managing directors of those banks were also asked to resign.

Among them, Exim Bank was under the control of Nazrul Islam Mazumder, then chairman of the Bangladesh Association of Banks (BAB), while the remaining four were controlled by S Alam Group chairman and controversial businessman Saiful Alam.

Governor Mansur told reporters last week that the merged entity would become the largest bank in Bangladesh, assuring depositors that their funds remain secure. He emphasised that, while the new bank will be state-owned, it will be run under private-sector management. Employees will receive market-based salaries, and depositors will enjoy competitive profit rates.

According to central bank data, United Combined Islami Bank will have an initial paid-up capital of Tk35,000 crore, of which Tk20,000 crore will be provided by the government and Tk15,000 crore will be converted into shares for depositors.

Bank merger