Sponsors, general shareholders of 5 merged Islamic banks now empty handed: Governor
Bangladesh Bank Governor Ahsan H Mansur has said the shares held by sponsor directors and general shareholders of the five Islamic banks that have been merged are now valued at zero.
The governor said, "Shareholders will not get compensation as net asset value against Tk10 face value became a negative maximum Tk450 of each bank," he explained.
As a result, the share value is considered as zero value for both sponsor shareholders and retail shareholders, he said on Wednesday (5 November) during a press briefing at the central bank.
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On the same day, the existing boards of the five Islamic banks were dissolved, and administrators were appointed on behalf of Bangladesh Bank.
The governor assured that employees of five banks will not lose their jobs at this time. The bank will be run by the government but each bank will operate as a private bank until the final merger into one bank.
Last month, when asked whether general investors would be compensated for their shares, Finance Adviser Salehuddin Ahmed told TBS, "It is certain that investors will get their due money back. But these investors are equity holders. What will happen in their case – I will not comment on that right now."
Mohammed Nurul Amin, an independent director and chairman of the Board of Directors of Global Islami Bank, had said, "In a bank merger, depositors and preferential shareholders are given priority. Ordinary shareholders or general investors in listed companies usually receive nothing. However, there are rules for compensating those ordinary investors."
He added, "Investors have demanded either compensation or shares in the new bank that will be formed. Discussions are ongoing regarding how to compensate the investors."
Commenting on the continuous decline in share prices, he said, "Banks that cannot return depositors' money are kept running only through liquidity support from the central bank. But due to the merger, even that support has been stopped. The banks are also failing to recover defaulted loans, so the operations of some banks have effectively come to a halt. Under these circumstances, share prices are bound to fall."
A senior central bank official said, "According to the Bank Companies Act, when a bank comes under a merger, there is no provision for returning funds to capital market shareholders."
The official further added that a meeting was recently held with the chairman of the Bangladesh Securities and Exchange Commission, the governor of Bangladesh Bank, and officials from the Bank Resolution Department.
