Sammilito Islami Bank may onboard foreign investors

The Bangladesh Bank (BB) wants to bring in strategic foreign investors for the new shariah-based Sammilito Islami Bank, which is being created through the merger of five troubled Islamic lenders, according to BB Governor Ahsan H Mansur.

Days after the central bank gave the preliminary approval for the new bank, the governor said today that the process is underway.

At the inauguration of the Bangladesh Islamic Finance Summit 2025 at Sheraton Dhaka, he said the new bank will be strong after a fresh public fund injection. It will begin the journey as a publicly owned institution.

"We would like to be handing over to strategic international investors as well as an eventual IPO [initial public offering]," he said in his speech as the chief guest. "That process is on."

Mansur said he expects Sammilito Islami Bank to become the strongest in terms of financial position. It will start with the highest level of capital in the sector, with paid-up capital of Tk 35,000 crore.

He hoped it could turn a profit even in its first year because of the large injection of liquidity.

A week earlier, the central bank sent letters to First Security Islami Bank, Union Bank, Global Islami Bank, Social Islami Bank and Exim Bank, informing them of the decision to merge the five commercial lenders under the Bank Resolution Ordinance 2025.

Administrators have already been appointed to carry out the process, after which the merged entity will operate as Sammilito Islami Bank.

During the process, the BB said the shareholders of the five lenders would receive nothing because the net asset value of those banks was already negative.

On fund injection, Mansur said Islamic banking had been the biggest casualty of plundering in the banking system over the past 15 years. The government, therefore, had to step in to protect the lenders.

He said that if governance improves, depositors will respond positively and stay with the bank, just as depositors of Islami Bank Bangladesh have done. "Let it grow."

The governor said Islamic banking in Bangladesh had been substantially damaged, although it remained resilient and would prove that resilience in the coming years.

He urged the sector to follow global best practices and maintain transparency to help Islamic finance contribute to economic growth and social justice.

He said the sector needs to think beyond crore banking businesses alone and include Islamic insurance, non-bank Islamic financing and digital banking in its vision for the future.

At the event, Mesbaul Asif Siddiqui, deputy managing director of City Bank, said sharia banking is an interest-free, value-based system and any compromise in these principles could cause serious harm.

He said the 1980s saw the rise of Islamic banking in Bangladesh, while recent years had seen a decline. The main cause was what he said, "a compromise of values"

Siddiqui said global Islamic finance assets stand at $4 trillion across 80 countries. Sukuk, capital markets and asset management are key pillars of the industry.

In Bangladesh, he said, bond and capital markets remain small and underdeveloped.

Senior officials from Islamic financial institutions and members of shariah boards spoke on the first day of the summit.

They said Bangladesh has many scholars capable of contributing to Islamic finance and urged them to place greater focus on the field.