BB wants to rescue weak ICB Islami Bank

The Bangladesh Bank is going to take action to support the weak ICB Islami Bank as the bank is facing various problems due to its high amount of bad loans, capital shortfall and losses.

As part of the move, the central bank plans to sign an MoU (memorandum of understanding) with the bank soon to improve its financial health, according to high officials of the central bank.

On Monday, Bangladesh Bank Governor Abdur Rouf Talukder met with the high official of the problem bank including its managing director at the Bangladesh Bank’s headquarters in Motijheel. Other high officials of the central bank were present at the meeting.

Bangladesh Bank Executive Director and spokesperson Md Serajul Islam told the Business Post that the central bank governor met with high officials of the ICB Islami Bank and held discussions aiming to improve its health.

The meeting discussed how to reduce the bank’s high amount of bad loans, meet its capital shortfall and reduce its losses, said a high official of the central bank who attended the meeting.

After being asked, ICB Islami Bank Managing Director and CEO Muhammad Shafiq Bin Abdullah told The Business Post that they met with the Bangladesh Bank governor but are yet to sign an MoU. A central bank official said that the central bank will fix a deadline to improve the financial indicator and governance of the troubled banks. On the other hand, the troubled banks must submit their progress report to the central bank from time to time, he added.

The central bank will appoint coordinators in the banks to figure out how improvements can be made, as per the Bangladesh Bank’s high officials.

At the end of June of this year, the ICB Islami Bank’s non-performing loans stood at Tk 680.26 crores, which is 82.62 per cent of the total disbursed loans.

At the same time, the weak bank faced Tk 1659.47 crores capital shortfalls.

Out of 33 branches of the bank, 18 branches are facing losses and the bank’s expenses are more than double its income, as per its financial statement.

The Bangladesh Bank recently signed MoUs with four banks- National Bank of Pakistan, National Bank, Bangladesh Commerce Bank, and Padma Bank to improve their financial health. The central bank identified 10 weak and problematic banks and the regulator will sign MoU with those banks in phases.