FSIB to Merge Under BB’s Reform Plan for Islamic Banks

First Security Islami Bank (FSIB) PLC has formally agreed to merge under the Bangladesh Bank’s (BB) reform-driven merger-and-acquisition initiative aimed at strengthening the country’s struggling Shariah-based lenders.

FSIB Chairman Abdul Mannan confirmed the decision following a meeting with the central bank governor. He said BB had presented a detailed assessment of the bank’s financial fundamentals, which aligned with reports prepared by both an overseas auditor and the bank’s own audit teams. “There were no differences between the findings,” Mannan stated.

The FSIB chairman also alleged that entities linked to S Alam Group had withdrawn nearly Tk 380 billion from the bank’s assets under various names over time. He noted, however, that the claim had not been independently verified.

A senior FSIB official, speaking on condition of anonymity, said the bank’s board had already resolved to move forward with the merger in line with BB’s recommendation and formally conveyed that decision during the meeting.

Part of broader reform drive

The agreement comes as part of Bangladesh Bank’s wider restructuring plan for the country’s financial sector, particularly Islamic banks, several of which have faced liquidity pressures and allegations of mismanagement in recent years. The central bank has been encouraging consolidation as a way to stabilise weaker lenders, restore depositor confidence, and safeguard the overall banking system.

Under the reform plan, the mergers will be closely monitored to ensure that depositors’ interests remain protected. BB has also signalled that it will take a proactive role in overseeing governance reforms within the merged institutions.

Concerns over financial irregularities

The mention of massive asset transfers linked to S Alam Group has once again highlighted concerns over financial discipline and corporate governance in the banking sector. Observers note that effective regulatory oversight will be critical in addressing irregularities and preventing similar crises in the future.

FSIB’s merger decision marks a significant step in the ongoing reform process, and it is expected that other Islamic banks under stress may also follow suit in the coming months.