Mega merger of five troubled Shariah banks faces legal hurdles, political risks

The government’s initiative to merge five weak Shariah-based banks into a larger Islamic bank has run into a series of challenges, including legal complications, and unless these issues are resolved, the merger process risks stalling. Bangladesh Bank has begun seeking legal solutions on questions such as how administrators will function in the banks, how depositors and stock market shareholders will be protected, and whether the merger can be completed before a political government takes office. Under the Bank Company Act, if the banks are merged rather than liquidated, depositors must be repaid in full, requiring the government to ensure sufficient funds. At the same time, the Bangladesh Securities and Exchange Commission (BSEC) rules stipulate that the interests of ordinary investors...