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Bangladesh's Islamic Banks Surge as Merger Optimism Returns

After months of decline, Islamic banks in Bangladesh are rallying. A merger could create the country's largest Islamic bank, sparking renewed investor confidence.

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2 min read
This is a black and white image. I can see groups of people walking. I can see few people standing....
This is a black and white image. I can see groups of people walking. I can see few people standing. These are the dresses hanging to the hangers. I can see the shops. This looks like a bucket. These are the buildings with windows. This looks like a name board. I think this is the market. At the very right corner of the image, I can see the watermark.

Bangladesh's Islamic Banks Surge as Merger Optimism Returns

Bangladesh's stock market today has seen a resurgence in optimism as shares of five Islamic banks slated for merger rebounded strongly over the past three trading sessions. The Bangladesh Bank, the central bank, is likely to lead negotiations regarding the treatment of bank write-offs and fair treatment of shareholders. Market turnover rose by 6.2% to Tk599 crore, indicating renewed activity.

Social Islami Bank surged by 29% to Tk4 per share, leading the pack of Islamic banks that saw significant gains. Exim Bank climbed 27.58% to Tk3.70, First Security Islami Bank jumped 26.31% to Tk2.40, Global Islami Bank rose 21.42% to Tk1.70, and Union Bank advanced 20% to Tk1.80. This turnaround comes after months of steep decline since August, when the Bangladesh Bank announced plans to consolidate the five lenders into a single Islamic bank. During this period, Exim Bank plunged 54.68%, First Security Islami Bank dropped 57%, Social Islami Bank tumbled 63.52%, Global Islami Bank slid 55%, and Union Bank fell 50%. The new bank will hold assets worth an estimated Tk2.20 lakh crore, with Tk35,000 crore in paid-up capital sourced from government funds, the deposit insurance fund, and multilateral lenders. Optimism has resurfaced as discussions are underway with the Bangladesh Securities and Exchange Commission (BSEC) on handling the delisting of these banks and ensuring fair treatment of shareholders. The DSEX, the key benchmark, inched up 9 points to end at 5,390, while Chittagong's bourse also ended in positive territory, with the CSCX up by 2.9 points and CASPI higher by 11.5 points.

The rebound in shares of the five Islamic banks signals renewed confidence in the stock market today, despite lingering uncertainty. As negotiations continue regarding the merger and the treatment of shareholders, investors await further developments. The strong performance of the market indices indicates a positive outlook, with the DSEX and CSCX both closing in the green.

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