The draft of the White Paper on the State of Bangladesh’s Economy, submitted to the Chief Adviser on Sunday, states that all 10 banks identified as “distressed” by the regulator are technically bankrupt and illiquid.
The report highlights that a banking system’s stability relies on its capital and liquidity, especially in distressed situations.
“We examined the solvency and liquidity of these 10 distressed banks, which include two state-owned banks, heavily impacted by scams over the last decade, and eight extremely weak Shariah-based and conventional private commercial banks,” it states.
The names of the banks were withheld to maintain confidentiality. These 10 banks together account for 33 per cent of total loans and 32 per cent of total deposits in the banking sector.
However, the combined adjusted value of their assets is just 52 per cent of the reported value, resulting in a negative net worth.
The liquidity ratio – measuring liquid assets against tangible assets-shows that eight out of the ten banks are illiquid. All 10 are rated as “Very Weak.”
