Dissolving board was timely, prudent: ABB

Association of Bankers, Bangladesh (ABB) has welcomed the central bank’s decision to dissolve the existing board of directors of Islami Bank Bangladesh PLC, describing the move as a timely and prudent step to restore stability across the financial sector.

A statement issued on Monday from the office of ABB Chairman and Managing Director of City Bank, Mashrur Arefin, expressed relief over the central bank’s intervention, noting that the ongoing crisis at Islami Bank had spiraled beyond a single institution and threatened the broader banking industry.

According to the release, the apex body of bank executives had formally conveyed its deep concerns to the Governor of Bangladesh Bank on June 10, warning of the systemic risks associated with the unfolding situation.

We conveyed that an early resolution would be beneficial for the industry, as the situation at Islami Bank was no longer an issue concerning a single institution; its impact was being felt across the banking sector, the ABB statement said.

Given that the dispute had acquired severe political overtones, the association had previously advised the regulator to seek a resolution through dialogue and consensus among relevant stakeholders.

In this context, we believe the decision taken yesterday by the central bank is commendable. We hope it will restore stability at Islami Bank and rebuild the confidence of its depositors, investors, and stakeholders, the statement added.

Highlighting the massive footprint of the country’s largest private commercial bank, the ABB emphasised that the stability of Islami Bank is inextricably linked to the national economy.

The bank boasts nearly 30 million customers, a vast deposit and investment portfolio, the nation’s largest remittance network, and a commanding share in international trade finance.

The association pointed out that recent “mob-driven protests” at the bank’s headquarters triggered widespread anxiety within the financial fraternity regarding institutional governance, liquidity preservation, and the confidence of both domestic depositors and foreign investors.

The ABB expressed optimism that the appointment of an interim authority would allay these pressing concerns.

The bankers’ association outlined critical expectations for the revitalized institution, calling for substantial progress in establishing robust good governance, strict accountability, a banking environment entirely free from political influence, and the aggressive recovery of the bank’s massive volume of non-performing loans (NPLs).