Two years of profit to be cut from deposits of five merged banks as per central bank directive

Staff Reporter | PNN

Bangladesh Bank has taken a major decision affecting depositors of five private banks undergoing a merger. According to the central bank’s new directive, no profit will be calculated on deposits of these banks for the years 2024 and 2025. The decision is being implemented by applying a “haircut” on deposits in line with international bank resolution principles.

On Wednesday, Bangladesh Bank informed the administrators of the five banks of the decision through official letters. At the same time, it instructed that all deposit accounts be recalculated. The five banks undergoing merger are First Security Islami Bank, Global Islami Bank, Union Bank, EXIM Bank, and Social Islami Bank. These five banks will merge and begin operations under the new name “Somonnito Islami Bank.”

Central bank officials said that during the two years in question, the banks collectively incurred significant losses, making it impossible to pay profit on deposits. Currently, these banks offer profit-based deposits at rates ranging from 7 to 9 percent. Under the new decision, deposit balances will be recalculated by excluding the profit that was added or was supposed to be added from January 1, 2024, to December 28, 2025.

Bangladesh Bank data shows that approximately 7.5 million depositors have deposits totaling around Tk 1.42 trillion in these five banks. In contrast, the total loan amount stands at around Tk 1.93 trillion, a large portion of which has already been classified as non-performing. The central bank believes this financial imbalance is one of the main reasons for taking strict measures under the resolution scheme.

The letter further states that to ensure balanced implementation of the resolution process, final calculations must be based on deposit balances as of December 28, 2025. Bank administrators have been instructed to update all accounts within the stipulated time and submit reports to the central bank.

As a result of this decision, depositors will lose profits earned over the past two years, and the actual value of their deposits will decrease. Earlier, the share prices of these five banks were reduced to zero, causing entrepreneurs and general investors to lose their share investments.

Analysts believe that while such decisions are difficult for depositors in the short term, they may help restore confidence in the financial system in the long run. However, attention is now focused on what additional measures will be taken to protect depositor interests during this process.