The Bangladesh Bank on Thursday appointed five independent directors to Islami Bank Bangladesh after seizing all shares held by previous board members connected with S Alam Group.
The central bank issued a notification in this regard on the day giving them the responsibility of running the troubled bank.
The newly formed board of directors consists of five independent directors, with former Rupali Bank managing director and chief executive officer Md Obayed Ullah Al Masud appointed as the board鈥檚 chairman.
The other board members are former Bangladesh Bank executive director Mohammad Khurshid Wahab, former Al-Arafah Islami Bank PLC deputy managing director Md Abdul Jalil, former Dhaka University professor M Masud Rahman and chartered accountant Md Abdus Salam.
Over 82 per cent of Islami Bank鈥檚 shares are held by S Alam Group and its associates, often under anonymous and forced acquisitions.
According to Dhaka Stock Exchange data, Islami Bank has a total of 1.6 billion shares, of which 82 per cent, valued at Tk 5,162 crore at current market rates, were acquired by the group.
At a press conference on Wednesday, Bangladesh Bank governor Ahsan H Mansur said that the government would not take over the operations of these banks.
Instead, independent directors would be temporarily appointed and any shareholders, excluding S Alam Group, holding more than 2 per cent of shares and deemed capable might join the board in future.
Therefore, share prices of Islami Bank hit upper limit of the circuit breaker on Thursday as several individuals rushed to purchase the bank鈥檚 shares to hold 2 per cent shares and became a board member
Mansur announced that nearly all of Islami Bank鈥檚 shares were held by the S Alam Group and its connected individuals.
He said that all the other banks would gradually be freed from S Alam鈥檚 control amid seizure of all of their shares under government control.
The Bangladesh Securities and Exchange Commission has already restricted the transfer or sale of shares in six banks controlled by the group.
On August 20, the commission imposed the restriction on 26 individuals and 56 companies linked to the S Alam Group.
The Bangladesh Financial Intelligence Unit also froze bank accounts of S Alam and his family members on August 18.
In 2017, S Alam Group took control of Islami Bank, allegedly with the help of a state agency, on the pretext of ousting individuals linked to Jamaat-e-Islami.
The government agency oversaw the whole operation when some individuals were forced to sign documents to facilitate the transfer of the bank鈥檚 ownership.
Over the past seven years, the group allegedly took Tk 75,000 crore from the bank under various anonymous names, accounting for half of the bank鈥檚 total loans.
Sources revealed that these loans were taken without following standard banking rules by companies linked to S Alam Group chairman Saiful Alam, his wife Farzana Parveen, his son Ahsanul Alam, their relatives and employees.
Ahsanul Alam was the current chairman of Islami Bank.
Since 2017, S Alam Group, backed by the government, has also gained control of five other banks in a similar manner. These banks are Social Islami Bank, First Security Islami Bank, Union Bank, Global Islami Bank and Bangladesh Commerce Bank.
On May 7 this year, the BB also handed over control of National Bank to individuals connected with the S Alam Group.
The BB restructured the board of the bank on August 20 to free it from S Alam鈥檚 control.
The group, with the support of former governors Abdur Rouf Talukder and Fazle Kabir, reportedly withdrew about Tk 2 lakh crore from the banking sector.
Most of these loans were siphoned off and never used for business within the country, BB officials said.
