The ambitious initiative to merge five struggling Shariah-based banks into a single entity—Sammilito Islamic Bank PLC—has entered a phase of strategic recalibration.
Following the official merger of Exim Bank, First Security Islamic Bank, Global Islami Bank, Union Bank, and Social Islami Bank (SIBL) on December 21, 2025, the path to full operational integration and financial stability remains complex.
Recent developments, including formal requests from partner banks to reconsider their inclusion, have brought the future structure of the merger into sharp focus.
The primary objective of forming Sammilito Islamic Bank was to consolidate fragile institutions under a unified governance structure, alleviate liquidity constraints, and restore depositor confidence.
However, five months into the process, the transition has proven more intricate than initially anticipated.
While the merger intended to create a robust foundation, the pace of normalizing banking operations has remained steady but slow.
Depositor withdrawals continue to be managed under specific limitations, and the immediate surge in public confidence that policymakers hoped for has yet to fully materialize.
This slow progress has led to internal discussions among stakeholders regarding the long-term viability of the current collective model.
The most significant shift in the narrative occurred when Social Islami Bank Limited (SIBL) formally applied to Bangladesh Bank to exit the Sammilito structure.
This application, spearheaded by former chairman Rezaul Haque, cites Section 18(a) of the newly amended Bank Resolution Ordinance as the legal basis for seeking a separate path toward restructuring.
Reports suggest that Exim Bank is also weighing similar options.
These movements indicate a potential lack of synergy within the merged entity, prompting questions about whether a massive, centralized structure is the most effective way to address the unique distressed assets of each individual bank.
The consolidation was a response to significant financial vulnerabilities across the five participating banks.
At the time of the merger, the combined entity inherited a portfolio where non-performing loans (NPLs) were notably high, with total defaulted loans estimated at nearly Tk150,000 crore.
To maintain stability during this transition, the government and the central bank have provided substantial liquidity support.
While these measures were essential to prevent a systemic collapse, the lack of immediate financial turnaround has sparked a debate among economists.
The central question remains: can a merger succeed if the underlying structural irregularities of the constituent banks are not fully resolved prior to or during the integration?
New legal provisions
The recently enacted Bank Resolution framework offers several paths for distressed financial institutions, introducing a layer of flexibility—and complexity—to the process.
These options include liquidation or the controlled closing of operations, bridge banking where assets are temporarily held by a state-managed entity, divestment to new private or foreign investors, and ownership reversion, allowing former shareholders a pathway to return under strict conditions.
Section 18(a), in particular, has become a focal point of discussion. While it allows for the return of original owners, critics and experts worry that without rigorous oversight, this could inadvertently invite the same management practices that led to the initial crisis.
The future of Sammilito Islamic Bank is not merely a policy matter; it directly impacts 9.15 million account holders and over 15,000 employees.
Maintaining the functionality of branch networks is critical to preventing social unrest.
Currently, many branches report a cautious approach from customers, with a slowdown in new deposits and visible frustration over withdrawal limits.
Branch managers have noted that clear, consistent guidelines from the central bank are the only way to stabilize day-to-day operations and reassure a wary public.
According to sources at Bangladesh Bank, the government does not intend to maintain permanent control over these merged banks.
BB spokesperson Arif Hossain Khan indicated that the state's role is that of a "temporary custodian."
The long-term goal is to stabilize the institutions and eventually return them to the private sector. The government remains open to new investors who are willing to inject capital and take over the management responsibilities of the merged entity.
SIBL’s Reconstruction Proposal: A Test Case
In its proposal to separate from the merger, SIBL has outlined an optimistic restructuring plan. The bank aims to reduce its NPL rate to 25% by December, strengthen its capital base, and reactivate 22 government accounts to recover Tk500 crore.
However, achieving these targets would require a staggering Tk11,000 crore in liquidity support over ten years.
Analysts remain skeptical, noting that such an ambitious turnaround requires unprecedented management discipline in an already tightened economy.
Whether Sammilito Islamic Bank remains a unified entity or is eventually decentralized, experts agree on three essential pillars for any future success:
- Frequent changes in the resolution framework create uncertainty. A long-term, unshakeable roadmap is required to regain market trust.
- Any transition—whether toward merger or separation—must be accompanied by a total transparency mandate to prevent a return to past irregularities.
- The survival of these institutions depends entirely on the recovery of defaulted loans. Without an influx of recovered cash, no amount of organizational restructuring will suffice.