16,000 Employees Face Salary Cuts as Troubled Lenders Get Fresh Tk 350 Cr Lifeline

Five struggling shariah-based banks First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, and EXIM Bank which are soon to be merged into the new Sammilito Islami Bank PLC, are likely to implement cuts in employee salaries and benefits due to their severe financial distress.

The central bank (Bangladesh Bank) approved a fresh Tk 350 crore in liquidity support for the five banks today, exclusively earmarked for paying employee salaries.

This approval followed a meeting with the banks' administrators, who had initially sought around Tk 1,000 crore for salary and allowance payments.

This latest disbursement brings the total liquidity support extended by Bangladesh Bank to these five lenders since the installation of the interim government to a massive Tk 35,300 crore, none of which has been repaid.

During the meeting, Governor Ahsan H Mansur reportedly asked the administrators to reduce salaries and other benefits to address the weak financial condition of the lenders.

The salary cuts are expected to be implemented soon across the five banks, which collectively employ about 16,000 staff members.

Employees are already facing severe financial stress; an Union Bank employee reported that while they receive salaries in their accounts, they cannot withdraw or use the funds immediately.

Financial Mismanagement: Bangladesh Bank's records indicate that these banks are paying staff salaries from depositors' funds. First Security Islami Bank is cited as an example: as of December last year, it recorded a negative operating income of Tk 4,308 crore against salary and allowance expenses of Tk 652 crore. The bank posted a net loss of Tk 5,450.15 crore last year, underscoring the severity of the crisis and "serious governance failure" noted in a central bank inspection.

Earlier this month, Bangladesh Bank granted initial approval for the formation of Sammilito Islami Bank PLC, the new state-owned entity resulting from the merger of the five troubled banks.