No Craft Is Working to Rescue ICB Islamic Bank From Debris and Wreckage

Switzerland-based ICB Financial Group purchased 53% shares of Oriental Bank in 2007 being invited by Bangladesh Bank but the move miserably failed. ICB Financial Group complied with all rules and laws of the auction while investing in this bank. The name Oriental Bank was renamed ICB Islamic Bank at that time. During the same period roughly, a court imposed moratorium on the sale and purchase of Oriental Bank's shares as local investors filed a case and went for a lawsuit. As a result ICB Financial Group could not get hold of Oriental Bank's full control. This phenomenon led to continuous deterioration of the all out plight of ICB Islamic Bank. Bangladesh Bank dissolved ICB Islamic Bank's board of directors very recently and posited the central bank's authority on this bank's operations.

Bangladesh Bank's spokesman Arif Hossain told journalists "ICB Financial Group invested money in this bank with a great deal of enthusiasm but they could not establish full control on the then Oriental Bank due to certain legal barriers. Foreign investors will regain interest to engage money in Bangladesh when legal issues will be settled down through effective measures from the concerned state machineries".

Papers show that Oriental Bank was launched in 1987. It was at that time known as Al Baraka Bank. It became a troubled bank in 1994. Bangladesh Bank introduced the regulation of appointing observers during those years to restore sound management in defective banks. Later on Al Baraka Bank was renamed Oriental Bank and it started operating as a commercial bank in 2004.

Afterwards a broad range of irregularities and disorder affected Oriental Bank and Bangladesh Bank dissolved the board of directors of Oriental Bank in June 2006. The central bank auctioned Oriental Bank's shares in 2007. Switzerland-headquartered ICB Financial Group bought 52.76% shares of Oriental Bank at that time. ICB Financial Group invested around BDT 300 crore to salvage Oriental Bank. ICB Financial Group signed an accord with Bangladesh Bank on buying and selling Oriental Bank's shares in 2008 and the bank was authorized to launch its business on 5 May 2008. As ICB Financial Group was associated with the attempt to rejuvenate Oriental Bank at that time, the bank was renamed ICB Islamic Bank.

Documents show that Bangladesh Bank confiscated the shares of Oriental Bank when two large business conglomerates violated the Bank Company Act and grabbed 86.34% shares of Oriental Bank. Very shortly, 11 individuals and organizations lodged a case against Bangladesh Bank's decision back then. Verdicts on three cases appeared to be convenient for Bangladesh Bank but in the rest of the cases stay orders were placed and all litigants were instructed by court to wait till the final judgement. The people and firms that launched the lawsuit against Bangladesh Bank are Mehedi Hasan, Salman Karim, Prudential Securities, Niaz Ahmed, Orion Infusion and Rezaul Karim. Due to this legal battle, ICB Financial Group lost its willingness to move forward with ICB Islamic Bank. Bangladesh Bank did not attach enough importance to the settlement of the court cases either. All these gloomy factors shattered the financial potentialities of ICB Islamic Bank and things continued to get worse as days proceeded.

Financial sources have reported that at present ICB Group holds 53%, Bangladesh Bank holds 7%, general investors hold 24% and some other companies hold 15% shares of ICB Islamic Bank. ICB Islamic Bank had deposits of BDT 1 thousand 231 crore at the closure of 2023. The amount of loans disbursed by ICB Islamic Bank reached BDT 741 crore as 2024 ended. BDT 672 crore became defaulted loans (91%). ICB Islamic Bank suffered monetary losses of BDT 56 crore in 2023. Very recently it was seen that each share price of ICB Islamic Bank in Dhaka Stock Exchange (DSE) was 2 taka 90 paisa.

ICB Islamic Bank's board of directors was dissolved last week. Bangladesh Bank informed through a letter that the board was dissolved in order to save depositors' money, to protect the bank from further aggravation and to establish good governance. ICB Islamic Bank faced tremendous provision deficit, capital shortage and acute liquidity crisis because of the inefficiency of the bank's top management and directors, the central bank stated.

At present ICB Islamic Bank is encumbered with a huge sum of classified loans and clustered loans. Total disorder is going on inside the bank's administration. Allegedly the board of directors of ICB Islamic Bank got involved in unethical activities which jeopardized the bank's depositors which prompted the central bank to nullify the board of directors of this bank.

Another circular from Bangladesh Bank mentioned that the central bank has authorized and appointed the central bank's Executive Director Mujibur Rahman to exercise the power of ICB Islamic Bank's Managing Director.

Bangladesh Bank's former Chief Economist Mostafa K Mujeree said "It was the country's failure that ICB Financial Group withdrew from further investment in ICB Islamic Bank. The authorities who were in charge should have been able to resolve the legal predicaments quickly but they could not do so. These problems need to be sorted out rapidly to convey a message of doing business easily to foreign investors. Otherwise attracting foreign entrepreneurs to invest money in Bangladesh's banking system and in other sectors will remain a far cry. Pragmatic and well-timed decisions are required for this purpose".

Former adviser to a caretaker government and retired Controller and Auditor General Hafiz Uddin Khan said, "The interim government has to do a lot of work within a short time. Recovery and streamlining of Bangladesh's rampaged banks from debris and wreckage is one of the principal assignments right now. A country's economic prospects cannot yield beneficial results leaving banks and financial institutions in a tumbled down status. So, the regulatory authorities should work without fears or favours."

Professor Dr. Mainul Hasan, Economics Department, University of Chittagong said "Strong endeavours, fast and feasible initiatives should be carried out by the interim government to constitute rule of law and accountability in all banks in Bangladesh. Political intervention defiled and crippled several banks during the past years. Honest, firm and competent officials need to be placed in vital posts to run banks. At the same time a sound and solid drive must be spearheaded to recover non performing loans from mega defaulters and to retrieve laundered funds from abroad."