Tobibur Rahaman has worked with Union Bank from day one and seen all its highs and lows. After experiencing a rollercoaster ride, he hoped that better days would come for him and his colleagues as Bangladesh Bank (BB) announced the merger of five banks struggling with massive bad loans.

However, he now sees very little improvement in the overall situation despite all the rebranding efforts to salvage the scandal-hit banks. In fact, as the merger remains hanging, he and his colleagues remain completely unsure of its outcome.

“How much cost-cutting will be required if the merger takes place and all five banks become a single entity? How secure are the jobs of the employees? Will the facilities and opportunities remain the same? How many adaptations will the new management need?” he asked.

He and bankers like him could not let their concerns go as the government’s plan for the merger has hit a deadlock with Social Islami Bank PLC (SIBL) and Export Import Bank of Bangladesh PLC (EXIM) refusing to join hands the process while the other three banks – Global Islami Bank PLC, Union Bank PLC, and First Security Islami Bank PLC (FSIB) – agree. This stalemate has thrown the fates of at least 18,000 employees into uncertainty and raised fresh concerns over the banking sector’s stability.

According to multiple sources, the moves of SIBL and EXIM are linked to political contexts. This not only impacts the financial stability of the country but may also erode investors’ confidence in the capital market ahead of the upcoming national election. Some insiders also believe that the final decision may only be executed following a new political settlement.

Arief Hossain Khan, executive director and spokesperson of Bangladesh Bank, said the merger proposal was announced after thoroughly reviewing the financial health of the five banks. However, SIBL and EXIM want to hold their ground.

“It would be better if the banks recover by themselves. However, in the current context, they are unable to return the depositors’ money. It cannot be said yet whether the merger process will collapse,” he said.

Reactions of SIBL and EXIM

Bangladesh Bank Governor Dr Ahsan H Mansur recently held meetings with the boards of the five banks regarding the merger. In the meetings, SIBL and EXIM raised objections.

SIBL Chairman Mohammad Sadiqul Islam told journalists that Bangladesh Bank presented a financial review of their bank, while they also presented their own. “We agree with the central bank on many issues. But what happens next will be decided by the central bank.”

Maj (Retd.) Dr Md Rezaul Haque, SIBL’s founding chairman and now director, said, “Our bank’s condition is not that bad. We just need time to recover. Bangladesh Bank is pressuring us, but a forced merger is not possible. We have defended our position through the courts.”

EXIM Bank Chairman Nazrul Islam Swapan echoed and said, “We are working to restore our bank. We want the chance to stand independently rather than merge. The governor has listened to our arguments.”

Reactions of Union Bank, Global Islami Bank, FSIB

Union Bank, Global Islami Bank, and FSIB responded positively after meeting with Bangladesh Bank Governor Dr Ahsan H Mansur recently.

Union Bank Chairman Md Fariduddin Ahmed said, “Depositors come for cash but cannot withdraw. The sooner a decision is taken, the better. Whether through merger, restructuring, or any other means, stability must come.”

Meanwhile, FSIB Chairman Mohammad Abdul Mannan said, “We have no disagreement with Bangladesh Bank’s decision.”

Echoing him, Global Islami Bank Chairman Mohammad Nurul Amin said, “We gave our consent for the merger.”

About layoffs

Currently, around 18,000 staff members work at these five banks. The proposed merger has created confusion among them. BB Governor Ahsan H Mansur assured that lower-level employees would retain their jobs, but no one in the top management considered themselves safe.

“Bangladesh Bank guidelines state that no employee can be terminated within three years of the merger. However, assessment tests may be introduced under the guise of qualification checks, causing unease among staff,” said BB executive director and spokesperson Arief Hossain Khan.

SIBL Deputy Managing Director Nazmus Sadat said, “We have no fresh plans for layoffs. Bangladesh Bank has also clearly said that no selective termination will be allowed.” Global Islami Bank Chairman Mohammad Nurul Amin echoed him.

BB also warned that actions would be taken against the authorities if any staff members were wrongfully terminated.

“No one can be dismissed arbitrarily, as per the central bank’s instructions. However, if irregularities are found in a particular batch’s recruitment, the banks can take action. But there is no scope for selective exclusion,” said BB spokesperson Arief Hossain Khan.

Five banks’ health

A recent Asset Quality Review (AQR) report assessed liquidity shortfalls, provisioning gaps, and asset deterioration of the five banks.

According to the report, the banks hold total deposits of Tk147,368 crore against total loans of Tk190,484 crore. Out of this, Tk146,918 crore is classified as non-performing loans (NPLs) — meaning 77% of the total loans have defaulted.

Union Bank is in the most precarious position with 97.80% of NPL alongside a provisioning shortfall of Tk23,800 crore. FSIB has an NPL ratio of 96.37% with a provisioning shortfall of Tk45,568 crore. Global Islami Bank stands with an NPL ratio of 95% with a shortfall of Tk10,095 crore. SIBL’s NPL ratio remains 62.30%, with a provisioning gap of Tk21,650 crore. EXIM Bank’s NPL ratio is 48.20%, with a shortfall of Tk15,117 crore.

From experts

Dr Zahid Hussain, former lead economist of the World Bank, said that BB held meetings with each troubled bank, requiring them to present individual resolution plans.

Mentioning that EXIM and SIBL are not as distressed as the other three, he said, “Although forced merger is legally possible, due process must be followed.”

He asked why liquidation was not considered and expressed skepticism about the BB governor’s assurance regarding employees’ and depositors’ protection.

“It is not realistic to keep the same number of branches and staff after the merger,” he said.

Md Arfan Ali, veteran banker and former president and managing director of Bank Asia, said, “Mergers are never easy for employees. In many cases, one role ends up being handled by two people, creating overlap and competition. This often leads to power struggles among senior and mid-level staffers. Ultimately, it is usually the more skilled employees who manage to survive in such situations.”