Bank merger: employees to face salary, benefit cuts
Employees of five shariah-based banks, which will be merged soon, are likely to face cuts in salary and other benefits due to the poor financial health of these banks.
The five — First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, and EXIM Bank — are struggling to pay their employees.
For all latest news, follow The Daily Star's Google News channel. To ease the massive liquidity crisis, these lenders sought around Tk 1,000 crore in liquidity support from the central bank, which in response approved around Tk 350 crore.
The approval came from a meeting at the Bangladesh Bank headquarters in Dhaka today between the administrators of the five banks and the central bank.
Governor Ahsan H Mansur presided over the meeting organised by the Bank Resolution Department.
At least three central bank officials, speaking on condition of anonymity, confirmed to The Daily Star that the administrators of the five banks had sought Tk 1,000 crore in liquidity support to pay salaries and allowances.
After approving the Tk 350 crore fund exclusively for employee salaries, the central bank governor reportedly asked the administrators to reduce salaries and other benefits due to the weak financial condition of the lenders.
One of the administrators, who also preferred anonymity, said the salary cuts are likely to be implemented soon in the five banks, which collectively employ around 16,000 staff members.
An official from the Bank Resolution Department told The Daily Star that they are working on measures to reduce salaries and other benefits.
An employee of Union Bank said the staff is currently under severe financial stress due to the fragile situation of their bank.
He added that while employees receive salaries in their accounts, they are unable to withdraw or use the funds immediately.
A recent Bangladesh Bank statement showed that the five banks are paying staff salaries from depositors' funds.
For instance, First Security Islami Bank recorded a negative operating income of Tk 4,308 crore, while salary and allowance expenses stood at Tk 652 crore as of December last year.
This indicates that staff salaries were being drawn from depositors' funds.
The bank posted a net loss of Tk 5,450.15 crore last year, while total operating expenses were Tk 1,051.61 crore.
On August 26, the central bank wrote to the bank's chairman, stating that a BB inspection had found "serious governance failure."
Earlier this month, Bangladesh Bank granted initial approval and issued a letter of intent to the government for the formation of Sammilito Islami Bank PLC, a new state-owned bank created through the merger of the five troubled shariah-based banks.
Since the installation of the interim government last year, Bangladesh Bank has so far extended around Tk 35,300 crore as liquidity support to those five banks, but the lenders are yet to repay the fund to the banking watchdog.
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