Employees at five struggling Islami banks in Bangladesh are bracing for inevitable pay cuts following an announcement that these banks will merge in an effort to avoid bankruptcy. The five banks, namely First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, and EXIM Bank, have all been dealing with severe financial difficulties for some time, and their merger is seen as an emergency measure by the central bank to address these issues.
The immediate concern for employees is the impact of this merger on their compensation packages. As these banks work to shore up their finances, salary and benefit reductions have been flagged as one of the necessary cost-saving measures. According to sources within the central bank, administrators of the banks have requested Tk 1,000 crore in liquidity support to cover salary and operational costs. However, only Tk 350 crore has been approved, which will be used exclusively to pay employees, leaving little room for other financial recovery efforts.
The central bank has made it clear that salary reductions and benefit cuts will be necessary due to the weak financial state of the banks. This will affect an estimated 16,000 employees who currently work at the five banks. An anonymous administrator confirmed that cuts to salaries and allowances are likely to be implemented shortly as part of the restructuring plan. Employees are already struggling with limited access to their salaries, which are sometimes paid from depositors’ funds, as the banks face a growing crisis of liquidity.
One particularly concerning detail revealed by sources inside Union Bank is that many employees have been unable to withdraw their salaries immediately. Even though the salaries are being deposited into accounts, workers are facing significant delays in accessing these funds. This situation is made worse by the fact that the banks are using depositor funds to meet payroll expenses, which raises serious concerns about the safety of customer deposits.
Bangladesh Bank’s intervention in this matter has been ongoing for several months. The central bank has provided emergency liquidity support to these banks on multiple occasions, including a total of Tk 35,300 crore since last year. However, this support has not been sufficient to restore these banks to solvency, and their future remains uncertain.
It’s clear that the financial health of these five banks is deeply compromised, and employees are likely to feel the consequences in the form of lower salaries, reduced benefits, and an uncertain future. With the central bank continuing to extend emergency loans, the broader financial system of Bangladesh could face long-term repercussions if these banks are unable to recover.