ICB Islamic Bank couldn’t stand up despite foreign investment

Switzerland-based ICB Financial Group acquired 53 per cent shares of Oriental Bank at an auction of Bangladesh Bank in 2007 and renamed it to ICB Islamic Bank.

In the meantime, investors of Oriental Bank filed lawsuit, prompting the court to issue a stay order on the sale of the bank shares, thus, the foreign firm could not entirely get the control over the bank. Since then, the bank’s financial condition continued to deteriorate, and finally the Bangladesh Bank dissolved its board of directors in 2025 and took over the bank.

Regarding this, Bangladesh Bank spokesperson Arif Khan told Prothom Alo ICB Financial Group invested in the bank with enthusiasm, but they could not get entire control because of legal issues. If legal issues are resolved with the help of the state, foreign investors would be interested in Bangladesh.

Documents showed the bank started journey as Al Baraka Bank in 1987. It turned into a ‘troubled bank’ in 1994. At that time, Bangladesh Bank introduced the appointment of observers to bring discipline in the banking sector. Later, the bank was renamed as Oriental Bank as a commercial bank.

After that, the central bank dissolved the Oriental Bank’s board of directors in June 2006 following the huge irregularities. The central bank then issued new shares in 2007 and auctioned, and ICB Financial Group invested about Tk 3 billion and bought 52.76 per cent of shares.

The next year, ICB Financial Group inked a deal with Bangladesh Bank to buy and sell the shares, received the permission of banking operation in May that year. At the time the bank was renamed to ICB Islamic Bank.

As two leading local conglomerate held 86.34 per cent of the bank’s shares violating the Bank Company Act, the central seized the shares. Later, 11 individuals and institutions filed lawsuits against the Bangladesh Bank’s decision. Three of the lawsuits went in favour of the central bank. Court issued stay orders on other lawsuits and directed all parties to wait till the release of the final verdict. The defendants of those lawsuits were Mehehi Hasna, Salman Karim, Prudential Securities, Niaz Ahmed, Orion Infusion and Rezaul Karim. As a result, neither ICB Financial Group took any other step nor Bangladesh Bank emphasised the resolution of lawsuits. Eventually, the bank’s condition deteriorated.

Data showed currently, ICB Financial Group holds 53 per cent of the bank’s shares, Bangladesh Bank 7 per cent, general investors 24 per cent and various institutions hold 15 per cent of shares. The bank’s deposits stood at Tk 12.31 billion at the end of 2023 and its loan outstanding rose to Tk 7.41 billion at the end of 2024, but Tk 6.72 billion or 91 per cent of total loans were defaulted. The bank continued to incur loss year after year and faced a loss of Tk 560 million in 2023. The bank’s share price was Tk 2.90 against a face value of Tk 10 per share at the closing of the Dhaka Stock Exchange on 10 April.

Bangladesh Bank dissolved the board of directors of the ICB Islamic Bank on 9 April. In a letter, the central bank said the board was dissolved to protect the interests of depositors and bank, as well as to ensure good governance. The bank faced a deficit in its capital and provision because of weakness of the bank’s management and its board of directors. Classified investments and accumulated loss are also huge. Management instability and liquidity crisis intensified. Weakness of the board of directors in policy making disrupts banking good governance in addition to financial crisis. The board of directors are also involved in activities against the interests of the depositors. For these reasons, an ordered has been issued to dissolve the existing board of directors under the Bank Company Act for the sake of the depositors’ interests and public welfare.

In a separate circular, Bangladesh Bank appointed its Executive Director Mojibur Rahman to exercise the powers and responsibilities of the board of directors and the managing director to protect depositors' interests and ensure banking good governance.

People involved in the sector said if foreigners face barriers to run their intuitions after making investments, other investors will lose interests. So, these lawsuits must be settled soon to give a massage on ease of doing business to the foreigners, only then foreign investments will come.

Regarding this, Mustafa K Mujeri, former chief economist of Bangladesh Bank, said it is failure of the country as to why ICB Financial Group could not succeed after making investments. The government must look into the matter as to why the lawsuits remain unresolved for such a long time. Certainly, the central bank did not carry out their duties properly. It is big example of why foreign investments are not coming to the country. Problems should be resolved before bringing foreign investors for the banks in crisis. The government must take pragmatic decision on banking sector, he added.