Islami Bank freed from S Alam, Obayed Ullah Al Masud new chairman

Islami Bank has been freed from the grip of the controversial S Alam Group after nearly seven years, with the Bangladesh Bank appointing a new five-member board of directors to oversee the bank's operations.

Leading the new board is Obayed Ullah Al Masud, a seasoned banking professional with previous stints as managing director of both Sonali Bank and Rupali Bank. 

His tenure at Sonali Bank spanned from 2016 to 2019, followed by a three-year stint at Rupali Bank from 2019 to 2022.

Other directors of the board are Khurshid Wahab, former executive director of Bangladesh Bank, Abdul Jalil, former deputy managing director of Al-Arafah Islami Bank, Masud Rahman, a banking department professor at Dhaka University; and Abdus Salam, a chartered accountant.

Among them, Abdus Salam earlier served the bank as an independent director.

On 21 August, Bangladesh Bank Governor Ahsan H Mansur announced that the board of Islami Bank, controlled by the S Alam Group, would be dissolved soon and all shares of the bank held by the S Alam Group would be transferred to government control.

"Independent directors will be appointed temporarily, and former directors holding 2% of the share capital will later be reappointed to the board," Mansur said at a press briefing. 

He said since current directors do not hold 2% or more of the shares, independent directors will be introduced in the interim period.

Governor Mansur also said that the government has taken control of all shares linked to S Alam and its associated companies. 

"If the S Alam Group settles all its outstanding dues, its shares will be returned. Otherwise they will be adjusted accordingly," he added.

On 6 August, the day after the fall of the Sheikh Hasina-led Awami League government, disgruntled officials of the Islami Bank staged demonstrations for the removal of officials appointed by the S Alam Group. 

In response to their protests, Islami Bank's Human Resources Department dismissed eight individuals on 19 August, including six deputy managing directors, who were identified as affiliates of the S Alam Group.

Before taking full control of Islami Bank on 5 January 2017, the S Alam Group was already a client of the bank's Khatunganj branch in Chattogram, with a loan exposure of approximately Tk4,000 crore. Following the takeover, the group's borrowing from the bank skyrocketed.

Half of Islami Bank loans went to S Alam

According to sources from the central bank and documents from Islami Bank, as of 18 August 2024, the total loan portfolio of Islami Bank stands at Tk1.5 lakh crore, with total deposits amounting to Tk1,53,274.

Of these loans, Tk74,972 crore has been identified as benefiting the S Alam Group, which constitutes half of the total loans. The loans amounting to Tk14,427 crore were directly under the name of seven S Alam Group companies.

The group began acquiring shares in Islami Bank, which was one of the top private banks and highest remittance earners at the time, through newly registered paper-based companies in 2016 and completed the acquisition by the following year.

Seven companies linked to the S Alam Group, which bought the bank's shares, were all registered only in 2016. They are Excel Dyeing and Printing Limited, Armada Spinning Mills Limited, ABC Ventures Limited, Grand Business Limited, Platinum Endeavors, Paradise International Limited and Blu International.