Islami Bank finally freed from S Alam Group

After seven years, S Alam Group’s control over Islami Bank ended yesterday after the Bangladesh Bank decided to dissolve the board of the country’s largest private sector bank that was heavily dominated by individuals linked to the conglomerate.
“They have looted whatever is there to loot — we now have to rescue the bank from this shattered state,” said BB Governor Ahsan H Mansur yesterday in a press briefing.
The existing board, whose chairman since June last year is S Alam group chairman Mohammed Saiful Alam’s eldest son Ahsanul Alam, will be dissolved in a day or two and a new board will be formed with BB-appointed independent directors.
The central bank will take over all the shares of S Alam against its liabilities as per law, Mansur said, adding that the Chattogram-based business giant can get back the shares if it repays the amount it owes the Shariah-based bank.
“But I don’t think they intend to,” Mansur said.
S Alam Group owns as much as 82 percent stakes in Islami Bank, documents show, but the conglomerate maintains it has 32 percent stakes.
The move to dissolve the board comes after a group of Islami Bank officials, former chairman of the board of directors and clients requested the BB governor to do so.
Once a well-run, profitable bank, its financial health took a turn for the worse after S Alam started exerting its influence following ownership change.
Between 2017 and June this year, the Chattogram-based conglomerate and its associates’ companies took Tk 74,900 crore, which is 47 percent of Islami’s total outstanding loans as of March.
The loans were taken in the name of Mohammad Saiful Alam, and his wife, daughter, relatives and other officials, according to central bank officials with knowledge of the matter.
Documents pieced together by The Daily Star show that most of the loans were taken by bypassing banking rules and regulations, in a testament to how the Chattogram-based conglomerate exerted its influence on the country’s banking sector.
Founded in 1985 by Alam, a relative of former Awami League politician Akhtaruzzanan Chowdhury Babu and former Land Minister Saifuzzaman Chowdhury, S Alam Group has grown into one of the largest conglomerates in Bangladesh.
The amount given to S Alam and its associate companies has left the bank with a deficit in its current account balance with the central bank for more than a year.
To plug the deficit, the central bank provided special liquidity support to the lender without any collateral on the orders of former BB governor Abdur Rouf Talukder.
The liquidity support was stopped after Mansur took charge last week.
Islami Bank started its banking activities in 1983 with 71.50 percent capital from Middle-eastern investors and 28.50 percent from local investors.
Until 2015, S Alam Group had no stake in the bank. In 2016, the business group started buying the bank’s shares through seven shadow companies, documents show.
After taking charge in 2017, S Alam Group appointed 7,240 employees-officials violating the rules and regulations. Most of them hailed from Alam’s hometown of Patiya in Chattogram.
A day after the fall of the Sheikh Hasina government, a group of officials and staff of the Shariah-based bank started a demonstration at the bank’s head office demanding the resignation of S Alam-appointed employees.
On August 11, a clash broke out between the two factions resulting in gunfire that left six injured.
Later on August 19, the bank terminated the contracts of eight top officials — including an additional managing director and deputy managing director — who were considered close allies of S Alam Group.