In response to the suggested merger of five private banks, the Bangladesh Securities and Exchange Commission (BSEC) has dispatched a letter to Bangladesh Bank, requesting that the central bank prioritize the interests of general investors. This correspondence was directed to the Governor of Bangladesh Bank during the final week of September.

While the merger proposal underscores the importance of protecting depositors’ funds, there has yet to be any decision made concerning the rights or compensation for general or minority shareholders. This situation led the BSEC to send the letter, stressing the necessity to protect the interests of public investors.

According to Bangladesh Bank sources, under the Bank Resolution Ordinance 2025, general shareholders will not be entitled to any compensation in the event of a merger. Although the new merged bank will be listed on the stock exchange, shareholders of the five merging banks will not hold any shares in the new entity, as fresh shares will be issued.

However, market experts argue that general investors are not responsible for the current financial troubles of these five Islamic banks. Instead, the blame lies with the banks’ founders and directors, whose actions have already been identified. They believe that if these individuals are at fault, their assets should be seized—not those of innocent public shareholders. Therefore, protecting general investors during the merger process is of critical importance.

The BSEC stated in its letter that general investors should not be held accountable for the financial distress of the five banks—First Security Islami Bank PLC, Global Islami Bank PLC, Union Bank PLC, Social Islami Bank PLC, and Exim Bank PLC. As per Section 77 of the Bank Resolution Ordinance 2025, the individuals responsible for the current state of these banks have already been identified.

The BSEC suggested the following measures to protect general investors’ interests in the merger process:

1. Fair valuation of investor interests based not only on the banks’ balance sheet assets but also on intangible factors like banking licenses, branch networks, client base, human resources, service delivery mechanisms, and brand value.
2. Valuation of recoverable funds from collateral and both movable and immovable assets held against defaulted loans, to be considered while determining investor compensation.
3. Distinction between shares held by responsible parties (as per Section 77) and general investors, so that the value of investments made by innocent shareholders is considered fairly in the merger ratio.
4. Merger ratios must reflect the value of general investors’ interests, and no delisting from stock exchanges should take place without officially announcing this value or the acquisition price for general investors’ shares.

The BSEC’s letter underscores that investor protection is just as important as depositor protection and should be given due consideration during the restructuring of the banks.