Bangladesh Bank on Wednesday declared five financially distressed Shariah-based banks ineffective and dissolved their boards, paving the way to merge them into a single government-owned Islamic bank.

The central bank said the decision was taken based on its proposal and recommendations from the Financial Institutions Division.

The banks affected are First Security Islami Bank PLC, Global Islami Bank PLC, Union Bank PLC, Exim Bank PLC, and Social Islami Bank. Bangladesh Bank notified their management through individual letters, stating that the boards’ operations have been suspended from November 5. The banks will now operate under the Bank Resolution Ordinance.

The merged entity will be named “Sammlito Islami Bank” (United Islami Bank). As part of the process, the boards of the five banks have been dissolved.

New administrators will be appointed immediately. Executive Director Md Shawkat Ul Alam will take charge of Exim Bank, Executive Director Muhammad Badiul Alam Didar will oversee Social Islami Bank, and Md Salah Uddin will manage First Security Islami Bank. Directors Mohammad Abul Hossain and Maksudul Alam will take responsibility for Union Bank and Global Islami Bank, respectively.

The new bank, formed from the five merged banks, will have an initial authorised capital of BDT 40,000 crore and paid-up capital of BDT 35,000 crore. It will assume all assets and liabilities of the existing banks. Of the paid-up capital, BDT 20,000 crore will be provided by the government—half in cash and the remaining BDT 10,000 crore through Sukuk bond issuance.