ICB Islamic Bank has no merger plan

Troubled ICB Islamic Bank has no plan to merge or sell on the majority shares owned by Malaysian entrepreneurs despite the bank's struggle to improve its financial indicators since current owners took over in 2008, a top official said.

Though the bank has paid off 98.5 percent account holders' deposits, those are individual depositors.

"Most of the remaining 1.5 percent deposits are of corporate clients who have big chunk of money with the bank. We need two more years to pay their deposits," said Muhammad Shafiq Bin Abdullah, managing director and chief executive officer of ICB Islamic Bank.

Corporate clients will get around Tk 500 crore from the bank.

"ICB last year paid off Tk 142.5 crore of depositors' money that was frozen with the bank for years. We will pay the remaining customers their deposits within the time Bangladesh Bank has given us," said Abdullah, a Malaysian citizen.

Switzerland-based ICB Financial Group Holdings acquired the majority stakes of former Oriental Bank in February 2008 under a BB reconstruction scheme and renamed the institution as ICB Islamic Bank.

Though the new owner was supposed to inject fresh capital to strengthen its financial health, it did not happen.

Accordingly, the bank's financial indicators, such as capital position, classified loans, deposit, investment and accumulated loss, deteriorated over the years.

To help the bank get back to sound health, BB last year took an initiative to merge it with a stronger bank. But the bank's majority shareholders did not want it.

"The directors (Malaysians) did not instruct me to pull out from the Bangladesh market. Rather, they want to see the bank become a profitable institution," said Abdullah.

As of December 31, 2015, the bank had a capital shortfall of nearly Tk 1,500 crore, with its capital adequacy ratio being a negative 98.68 percent.

The bank's classified loans reached more than Tk 700 crore, which is 75 percent of its total loans. Of the classified loans, 90 percent were held by 50 top defaulters.

At the end of last year, its net losses stood at Tk 15 crore, down from Tk 28.65 crore a year earlier. In 2012 and 2013, its net losses stood at Tk 106 crore and Tk 68 crore respectively.

On the other hand, ICB Bank's accumulated losses crossed the Tk 1,700-crore mark.

"Bangladesh is a very competitive market with 56 banks. Loan recovery is not an easy task here," Abdullah said, adding that two-thirds of the banks' 33 branches are profitable now.

The bank's legacy of negative image often holds it back, he said. "Depositors want higher interest rate, while borrowers want the lowest in the market."

Even then, ICB has managed to attract around 10,000 new deposit customers.

On the investment side, the bank approved loans amounting to Tk 221 crore in 2015. Strict selection of customers, documentations and strong credit control measures helped the bank keep its non-performing loans against these disbursements within 4 percent. "Now we don't give loans without collateral," Abdullah said.

Also, the bank does not go for big loans, with Tk 15 crore being the highest it would go. 

ICB Islamic Bank is listed on Dhaka Stock Exchange; its share was traded between Tk 3.8 and Tk 3.9 before closing at Tk 3.9 yesterday against the face value of Tk 10.