The Bangladesh Bank (BB) on Thursday made it clear that shareholders and general investors in five troubled banks earmarked for merger will be required to bear losses as part of the banks restructuring process.
This stance effectively rules out any protection for ordinary shareholders amid the ongoing merger plans for these institutions. In a recent press release, BB explicitly stated that there is no scope to safeguard the interests of general investors or small shareholders in these banks.
This position stems from the provisions outlined in the Bank Resolution Ordinance-2025 and decisions made by the Banking Sector Crisis Management Committee.
The harsh reality for these shareholders is based on assessments by international consulting firms and special inspections, which confirmed that the banks are suffering from massive losses. Most critically, their Net Asset Value (NAV) has turned negative, indicating that liabilities surpass assets. This financial deterioration leaves no room for protecting the investments of ordinary shareholders, who are now faced with the potential of absorbing significant losses.
The Crisis Management Committee, convened on September 24, 2025, under Section 42 of the ordinance, determined that shareholders must bear the brunt of the banks' losses during the resolution process. This decision underscores a firm stance that those holding ownership stakes cannot escape the fallout of the financial collapse.
Under the Bank Resolution Ordinance-2025, Bangladesh Bank has broad authority to impose losses on stakeholders, including shareholders, responsible persons, and holders of various tiers of capital and debt.
The ordinance explicitly states that shareholders will be the first to absorb losses, consistent with standard bankruptcy principles. However, it does include a limited safety valve-under Section 40-allowing shareholders to seek compensation if they can prove they would face greater losses through resolution than through outright liquidation. Such claims must be evaluated by an independent assessor, making the potential for compensation a remote comfort.
While the central bank has taken a hard stance on general shareholders, it has acknowledged that small retail investors may warrant special consideration. The government is reportedly contemplating providing some form of compensation to small investors, but no concrete details or criteria have yet been announced.
The Bank Resolution Ordinance- 2025 was crafted with international best practices in mind, incorporating advice from the IMF, World Bank, and other agencies to balance stakeholder rights while equipping BB to handle banking crises decisively.
