Some banks may face delisting from Bangladesh鈥檚 stock exchanges under the Bank Resolution Ordinance 2025, which empowers Bangladesh Bank with sweeping authority to restructure or dissolve financially distressed scheduled banks.
Enacted on May 9, the ordinance allows the central bank to transfer a non-viable bank鈥檚 shares, assets to a third party or a bridge bank. This process can fundamentally alter or eliminate the role of existing shareholders, effectively stripping them of ownership and leading to the bank鈥檚 removal from the capital market.
Under the ordinance, Bangladesh Bank may initiate resolution measures if it determines that a scheduled bank is non-viable with no reasonable prospects of recovery.
The law defines non-viable banks as those failing to meet regulatory requirements, unable to fulfill obligations to depositors or creditors, or engaged in unsafe or fraudulent practices.
In such cases, Bangladesh Bank may appoint an administrator, suspend the board, and proceed with steps including amalgamation, acquisition, transfer of assets and liabilities, or liquidation, leading to potential delisting stage.
When a bank鈥檚 assets and shares are transferred to a bridge bank or buyer, shareholders lose their investment as ownership shifts away from them.
BB officials said that several banks now have negative capital, meaning shareholders no longer hold any actual net assets in those institutions.
Since shareholders are the risk bearers and not guaranteed compensation, the law emphasises protection of depositors rather than recovery for equity holders.
The ordinance establishes a Resolution Oversight Committee, where the chairman of the Bangladesh Securities and Exchange Commission (BSEC) serves as a member to ensure coordination with market regulators.
BSEC spokesperson and director Abul Kalam told 抖阴精品 that the commission is aware of the ordinance and noted that decisions regarding the resolution of banks must involve consultation with relevant regulatory bodies.
He added that the commission will have the opportunity to provide input if shareholder interests or potential delisting issues arise during the resolution process.
Zahid Hussain, former lead economist of World Bank鈥檚 Dhaka office, supported the new framework, noting that many insolvent banks cannot continue in their current state.
He said the process provides options for recovery, such as giving banks time to rehabilitate before taking more drastic steps like mergers, acquisitions, or creating a bridge bank. He, however, said that if recovery fails, resolution including liquidation becomes unavoidable.
A bridge bank, as defined in the ordinance, may be formed to temporarily maintain critical banking services 鈥� such as accepting deposits and processing payments 鈥� while the central bank looks for a long-term solution.
To support resolution actions, Bangladesh Bank may also use the Bank Restructuring and Resolution Fund or request government financial assistance.
During resolution, affected banks may be granted temporary relief from stock exchange disclosure requirements under Section 94, which could delay immediate delisting if there remains a prospect of recovery.
However, if the resolution attempt fails, Bangladesh Bank may petition the court for a winding-up order.
Once approved, a court-appointed liquidator prepares a wind-up plan to sell assets and settle claims.
The ordinance outlines a claims hierarchy where insured deposits, taxes, and employee dues are prioritised above shareholder interests.
As the liquidation process proceeds, typically involving asset sales through public auctions and a distribution schedule approved by the central bank, the bank鈥檚 operations are gradually dismantled.
This often prompts stock exchanges to suspend trading of its shares. Upon conclusion of the process, the Registrar of Joint Stock Companies and Firms formally strikes the bank鈥檚 name from the registry, terminating its legal status.
The capital shortfall in 19 banks in Bangladesh soared to record Tk 1,71,777 crore by the end of December 2024, marking the worst capital position in the country鈥檚 banking history.
A total of 13 of the 19 banks are listed on the stock exchanges.
In addition, total regulatory capital of nine listed banks turned negative as per data in December 2024.
Financial experts said that when a bank鈥檚 capital becomes negative, its liabilities are greater than its assets, making it technically insolvent.
It typically happens when a bank has suffered large loan defaults and must make high provisions for those non-performing loans. These provisions are charged against earnings, and if earnings are insufficient, they erode the capital. Over time, accumulated losses or negative retained earnings can deplete Tier-1 capital.
