Governance issues weigh on Bangladesh’s Social Islami Bank PLC

The government recently replaced its board and made changes to its management

Governance issues in Social Islami Bank PLC (SIBP) have strained the bank’s financial viability, said Moody’s Ratings.

Bangladesh’s banking regulatory authority replaced SIBP’s board in August and made changes to its management team to address irregularities in the bank and improve its governance. It is also providing liquidity support to the bank.

Nevertheless, its asset quality and funding remain susceptible to unexpected strain because of significant governance concerns, the ratings agency said in a report, where it downgraded SIBP’s outlook to ‘negative.’

“Significant governance issues in Bangladesh's Islamic banks, including SIBP, have weakened depositor confidence in those banks,” Moody’s said.

“Social unrest and a government change in August 2024 have further added strain to SIBP's standalone viability,” it added.

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