The Bangladesh Bank yesterday dissolved the board of directors of ICB Islamic Bank considering the interests of depositors, according to an official letter.

The board was dissolved to protect the interests of depositors and the institution itself as well as to ensure good governance, according to a directive issued by the banking regulator.

In the letter, the central bank cited weaknesses in the bank's management and board of directors as the main reason for the move.

ICB Islamic Bank is currently facing a severe capital and provisioning shortfall, a large volume of classified investments, significant accumulated losses, extreme instability in management, a liquidity crisis, and an overall deteriorating financial condition, the BB letter said.

It also highlighted the board's policy-level failures which disrupted financial discipline and governance, ultimately harming the interests of both the bank and its depositors.

Invoking powers under the Bank Company Act, the central bank dissolved the existing board, the letter added.

In a separate letter, Bangladesh Bank appointed its Executive Director Mojibur Rahman to exercise the powers and responsibilities of the board of directors and the managing director to safeguard depositors' interests and ensure proper governance.

ICB Islamic Bank traces its origins to 1987, when it operated as Al-Baraka Bank.

In 1994, it was labelled a 'problematic bank', prompting the central bank to introduce the practice of appointing observers to errant banks to enforce discipline.

In 2004, the institution was renamed Oriental Bank and began operating as a scheduled commercial bank.

In June 2006, the Bangladesh Bank dissolved the board of Oriental Bank after uncovering major irregularities.

A total of 34 cases were filed in 2005 and 2006 over the embezzlement of approximately Tk 34 crore from the bank.

The central bank then took full control of the institution and appointed a BB executive director as an administrator to protect depositors' funds.

In August 2007, the Bangladesh Bank floated a tender to sell a majority stake in the bank. Swiss ICB Group, which has banking operations in Asia and Africa, acquired the stake through a bidding process.

The bank was then renamed ICB Islamic Bank in 2008.