KARACHI: Sindh Bank Limited (SBL) and Summit Bank Limited (SMBL) are on track to complete their proposed merger by the end of September after securing regulatory approval and permission from the apex court, officials said on Thursday.
“Our board is going to hold an extraordinary general meeting of the shareholders on August 31. After taking approvals from the bank shareholders, and permission from the Supreme Court, we will apply to the State Bank of Pakistan for getting its nod to complete the transaction at the earliest,” Ahsan Raza Durrani, the CEO at SMBL, said while talking to reporters.
Durrani added that the bank was going with the merger to comply with the Basel III capital requirements.
Both lenders would be merged via a share swap agreement. The board of directors at SMBL and SBL in their meetings held in early August had approved the revised swap ratio from 4.17 to 8.37 in respect of amalgamation of the former with and into the latter. The revised swap ratio was calculated on the both banks’ balance sheets at the end of December 2017.
Muhammad Bilal, director Sindh Bank, said the sawp price would be presented to the shareholders and Sindh Cabinet Committee for their respective approvals. “We are hoping to successfully complete merger transaction by September 30.”
Bilal said the surviving entity, the Sindh Bank, would have Rs27 billion paid-up capital, more than 500 branches, and going forward it could create a healthy competition for the large customers and branch network banking player.
“Sindh Bank had chosen to acquire Summit Bank for its increased branch network and decent foreign trade business,” Bilal said.
He also disclosed the Sindh Bank had planned to go public this year.
“We have intentions to add Rs10 billion more in paid-up capital to meet the future capital requirements,” Bilal said.
The SBP has fixed bank capital adequacy ratio for 2018 at 11.90 percent, while it will increase to 12.5 percent next year. The equity of the Summit Bank was Rs10 billion at the end of December 2017.
Tariq Ahsan, president Sindh Bank, said the bank had 300 branches as of March 31. “The combined entity would propose about its Islamic banking portfolio post merger,” Ahsan added.
Durrani, the CEO of the Summit Bank, on the occasion, also clarified that his bank was not closing operations and was fully discharging its liabilities towards its depositors and other stakeholders through clearing mechanism of National Institutional Facilitation Technologies and there was no stoppage or difficulty as clarified in the SBP statement issued early this month.
“Neither the Summit Bank has any affiliation with any political party nor is the bank involved in money laundering. The bank is running its operations as per the SBP’s regulations,” Durrani said.
He added that the depositors’ money was safe with the bank and the money laundering allegations would not have any effect on the merger deal.
“We are cooperating with the law enforcement agencies in terms of sharing information. It’s an ongoing investigation,” Durrani said.
It’s important to mention here that the Summit Bank, along with two more banks, faces allegations of involvement in suspicious transactions carried out through fictitious bank accounts.
Former president Asif Ali Zardari and his sister Faryal Talpur are allegedly among the beneficiaries of these accounts.
The apex court had taken a suo moto notice against this issue in January this year, following which a federal agency had launched an inquiry.
The Federal Investigation Agency last month arrested Hussain Lawai, chairman Pakistan Stock Exchange and vice chairman Summit Bank, who is widely believed to be a close aide to Zardari, and assistant vice president of Sindh Bank Mukhtiar, along with two other bankers for interrogation in a money laundering case.