Silkbank says compliant with SBP’s minimum capital requirement

KARACHI: Silkbank Limited clarified a news item headlined ‘Silkbank to convert TFCs into ordinary shares’ published in the business section on Friday. 

“The news pertaining to the conversion of the TFCs is absolutely false and baseless,” the bank said in a statement. 

“The notice of the extraordinary general meeting published by the bank contained a standard State Bank of Pakistan requirement of obtaining the shareholders’ approval for conversion of TFCs into ordinary shares only in the event at the point of non-viability (PONV), if required by SBP.” 

Silkbank, referring to a notice it issued to Pakistan Stock Exchange, said it didn’t imply that the PONV has been triggered requiring conversion into ordinary shares. 

“This (conversion) is standard SBP requirement under Basel III guidelines, for all Tier II instruments and part of the SBP approval for the issuance of TFCs by the banks/financial institutions,” it said.

“We maintain that the purpose of the TFC issue is to contribute towards Tier II capital for complying with the capital adequacy requirements prescribed by SBP under the Basel III framework and the funds raised will be utilised towards the bank’s business operations.”

Silkbank posted a healthy profit before tax of Rs1.3 billion in the fiscal year of 2015/16. In Q12017, the profit before tax amounted to Rs214 million. 

“The bank is fully compliant of the minimum capital requirement of Rs10 billion as set by SBP,” the bank said.  We regret misinterpretation of the Silkbank’s July 20th issued notice to the Pakistan Stock Exchange.