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Friday March 29, 2024

Summit, Sindh banks merger hits snags

By Our Correspondent
March 29, 2018

KARACHI: Supreme Court of Pakistan’s suo moto intervention over certain irregularities is likely to further delay or perhaps even stay the proposed merger of Summit Bank into Sindh Bank, The News learnt on Wednesday.

Taking up the case, the apex court has ordered a conclusive and comprehensive report regarding the decision of the amalgamation scheme as well as the progress made in the matter.

The Supreme Court Registrar office’s note, which is the basis of the suo moto, said the Summit Bank was created through a merger of My Bank, Atlas Bank and Arif Habib Bank and as per State Bank of Pakistan (SBP) requirement, it was the mandatory for every bank to raise its paid-up capital to Rs10 billion.

“Summit Bank has failed to comply with such requirement for years and on the contrary the capital has been raised fraudulently by misusing depositors’ money against shell companies and fake grower loans through sugar mills and power project in Nooriabad, Sindh,” the note added.

Few of those aforementioned shell companies have been identified as Parthenon, Golden Globe and Alpha Zulu along with sugar mills owned by Omni Group. Moreover, loans were issued without following banking laws.

It must be noted that State Bank of Pakistan had already accorded approval to the proposed merger in December 2016; however, the scheme was yet to be effectuated.

The Registrar’s note also added that Sindh Bank is a government bank and its taking over a suspicious as well as a loss-making entity would result in loss to public exchequer.