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SBP bars Dubai Bank from selling stakes in Bank Islami Pakistan

KARACHI: The State Bank of Pakistan (SBP) has stopped UAE-based Dubai Bank from selling its stakes in Bank Islami Pakistan to existing sponsor shareholders, a bourse filing said on Tuesday. “Dubai Bank has informed that SBP notified in writing that [it] cannot sell any shares in Bank Islami to any

By Javed Mirza
September 30, 2015
KARACHI: The State Bank of Pakistan (SBP) has stopped UAE-based Dubai Bank from selling its stakes in Bank Islami Pakistan to existing sponsor shareholders, a bourse filing said on Tuesday.
“Dubai Bank has informed that SBP notified in writing that [it] cannot sell any shares in Bank Islami to any of its existing sponsors pursuant to the founding shareholder agreement,” Bank Islami Pakistan said in communiqué to the Karachi Stock Exchange (KSE).
“Consequently, Dubai Bank has shown its inability to sell its shareholdings to Jahangir Siddiqui Company Limited (JSCL), or the other sponsor shareholders.”
JSCL held 21.25 percent shares of Bank Islami, while Dubai Bank held 25 percent as of December 31, 2014.
However, Bank Islami Pakistan conducted its right shares’ issue that increased its shareholders’ equity to Rs9.9 billion on April 30, 2015 to meet the central bank’s capital adequacy requirements.
Dubai Bank did not subscribe to the newly issued right shares and its shareholding was reduced to 14.3 percent as on June 30, 2015.
JSCL had approved to acquire 88.115 million ordinary shares in Bank Islami from Dubai Bank at a cost of Rs947.052 million in an extraordinary general meeting (EGM) held on September 10, 2015.
An investment of Rs749.349 million for purchase of 74.934 million shares of Bank Islami offered by Dubai Bank on proportionate basis at an offer price of Rs10 each was approved.
Another Rs197.703 million was approved for the purchase of 13.18 million shares of Bank Islami at an offer price of Rs15/share to Dubai Bank.
Dubai Bank had announced to sell its entire shareholding of 144.2 million shares and received an offer from a consortium, comprising Al-Karam Group and a high net-worth Ali Hussain – who already possesses 8.36 percent shares of the Islamic bank – to purchase its shares in Bank Islami.
Dubai Bank, however, offered JSCL and Ahmed Randeree of the Randeree Group the right of first refusal to purchase the respective portion of these shares under the founding shareholders agreement. Ahmed Randeree holds 9.83 percent shares of Bank Islami.
“JSCL intends to approach central bank on this matter and an application in this regard will be filed shortly,” the bourse filing said.
Bank Islami Pakistan posted a profit after tax of Rs71.275 million, translating into earnings per share of Rs0.124 for the quarter ended March 31, 2015.
The scrip was trading at Rs9.78/share at KSE as on September 29. The financial conglomerate JSCL shed 35 paisas to close at Rs18.02/share on Tuesday.