Silk Bank BoD decides to exercise call option

KARACHI: The board of directors of Silk Bank has given a green signal to bank's management for exercise of the Call Option in respect of 880 million Non-cumulative Convertible Preference Shares (PNCPS) to streamline its shareholding. The decision was taken in an emergent meeting of the Board of Directors of the Silkbank held on Wednesday. The board approved the exercise of the Call Option by the Bank in respect of the Non-cumulative Convertible Preference Shares ("PNCPS") issued in 2013 and passed the resolutions which including cancellation of the 1,028,710,173 unsubscribed rights of 311.00226 percent.

According to resolution passed by board in accordance with the Listing Regulation No. 35 under the Code of Corporate Governance - 2012, the board approved that "Rights Issue of the bank, announced in the year 2010, be and is hereby approved.

The board empowered President and CEO of the bank and the Company Secretary of the bank, be and are hereby authorized, to take all steps necessary, ancillary and incidental for excising call option for PNCPS and resultant cancellation of the unsubscribed rights, including but not limited to obtaining all requisite regulatory approvals and submitting all such documents as may be required by the regulators, executing all such certificates, applications, notices, reports, letters and any other document or instrument including any amendments or substitutions to any of the foregoing as may be required and all other matters incidental or ancillary thereto.

Last month,t he management of Silk Bank has concluded its right share exercise to generate required paid up capital with final subscription of sponsor investors and general public. The bank received subscription of 4.3 million right shares which attract Rs 6.8 billion which including Rs 0.5 billion stakes of general public; Rs 1.05 billion by Zuliqernain Nawaz Chatta; Rs 0.648 billion by Zubair Nawaz Chatta; Rs 1.095 billion by Shaukat Tarain; and Rs 3.99 billion by Arif Habib Corporation as underwriter sponsor. After go-ahead signal of central bank in June 2015, Silk Bank floated Rs 6.14 billion rights right shares against the value of Rs 1.56 per share which is discounted price of Rs 8.44 per share.

In July, the bank was provided financial supported by Arif Habib as underwriter to an extent of Rs 6 billion which means expectedly financing has been increased in the bank by investors, resulting of paid-up capital enhancement to Rs 16 billion. Later, the underwriters M/s. Arif Habib Limited subscribed the remaining/ unsubscribed portion of the Rights Issue as per the Underwriting Agreement. According to the five year strategic financial plan submitted to the central bank, the bank has made projections for its profitability and business expansion in the future. The board of directors has planned to enhance its profitability by Rs 4.8 billion with twofold increase in the assets and expansion of business operations by next five years from 2015. The bank management will set up its branches' network which will include conventional and Islamic banking , Emaan but these branches will be established comparatively in small size than operating branches in different cities. Due to shortfall in the paid-up capital, the bank is not allowed to set up its branches and new products but now it will set to grow its business with an aggressive business strategy.