Sum­mit Bank keen to ac­quire 51pc shares in Burj Bank

The Pak Banker - - FRONT PAGE - Muham­mad Yasir

The man­age­ment of Sum­mit Bank has sought a per­mis­sion from State Bank of Pak­istan (SBP) to ac­quire ma­jor­ity of share­hold­ing of at least 51 per­cent in Burj Bank. Ac­cord­ing to the no­ti­fi­ca­tion is­sued to Pak­istan Stock Ex­change, the bank man­age­ment in­formed its share­hold­ers that it has showed its in­ter­ested in the share pur­chase deal of Burj Bank, a full-fledged Is­lamic Bank.

The in­ter­est of the Sum­mit Bank is quite sur­pris­ing to buy shares in a strug­gling bank as it has been try­ing hard to meet up its paid-up cap­i­tal it­self through right shares sub­scrip­tion and sup­port of spon­sor Suroor In­vest­ments.

The bank is not only in the process of fi­nal­iz­ing its right share but it also has de­cided to in­creased its au­tho­rized cap­i­tal share from Rs 20 bil­lion to Rs 25 bil­lion. But Sum­mit Bank man­aged to record profit of Rs 238 mil­lion in 2015 from Rs 241 mil­lion re­ported in 2014. The bank's rev­enue earn­ing im­proved to Rs 5.94 bil­lion in 2015 from Rs 5.07 bil­lion re­ported in 2014.

It will be chal­leng­ing


for Sum­mit Bank's man­age­ment not only to strengthen its fi­nan­cial sound­ness along with op­er­a­tions in line with con­vert­ing bank into con­ven­tional to full-fledged Is­lamic but to ac­quire shares of a strug­gling bank pro­vided the cen­tral bank gives green sig­nal for next step.

It is per­ti­nent to men­tioned here that Bank of Khy­ber has shown its in­ter­est to con­duct due dili­gence of Burj Bank in Fe­bru­ary 2016 in or­der to ac­quire shares in the com­pany. It is also seek­ing cen­tral bank per­mis­sion for due dili­gence. At present, Burj Bank has en­gaged with mul­ti­ple in­vestors, in­ter­ested to in­vest in the cap­i­tal of the Bank.

Sub­se­quently, the ma­jor­ity ex­ist­ing share­hold­ers of the Bank (con­sist­ing of 71.80% share­hold­ing in the Bank) are work­ing on the pro­posal with one of the po­ten­tial in­vestors to al­low them to in­ject fresh cap­i­tal in the Bank so as to ac­quire 51% or more share­hold­ing in the Bank to com­ply with the min­i­mum cap­i­tal re­quire­ment of Rs 10 bil­lion as stip­u­lated by the SBP. The bank has ap­plied to SBP for the ap­proval of the above ar­range­ment and the re­sponse from SBP is awaited. How­ever, the SBP has al­lowed the Bank an ex­ten­sion in meet­ing the MCR of Rs. 10 bil­lion till Novem­ber 30, 2015 and to main­tain the CAR at 18% till such time. Pre­vi­ously, MCB Bank and Na­tional Bank of Pak­istan (SBP) has com­pleted its due dili­gence in or­der to ob­tain share­hold­ing in the Is­lamic Bank which has been in­cur­ring losses with paid up cap­i­tal less than the in­dus­try re­quire­ment.

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