Summit Bank will become an Islamic Bank in 3 years
The management of Summit Bank has planned to transform the operation of the bank from interest-based to Shariah-based banking mode in the next three years. In accordance with the plan, scholars of the Shariah Board have recently reviewed the management's decision and given its green signal for the conversion of the bank from a conventional to a full-fledged Islamic bank.
It is pertinent to mention that the board of directors of the bank earlier had the same conversion plan in 2016 which was revoked in the subsequent months as the management and the board preferred an opportunity to pursue another plan, that is, the bank's merger with Sindh Bank.
Therefore, the two banks continued to work on sealing the merger deal in accordance with the required process and approval of the relevant authorities successfully but the amalgamation plan of the two banks was objected in the Supreme Court of Pakistan (SCP), which called off the deal ultimately in 2019.
In the meantime, various cases were filed against the Chairman and CEO of the bank for their alleged involvement in financial embezzlement.
In 2021, the bank once again came into the limelight after Dubai-based investor Nasser Abdulla Hussain Lootah announced the acquisition of the majority shareholding (51 percent) of the bank at 2.51 per share. Media tycoon,
Salman Iqbal also joined him as part of the consortium.
At present, the bank is operating nearly 50 branches Islamic branches out of 195 overall branches. Its assets and deposit stood at Rs. 23 billion and Rs. 20 billion, respectively. The bank is not opening new branches of its conventional bank but converting its established branches into Islamic banking branches.
The Islamic banking division of the bank made a profit of Rs. 551 million by the end of September 2022. On the contrary, the bank posted an overall loss of nearly Rs. 2 billion by the end of September last year.
Summit Bank is one of the unique banks in the history of Pakistan's banking industry which was formed after the merger of Rupali Bank, Atlast Bank, and MyBank.
The Bank has incurred a net loss of Rs. 1.994 billion resulting in accumulated losses of Rs. 40.6 billion and negative equity of Rs. 16.515 billion.
As per the applicable laws and regulations, the bank is required to maintain Minimum Paid-up Capital (net of losses) (MCR) of Rs. 10 billion, Capital Adequacy Ratio (CAR) of 11.50 percent. In 2023, Pakistan's banking landscape witnessed a complete conversion of Faysal Bank into a full-fledged Islamic bank.
The successful conversion may give the confidence to devise a conversion plan for becoming a full-fledged Islamic bank in order to tap the high demand for Shariahbased banking services in the country including adhering to the instruction of the Federal Shariah Court towards the elimination of the Riba-based economy.