63
KARACHI: The State Bank on Friday put six-month moratorium on KASB Bank, allowing only small depositors to withdraw their money.
The bank has been in trouble for more than a year as it failed to meet SBP’s criterion for capital adequacy ratio (ADR). However, the banking circle believes that the bank came under attack of a banking tycoon who wants to buy majority shares in the bank.
“In order to protect the interest of depositors and other stakeholders and due to financial health and other circumstances of KASB Bank Limited, (“the bank”), the federal government, on the application of the State Bank, has placed KASB Bank Ltd under moratorium for a period of six months effective Nov 14, 2014,” said the State Bank in a statement issued for the media.
Also read: KASB Bank books profit of Rs237m
Consequently, the payment of certain debts and obligations from the bank would be suspended while it would continue to receive all payments or recoveries due to the bank, said the SBP.
“The federal government has directed the State Bank to consider reconstruction or amalgamation of the bank as per the provisions of the Banking Companies Ordinance, 1962 within six months,” said the SBP.
“Payment to the depositors of the bank having account balance of up to Rs300,000 on the date of placing of the bank under moratorium will not be affected,” said the SBP.
In this manner, more than 92.33 per cent of total account holders will be able to operate their accounts, said the SBP. “The account holders with balance of more than Rs300,000 as of effective date, however, would be able to withdraw up to the above permitted threshold only.”
The State Bank said that the overall banking system is well capitalised and functioning smoothly. However, the KASB Bank Ltd consists of just 0.6pc of the total assets of all banks and the SBP will ensure a resolution of the same in the best interest of the depositors and the banking system, the statement added.
Banking sources said the name of a majority shareholder of the KASB Bank was placed on the Exit Control List few months ago. They added the State Bank was closely monitoring the operations of the bank. Banking sources said they were aware about the development as the bank was struggling hard to improve its balance sheet.
They said the KASB Bank also came under strict observation after it failed to justify a large deposit.
All attempts to get a response from the KASB Bank management on the government’s drastic decision proved futile.
Published in Dawn, November 15th, 2014
Read more
On DawnNews
Comments (63) Closed
Nov 15, 2014 06:43am
Must be NAwaz or zardari friend.
Recommend
0
Nov 15, 2014 07:23am
@Syed your zardari and Nawaz references have gotten old.
Recommend
0
Nov 15, 2014 07:29am
Some things sounds fishy, any bank should not be allowed to get burst like that.
Proper investigation is needed urgently to restore the confidence of the ordinary public who have deposited their hard earned money by trusting the bank
Authorities should take immediate action to protect the funds of the depositors
Recommend
0
Nov 15, 2014 08:31am
My sixth sense tells me it is Shaukat Tareen the ex finance minister of Pakistan after Shaukat Aziz left the post (both ex Citi Bankers) the hidden owner of Silk Bank who is on the ECL. While I was working in KASB a few years back Silk Bank was prepared to acquire KASB which Nasir Ali Shah Bukhari the son of Khadim Ali Shah Bukhari refused the said offer. Shaukat Tareen is the same person who sold off Union Bank to Standard Chartered Bank making huge personal income on that deal without any tax I assume. Well at that time I was an employee working for Union Bank. Zardari was interested in MCB(Mian Mansha's baby) Which was declined by the later. That is why we have Sindh Bank now. Punjab Bank is under Shahbaz Sharif as it was him that actually opened it. If we start cleaning all the dirt under the rugs it will take us a life time to clear the dust and rubbish, we have gathered in 67 years of independence.
Recommend
0
Nov 15, 2014 08:55am
Mian Mansha directly and indirectly Nawaz sharif under cover.
Recommend
0
Nov 15, 2014 08:59am
@Aly khan I also have account in this bank, what should I do? are they making payments? or normal banking work is stopped? Any one know about this?
Recommend
0
Nov 15, 2014 09:25am
How about their KASB Skyview project, I invested there????
Recommend
0
Nov 15, 2014 09:56am
Protection of depositors is good measure. However, why the shareholders have been abadoned.
The Auditors' Report should have signified the symptoms of the disease, earlier. If there was no indication by the auditors, if it is demanded that they should also be held responsible, it will not be unfair as they allegedly have been misleading shareholders.
If the SBP action is correct, it also raises a pertinent issue of benefit of Audit and fat payments made to them.
Let us discuss/comment on the subject on its merit and issue should not be politicised.
Recommend
0
Nov 15, 2014 10:04am
I am a depositor in KASB Bank. The way adopted by SBP is very strange, if KASB was not maintaining Capital Adequacy Ratio, SBP should have warned general public through press release for awareness of general public and should not take such drastic decision. Pakistan is a total fraud country where no one is honest. We speak the least truth when compared among the other nations of the world. May Allah protect Pakistan and its every citizen. Ameen
Recommend
0
Nov 15, 2014 10:05am
It will have to be seen as to who initiated collapse of the Bank so as to do a salvage operation picking up the bank for nothing. Zardari allegedly own three banks albeit using proxies and it may well be Nawaz who may follow into his foot steps, as he desperately require a bank to perhaps park the slice of his cake. Unless it is not Nawaz, State Bank or KASB should post on its website that KASB has been subject to a bid and being listed on the securities commission, the shareholders have a right to know the bid price. It is transparency that is essential in today's time which the Government is short of.
Recommend
0
Nov 15, 2014 10:11am
It will have to be seen as to who initiated collapse of the Bank so as to do a salvage operation picking up the bank for nothing. Zardari allegedly own three banks albeit using proxies and it may well be Nawaz who may follow into his foot steps, as he desperately require a bank to perhaps park the slice of his cake. Unless it is not Nawaz, State Bank or KASB should post on its website that KASB has been subject to a bid and being listed on the securities commission, the shareholders have a right to know the bid price. It is transparency that is essential in today's time which the Government is short of.
Recommend
0
Nov 15, 2014 10:12am
@KAMRAN g
ATMs are down. We will know on Monday we can withdraw money or not.
Recommend
0
Nov 15, 2014 10:26am
@KAMRAN
If u have deposit upto rs. 300K, it will be business as usual for you. If your deposit I'd more than Rs. 300K then u can withdraw upto the above amt. Rest of your deposit will remain with bank till completion of process.
Recommend
0
Nov 15, 2014 10:58am
Being a banker, it is my suggestion to all customers that not to worry about this, as SBP will resolve the issue and it is 100% sure that not a single customer will loose money
Recommend
0
Nov 15, 2014 11:02am
In other words it's a bailout. Usually such credit crunches show up when recession is about to hit. Run for cover!
@UnshacklePak
Recommend
0
Nov 15, 2014 11:24am
"Banking sources said the name of a majority shareholder of the KASB Bank was placed on the Exit Control List few months ago."
Why the people were not informed at that time, and also who benefited from late disclosure of the information to public.
Role of state bank is also fishy!
Recommend
0
Nov 15, 2014 11:46am
@ali Fault of SBP before going for such action they should warn investors..this is not about one bank almost all banks have issues due to which general public trust is not any more on banks..at this after effects on Pak economics
Recommend
0
Nov 15, 2014 12:08pm
Banking Tycoon.... Nawaz govt..... who could it be?
Recommend
0
Nov 15, 2014 12:25pm
This is totally unfair with the depositors
Recommend
0
Nov 15, 2014 12:30pm
@ayaz thanks for your stress relieving comments
Recommend
0
Nov 15, 2014 12:37pm
A glaring and shameful negligence of duty by our central bank!! Period!
There is no excuse for not blowing the whistle as early as the the crisis set in and that makes the State Bank morally, ethically and judiciously liable to compensate all the depositors,nothing short of, 100% with the amounts they had in their accounts.
What a watch dog!
Recommend
0
Nov 15, 2014 12:45pm
i have more than 300 K in my Kasb Bank account....any idea k when will i be able to receive rest of my money.
any expert opinion???
btw this move will shatter the confidence of Pakistani people in the banking system of the country.
Recommend
0
Nov 15, 2014 12:54pm
@SHAMS UL HASSAN
You are right. It is the duty of SBP to inform the general publice if any financial institution of Pakistan financial health is not stable. Further more, i am astonished when I heard that the SBP will not pay the customers their hard earn money except Rs: 300,000/-.
I suggest all account holders to go to Supreme Court of Pakistan to get your hard earn money. As I know our Supreme court is also a type of fraud court because I know you people will not get justice from there except dates. But you have no other option.
May Allah Help Us and We should get rid from these corrupt politician, police and judicial.
AMEEM
Recommend
0
Nov 15, 2014 01:19pm
I know the person who are the friend of the main shareholder of the bank of course N. A. S. B. , he told me that "his son go to dubai on a pleasure trip and come back in the nigh as Mr. N.A.S.B doesn't like his children to have over nigh stay so the next day the kid go back to dubai again on bank expense". If this is true there should be a complete investigation on Mr.N.A.S.B as he looted deposit holders and shareholders money and he should be bring to the justice system so it creates a precedence for the future.But not very optimistic as the system for the stronger is different than the weaker.Shame on the system maker and can just hope one day it will get better.
Recommend
0
Nov 15, 2014 01:27pm
@Ahmed pray brother my condition is not much different from yours..waiting for words from S B P.....
Recommend
0
Nov 15, 2014 01:31pm
@Ahmed You are correct. Now no one feels safe with their money in the bank account. Who knows, UBL and Habib may be next. SBP should have never imposed the 300,000 limit. Customer's money needs to be accessible at all times. By imposition of limit, SBP has shaken the confidence of the people in the Pakistani Banking System
Recommend
0
Nov 15, 2014 01:32pm
@KAMRAN if ur balance is 300000 or less u can operate normally. If it is above that threshold u might need to wait a little :)
Recommend
0
Nov 15, 2014 01:53pm
what about the amount more then 300,000/= on monday all depositors can withdraw rs 300,000 and what about rest of money when we can witdraw
Recommend
0
Nov 15, 2014 01:55pm
For all those concerned over the 300K limit imposed by SBP, please note that this has been done to ensure that there is no run on the bank. In other words, the branches have limited amount of cash at one point in time. For instance, if one branch has deposits of PKR 10mn, it will not have 10mn in cash at one point in time since that money has been allocated elsewhere. If all the depositors showed up at once and demanded their money, the bank will not be able to honor all the customers, and it would have to declare bankruptcy. And that would mean that the entire money is lost. SBP has done this to ensure that both the bank and its customers are protected. There will probably be some more clarity by Monday. In the meantime, enjoy your weekend.
Recommend
0
Nov 15, 2014 02:01pm
I m an ex-employee of the bank and i know for a fact it was a regular practise there to keep employees in the dark over key matter so i can imagine customers are obviously worse off,the sahaukat tareen/union lobby was pretty strong though
Recommend
0
Nov 15, 2014 03:30pm
SBP needs to inquire why the bank did not keep adequate ADR.
Recommend
0
Nov 15, 2014 03:59pm
It looks like a complete failure of SBP instead of KASB!!! Central bank is responsible for the safety of public money and must work as a trustee. Corruption is leading this country towards a complete failure!! May Allah protect the residents of this country.
Recommend
0
Nov 15, 2014 05:06pm
i have more than 300 K in my Kasb Bank account....any idea k when will i be able to receive rest of my money.
any expert opinion???
Recommend
0
Nov 15, 2014 05:38pm
I am a Banker and rest assured that your money is safe given the fact if u have deposit proofs with you. Nobody should be worried. It is duty of SBP to protect public money. If not then SBP will be answerable to lots of international forums. But time factor will cause inconvenience. People in trouble are only the employees of KASB Bank. But no doubt it puts serious concerns over capability of our so called foreign degree holders financial managers.
Recommend
0
Nov 15, 2014 06:41pm
Being myself an accountant by profession, the case seems to more mishandled. Inquiry and detailed investigation should have been made by the SBP along with taking correcting actions without making the things public.
That way, there would have been no need to impose PKR 300k withdrawal limit to avoid bank running out of cash nor would it had worsened the bank's management case for merger / disposal.
Further, having made the thing public, I think, now it should be responsibility of SBP to make the peoples having cash deposits greater PKR 300k to get those withdrawn based on their convenience and necessity instead of just making go here and there and take loan or arrange for other sources of finance. After all, it is their responsibility to protect public interest and that is what they are paid for from public taxes (having made the things public in this manner).
Recommend
0
Nov 15, 2014 07:58pm
KASB Bank will release an official note by Monday so not worry about your accounts as per senior official officer of Bank for all customers! Not Worry, Even I also have an account in KASB more than 300K! Be Relax
Recommend
0
Nov 15, 2014 08:31pm
why state bank always wake up late? why not apprehend such malpractices & wrong doings of white collar criminals earlier?
SBP must shun off 'Governmental sentimentalism' both their field staff and back office staff do critical things with laziness! SBP monitoring is not efficient most private banks has gigantic mistakes/errors/embezzlements but SBP doesn't intervene. SBP is playing the regulator's role like our 'Police' always arrive late and recovery/repairing is not efficient.
Recommend
0
Nov 15, 2014 08:36pm
Action should be taken against SBP and GOP for letting things get this bad. Sponsors of KASB should be punished and regulator reformed!
Recommend
0
Nov 15, 2014 08:38pm
@jj, you seem a rather disgruntled employee of most of the failed banks in Pakistan. hmmm, i wonder what they all have in common?
Recommend
0
Nov 15, 2014 09:32pm
The news item raises many questions and answers none...Is it the Capital Adequacy Ratio, the financial health, raid by a tycoon, impending run on the bank, political motivation (PTI Donations, Bahria Town etc), siphoning off of funds for bailing out the govt, feeding corrption, making the bank an easy prey for BOC?
We the account holders have the right to know what's up? It's hard to believe the govt when it says that it is in our interest...yeah right !
Where are the investigative jurnos?
Recommend
0
Nov 15, 2014 09:40pm
@Ahtesham is it sure that by mon notice will be isssued ?
Recommend
0
Nov 15, 2014 09:55pm
Guys relax. nothing criminal seems to have happened so far. KASB bank had fallen below the required capital adequacy ratio and despite repeated SBP warnings couldn't present an adequate capital injection plan. So SBP to safeguard the depositors has taken over the bank. There were enough warnings for shareholders, a cursory read of the bank's quarterly report has the whole issue there in the open. Auditors and management both were concerned about the bank being a going concern.
That said SBP seems to have mishandled the takeover by imposing the moratorium, which has caused a public panic. This will have repercussions for other small banks. The whole thing was better handled behind closed door and made public once a solution was already there (an investor or a merger). But anyways there is no threat of loosing money here only inconvenience.
Recommend
0
Nov 15, 2014 10:38pm
@Syed This bank was actually ruined by Munir Kamal, ex President of this bank and the elder brother of Asad Umar.
Recommend
0
Nov 15, 2014 10:45pm
Because Mansha Group wanted to buy the bank and to crash the share and reduce the buying price - This is Pakitan
Recommend
0
Nov 15, 2014 10:50pm
@Em Moosa Wooow you have hit the nail right on the head
Recommend
0
Nov 16, 2014 12:57am
They claim it's issue related to capital adequacy but that does not happen overnight. Sbp has proactive reporting requirements on advances, deposits, concentration and financials it's surprising that it happened this way and account holders are affected ... I recall a morotarium on $ accounts in 88 and getting funds back was a pain.
Recommend
0
Nov 16, 2014 01:49am
Nothing will happen, Mehran Bank scandal is still unresolved.
Recommend
0
Nov 16, 2014 02:32am
@ayaz i also have a acount in kasb value of 800k what should i do. what is the process of the bank??? how can i get my money back???
Recommend
0
Nov 16, 2014 04:11am
Confidence of Account holders has been shattered by this action.
Recommend
0
Nov 16, 2014 06:40am
bhot pershan hai sab log
Recommend
0
Nov 16, 2014 08:16am
@masood faker na karo
Recommend
0
Nov 16, 2014 08:17am
A/c holder ko kion band kia
Recommend
0
Nov 16, 2014 11:22am
@PukhtoonWali it seems like this, people are talking that they are going to sale to Mansha group, it seems a game of pmn
Recommend
0
Nov 16, 2014 11:36am
@ali How much time it will take? We have deposited our hard cash on current account to purchase a small house, but saw the shocking news ... any idea guys
Recommend
0
Nov 16, 2014 11:39am
@Kamran Honestly speaking, knowing this news... now no one has trust on Central Bank of Pakistan.... at least being a banker I don't trust anymore...
Recommend
0
Nov 16, 2014 11:44am
@AW NO TRUST on SBP, people should have a right to access to their own money. Kabul bank collapessed in Afghanistan, but a country like Afghanistan never compromise with the depositors. They have given access to the depositors all time.
Recommend
0
Nov 16, 2014 12:16pm
@Usman Thanks Usman, if it is the case then SBP should not put cap on the public money. How people can trust on SBP. I know it will be very small money, but it will impact the entire financial sector. As you can see PIA, how people losing trust, the Federal Government and SBP is totally responsible of the panic among the public. This is very bad sign and mismanaged by Central Bank
Recommend
0
Nov 16, 2014 02:46pm
@Abdu Rahman .me also having the same problem.
Recommend
0
Nov 16, 2014 03:02pm
@ahmad Yes, It is sured by Monday they will send a notice to all customers. Be Relax and Enjoy the WeekEnd!
Recommend
0
Nov 16, 2014 07:45pm
Arise bitcoin !!
Recommend
0
Nov 17, 2014 01:43pm
need to resolve this matter on top urgency level.
to build up the confidence of general public on Banking sector
Recommend
0
Nov 17, 2014 09:10pm
In pakistan we know these gueys who audit the offices these people get a hand some of money every year from institutions and gave them ok certificate for next year, sbp is fully responsible for it and there stupid silece will harm may other banks, why they dont have fedral insurance for usa.
Recommend
0
Nov 19, 2014 10:03am
Any update guys, what will happened with the depositors who have more than 300,000 pkr....
Recommend
0
