KARACHI: The State Bank of Pakistan (SBP) has disposed of all objections raised regarding the merger of defunct KASB Bank into BankIslami in the light of orders of the Sindh High Court.

The State Bank posted the details on its website saying ‘the objections stand disposed of accordingly.’

In compliance of the order of the Sindh High Court, the State Bank of Pakistan initiated the process of inviting objections through notices regarding the merger of the KASB Bank.

On May 14, notice inviting objections to the valuation of the bank was published in the leading national and regional dailies informing therein the valuation report of the bank,” said the SBP.

In order to reach the maximum members or shareholders of the bank, notices were also placed on the websites of the Central Depository Company (CDC), BankIslami (Pakistan) Ltd and Pakistan Stock Exchange (PSX).

A copy of the notices was also issued to the 3,999 members and shareholders of the bank on the given addresses, as per the list obtained from BankIslami, CDC and PSX.

According to the notice, the members or shareholders of the bank, as on 27-4-2015, were invited to file their written objections to the valuation of the bank as set out in the scheme of amalgamation to the Director, Banking Policy and Regulations Department, SBP, within 15 days of the notice.

The SBP reviewed all the objections raised by the objecting members and shareholders on merit.

“Based on the assessment of the objections the evaluation conducted by the independent evaluator of the bank was considered reasonable,” said the SBP.

There was no reason raised by the objecting members and shareholders, which could be considered to necessitate fresh evaluations, said the SBP.

“Therefore, the objections, as analysed above, have not raised any sustainable ground for increase in valuation justifying payment of the any compensation to the members or shareholders of the bank,” said the SBP.

KASB Bank remained non-compliant with the prescribed minimum capital requirement and capital adequacy ratio since 2009. In January 2011 the SBP imposed monetary penalties and some limitations on operations. The bank was operating in highly objectionable manner, the SBP said.

Due to the continued deteriorating financial position posing serious threats to depositors’ money, the bank failed to inject the required capital as committed with the SBP. The accumulated loss of the bank reached Rs12.6 billion.

The merger was criticised by some stakeholders but finally the objections raised against the merger were rejected.

Published in Dawn, July 5th, 2018