KARACHI: Summit Bank’s merger into Sindh Bank will accentuate the latter’s paid-up capital to Rs27 billion and widen its network to 525 branches by the end of September, said the presidents of the two banks in a press briefing held on Thursday.
Sindh Bank with an existing paid-up capital of Rs17bn, will add another Rs10bn of Summit Bank’s capital into its portfolio once the deal is finalised.
The Summit Bank will disappear from the banking horizon but the management said the merger has nothing to do with money laundering case being faced by some of the senior officials of the bank.
Supreme Court’s clearance is still required to see the deal through
“The decision to merge Summit Bank was taken in 2016 when there was no case against any official of the bank,” said Ahsan Raza Durrani, president Summit Bank Limited.
National Clearing Company of Pakistan Limited (NCCPL) on Aug 2 this year excluded Summit Bank from the list of settling banks and advised securities brokers to shift to other banks for settlement of transactions executed at Pakistan Stock Exchange (PSX).
The decision related only to the PSX transactions was misinterpreted in the financial circles who took the notice as a warning for bank’s imminent closure. However, State Bank of Pakistan (SBP) in a press release quashed all rumours and ensured that the bank will continue operations.
“After money laundering charges against some officials of Summit Bank, the bank faced few dents regarding withdrawal of deposits but the overall situation remained calm and the bank is functioning smoothly,” said Durrani.
Mohammad Bilal, Director Sindh Bank said the extraordinary meetings of both banks would be held on Aug 31 to obtain shareholders’ approval for the merger.
He said the SBP has already allowed the proposed merger in principal whereas Supreme Court’s approval is still required. He said the Supreme Court has advised to approach the court with complete documentation.
“We hope to get Supreme Court’s approval by the end of September 2018,” he said.
Both banks, keeping in view the lower share price of Summit Bank, had set a swap ratio of 1:8.3 for the proposed merger.
The ratio, awaiting shareholders’ approval, translates into one share of Sindh Bank being equal to 8.3 shares of Summit Bank.
The bankers said the initial public offer of Sindh Bank could also be offered during 2018, once both banks are successfully merged into a single entity.
Mr. Tariq Ahsan, president and chief executive officer at Sindh Bank said the bank currently has 330 branches in 151 cities of the country including 175 in Sindh and 55 in Punjab with 28 branches in Lahore alone.
The bankers said the non-performing loans (NPLs) of Summit Bank stand at Rs17bn of which provisioning has been made for Rs14bn. Compared to that, NPLs at Sindh Bank amount to Rs3.5bn despite record growth of 330 branches in six years whereas another 30 branches are currently in the pipeline which would be opened by December 2018.
Mr Tariq said that following the merger of Summit Bank’s 195 branches, Sindh Bank’s network will grow to 525 branches, helping the bank position itself as one of the strongest banks.
The Summit Bank’s officials avoided commenting on the ongoing money laundering case since it is currently being tried in the court.
Published in Dawn, August 17th, 2018