KARACHI: A property development company with links to former Punjab minister Aleem Khan is no more interested in buying Silkbank Ltd.
The troubled bank, which is one of the smallest among listed lenders, told shareholders on Monday that Park View Enclave Ltd has withdrawn the offer to acquire a majority stake due to a change in its “business priorities”.
Park View Enclave expressed its intention in May to subscribe to at least 51 per cent shareholding of the bank and get its control by way of fresh equity injection of up to Rs12 billion. It was going to acquire any additional shares through a public offer under the prevailing acquisition laws.
Speaking to Dawn, JS Global Head of Research Amreen Soorani said Silkbank has been making losses for many years now. The bank’s accumulated losses amounted to Rs20.27bn at the end of 2020, the latest period for which the bank has published its financial accounts.
Park View Enclave hadn’t specified the total number of shares it intended to acquire through new subscription and the subsequent public offer.
Ms Soorani said the bank was in desperate need of new capital to meet regulatory requirements. Its capital stood at Rs3.16bn against the prescribed minimum capital requirement of Rs10bn at the end of 2020. Similarly, its capital adequacy ratio was -4.45pc against the prescribed level of 11.5pc on Dec 31, 2020.
Arif Habib Ltd, which served as manager to the offer, has informed Silkbank that it’s “identified other potential investors” with whom they’re in discussion for raising capital for the bank.
Silkbank has been facing asset quality issues for some time. Its coverage ratio — which is the reserved allowance for loan losses divided by the total amount of non-performing loans — was already “very low” and may have further deteriorated given the considerable increase in interest rates since 2020.
It posted a net loss of Rs6.57bn in 2020 versus a net loss Rs3.95bn in the preceding year.
The major shareholders of Silkbank are Arif Habib Corporation Ltd (28.23pc), former finance minister Shaukat Tarin (11.55pc), International Finance Corporation (7.74pc) and Zulqarnain Nawaz Chatta (7.74pc).
State Bank of Pakistan subjects every investor acquiring a strategic/controlling stake in a bank to the Fit and Proper Test — a thorough process aimed at assessing the potential acquirer’s “integrity, honesty and reputation,” track record, solvency and possible conflicts of interest.
As for Park View Enclave, Kiran Aleem Khan controlled 50pc voting rights while the rest of the shareholding was held equally by Abdur Rehman Khan and Zaineb Aleem Khan.
The share price of Silkbank stood at Rs1.03 apiece on Monday after decreasing 0.96pc from the preceding close.
Published in Dawn, November 1st, 2022
