PESHAWAR, Jan 9: The Bank of Khyber (BoK) will jack up its paid-up capital to Rs4.5 billion by April 2007 surpassing the yearly target of Minimum Capital Requirement (MCR) set by the State Bank of Pakistan (SBP).

CEO of the BoK Syed Iqbal Ashraf told Dawn that a strategy had already been devised

for achieving the SBP’s targets following getting go ahead signal from the provincial government and shareholders of the bank.

According to the MCR determined by the SBP, every bank has to maintain minimum paid up capital up to Rs6 billion by end of fiscal year 2008-09. Accordingly, the BoK was required to increase its paid up capital on yearly basis to the specified ratio, which currently stands at Rs2 billion.

“Target for enhancing the paid-up capital for 2007 was Rs4 billion, which we will exceed by putting it at Rs4.5 billion within next three months," Mr Ashraf maintained.

He informed that in this regard the management was pursuing a strategy that had been approved in Extraordinary General Body Meeting (EOGBM) held recently.

The shareholding of the NWFP government, stands at 65 per cent, would be reduced by 51 per cent under the strategy that would ultimately increase the paid-up capital at the required level.

The bank had hired AKD Securities and United Bank Limited as its underwriters and financial advisors that would offload 24 per cent shares of the Frontier government through ‘right issue’ enabling the management to meet the SBP targets, Ashraf informed.

Under the right issue, he explained, the 24 per cent shares of the NWFP government first would be offered to the existing shareholders and then it could be purchased by the underwriters.

Apart from achieving the SBP targets, the reduction of Frontier government’s shares in the BoK would make its dealing with the World Bank easy.

The World Bank had been asking the provincial government to curtail its shareholding in the BoK.

The NWFP government currently was in the process of attaining $130 million from the World Bank under a proposed Development Policy Credit (DPC) to manage funds for growing development as well as current expenditures, for which reduction of its shares in the BoK was still one of the targets, said an official at Finance Department.