KARACHI, Sept 6: Bank of Punjab (BoP) would take over all 160 branches of the Punjab Provincial Cooperative Bank (PPCBL) before December 31 this year, a source familiar with the development said on Thursday.

In a meeting held last week with the Secretary to Government of Punjab, the management of two banks were asked to put things in order so as to complete the merger before the end of the year.

“The minutes of that meeting have been duly notified in the official Gazette”, the source who asked not to be named said.

The reputed consultancy firm, Ferguson Associates has been hired by the government, which has started the due diligence process to determine the ‘swap ratio’ and other details.

PPCBL was incorporated under the Cooperative Societies Act, 1912 and given the status of commercial bank by SBP in 1955. The main objective of the bank was “to carry out the business of agricultural credit and other activities as defined in the Cooperative Societies Act 1925”.

For the financial year 2006, PPCBL posted net profit of Rs155m. Paid-up capital of the bank stood at Rs426m (4.26 million shares of Rs100 each) with its total equity at Rs1.93bn.

A sector analyst thought that the increase in BoP’s branch network would rise to somewhere around 421, which would make it sixth largest amongst commercial banks in terms of branches. The merger was also said to enable BoP to penetrate further in the agricultural and rural sector.

All that is fine, but the only fly in the ointment for BoP is the great uncertainty surrounding the political scene, which has already turned most of the government’s privatisation plans topsy-turvy.