KARACHI, June 9: First Standard Investment Bank Limited said on Wednesday that it had received the regulators' nod for the merger of Paramount Leasing Limited, Pacific Leasing Company Limited and First Leasing Corporation Limited into the bank.

The implementation of merger/amalgamation of the four separate companies into one, would be effective from June 15, following which Paramount Leasing (PLL); Pacific Leasing Company (PLCL) and First Leasing Company (FLCL) would stand delisted from the stock exchanges.

The consolidation of such huge financial assets into one entity, would inevitably mean cut in common overheads. Employees may have dreaded job losses. But The SECP Commissioner, Etrat H Rizvi, who issued the Order under section 282 L of the Companies Ordinance, 1984 did not lose sight of the humane angle: "Every officer, workman or other employee of PLCL, PLL and FLCL shall, on the effective date become an officer, workman or employee, as the case may be, of FSIBL on the basis that his service shall not be interrupted by the vesting of the undertakings of PLCL, PLL and FLCL in FSIBL under the Scheme(s) and on the same remunerations and other conditions of service, rights and privileges as to pension, provident fund and gratuity, if any, and other matters as were applicable to him before the effective date," the Commissioner set that out in Rule 6 of his Order.

The First Standard Investment Bank currently has 738 million shares outstanding. Interestingly, following the amalgamation of the four companies, the outstanding shares in the Bank would stand reduced to just around 52 million.

The reason: The Bank already owns 45 per cent equity in PLCL; the same in PLL and 35.69 per cent in FSIBL. As the Corporate Regulations stand, no company can own its own shares, and so can't the bank.

The Bank's stake in those companies would, therefore, be eliminated. The remaining shareholders in PLCL, PLL and FLCL would be issued shares in the Bank in swap ratios of 0.555; 0.513 and 3.268, respectively for each share held in the Bank.

First Standard Investment Bank was born following the earlier amalgamation between Altowfeek Investment Bank Limited - 60 per cent controlled by AlBaraka Investment & Development Co, Jeddah - and First Crescent Modaraba.

As a result of that merger, the Crescent Group was believed to have acquired 35 per cent shareholding with three nominees on a seven-member board of directors, while AlBaraka Investment held 14 per cent stake and a claim to two seats on the board of the First Standard Investment Bank Limited.

But that was then. The pattern of shareholding may have changed since. Some time later, the Crescent group purchased strategic equity interest held by Pak-Libya Holdings Limited in First Leasing Company and Paramount Leasing for Rs175 million.

Interestingly, unlike all other leasing companies, those two were the exceptions where over 80 per cent equity was vested in financial institutions. That was why acquisition of majority stake looked both an easier and a timely strategic move.

Those keeping an eye on the country's financial sector had long since affirmed that the Crescent Group was following the strategy of eventually combining all of its financial assets: Modaraba (First Crescent Modaraba) investment bank (Altowfeek Investment Bank) and leasing companies (Paramount and First Leasing) into First Standard Investment Bank Limited. Those predictions proved right.