ISLAMABAD, Jan 6: The National Assembly Standing Committee on Privatization met here on Thursday to discuss the restructuring of the Allied Bank (ABL) by the State Bank of Pakistan.

The meeting was presided over by Syed Mohammad Asghar Shah, says a press release. SBP Governor Dr Ishrat Hussain informed the committee that the Allied Bank was not being privatized, but restructured.

He said the bank was given to the Allied Management Group in 1991 through privatization process at the rate of Rs70 per share for initial offer of 26 per cent shares and additional offer of 25 per cent shares on the same rate.

The employees later started selling their shares in 1997 and, at one stage, there were eight per cent shares left with the employees, and the bank's equity got negative. Such circumstances called for the State Bank's intervention as a regulator, Mr Hussain said.

An inspection of the ABL was constituted which revealed various irregularities, out of which the most glaring was the involvement of directors and employees in extending financing facilities to a borrower. The facilities were used for purchase of shares from the employees.

The State Bank, taking cognizance of irregularities, acted under Section 41-A of Banking Companies Ordinance, and removed five directors and two employees of the ABL board. The matter was then referred the case to the National Accountability Bureau for further investigation.

Later, after fulfilling the prescribed procedure and all requirements, management of the ABL was transferred to the successful bidder. Thus, the State Bank successfully recapitalized the ABL and set off its losses.

Now the bank has an equity of Rs9.33 billion and capital adequacy ratio of 26.93 per cent, the governor said. The committee appreciated the efforts of the State Bank governor.

Syed Mohammad Asghar Shah asked the governor to pursue the matter with NAB for institution of criminal proceedings against the ABL directors and employees, who caused a major loss to the bank and were still at large.

The meeting was attended by Minister for Privatization and Investment Abdul Hafeez Shaikh, MNAs Ch Haroon Qaiser, Ijaz Ahmad, Gul-i-Farkhanda, Jaffar Hussain Bokhari, Khawaja Mohammad Asif, Dr Farooq Sattar, Qari Mohammad Yusaf, Ghulam Murtaza Satti, Syed Ghulam Mustafa Shah, ABL president, Privatization Commission secretary and representatives of the departments concerned.