KARACHI, Jan 18: Pakistan-Kuwait Investment Company has received permission in principle from the State Bank to launch the first Islamic commercial bank, PKIC managing director Zaigham Mahmood Rizvi told Dawn on Friday.
The bank is expected to be launched in mid- February by the merger of Al-Meezan Investment Bank with the proposed acquisition of the French international bank, Societe Generale’s four branches operating in Pakistan.
The deal has been finalized and the take-over is possible by the middle of the next month. Zaigham Rizvi says that legal formalities for the acquisition are now under way. Various authorities have to be informed.
The proposed Meezan Commercial Bank has been specially permitted by the Central Bank to conduct banking based entirely on Islamic principles, says a press release issued by the DFI.
The Pak-Kuwait board of directors meeting held on Thursday in Karachi appreciated the efforts made by the company for creation of synergies with the proposed Meezen Commercial Bank upon its establishment in the near future.
Under the central Bank rules for Islamic commercial banking made public last month, the paid-up capital of the proposed venture would be Rs1,000 million and it would be required to maintain a capital adequacy ratio of 80 per cent based on risk weighted assets.
The company’s subsidiary Al-Meezan Investment Bank, which is acquiring the banking licence, has a paid-up a capital of nearly Rs3 billion and a capital adequacy ratio of 101 per cent. The Islamic Commercial Bank has to be a listed banking company with expertise in Islamic banking. Set up in 1997, Al-Meezan has focussed on Islamic banking.
Under the State Bank rules, at least 15 per cent of the paid-up capital is to be subscribed by the sponsor-directors. Investment by foreign directors in non-repatriable but dividends are eligible for remittances abroad.
The second major decision announced by the Pakistan-Kuwait management, after the board meeting, is to eventually go for listing.
The board principally cleared the concept of conversion of Pak-Kuwait into a non-listed public company, as a first step towards the possibility of it becoming a listed company at a later stage, with the approval of the shareholders.
The company has triple A rating, reconfirmed by JCR-VIS Credit Rating Agency. Starting operations in 1979 with an initial paid- up capital of Rs250 million, the company is now the highest capitalized financial institution operating in the country, with a net worth in excess of Rs4 billion. It has an impressive history of dividend payouts, which have amounted to a total of Rs2.3 billion since inception.
The Business Plan and Strategy for 2002-2003 was presented to the Board by managing director Zaigham Mahmood Rizvi and to quote the press release “was well received.”
The plan envisages active involvement in diversified activities, which include project financing, local capital market, treasury operations, as well as privatization and other advisory services.
Zaigham Mahmood Rizvi also informed the board that during the year ended December 31, 2001, Pak-Kuwait sanctioned credit facilities to the tune of Rs3 billion to companies mainly in the chemical, communication, PSF, textile and sugar sectors.
Further transactions on the pattern of Fayzan Manufacturing Modaraba to facilitate ICI Pakistan’s expansion programme, are in the process of completion in conjunction with the subsidiary Al Meezan Investment Bank. The board approved these transactions.
The approval of the board was also obtained for creation of a separate cell to cater to the requirements of micro financing and small and medium enterprises. It would work with SME Bank to play a dynamic role in the field.
The Pakistan-Kuwait is a joint venture on a fifty-fifty basis between the governments of Pakistan and by Kuwait Investment Authority. Representing the Authority in the Board are: Abdulazim A. Al-Shamali, Chairman, Emad Yousef Al-Monayea, Abdulallah Abdulwahab Al-Ramadhan. Pakistan is represented by Abu Shamim Ariff, Javed Sadiq Malik and Zaigham Mahmood Rizvi.