KARACHI: A UAE-based investor leading the consortium set up to acquire the majority stake in Summit Bank Ltd proposed on Monday that the share subscription agreement be changed to reflect a reduced amount of fresh equity injection.
Nasser Abdulla Hussain Lootah said he’ll now subscribe to 3.98 billion new shares of the bank at the previously agreed rate of Rs2.51 apiece. The transaction will generate Rs10bn in equity for the commercial bank.
The injection of fresh liquidity is meant to fix the bank’s capital adequacy issues.
Without naming Summit Bank, the International Monetary Fund recently urged the State Bank of Pakistan to take a “more proactive approach” in addressing the matter of its undercapitalisation.
The original share subscription agreement, signed last year, entailed that the bank would issue a total of 5.97bn shares to both the Lootah-led consortium and other minority shareholders at Rs2.51 apiece. That would’ve generated fresh equity of Rs15bn.
Mr Lootah already owns 0.51 per cent shares in the bank. His consortium is set to acquire at least 51pc shareholding in Summit Bank along with management control.
Salman Iqbal, owner of the ARY Group, had previously shown his willingness to be a part of the consortium by subscribing to a maximum of 25pc shares of the bank. However, a source privy to the development said Mr Iqbal’s plan to take part in the consortium has now “fizzled out” in view of recent political developments unrelated to the bank.
The source added that the transaction will consummate when shareholders give their nod to the agreement in an extraordinary general meeting planned in the next three weeks.
“The change in the board of directors will take place in March. The bank is also expected to unveil its new name by that time,” said the source requesting anonymity.
The lender is going to convert itself into a full-fledged Islamic bank — something it planned to do even before the federal government announced its recent decision to switch completely to Islamic banking in five years.
Published in Dawn, December 13th, 2022