KARACHI: The Sindh Bank and Summit Bank officially announced on Thursday that both banks have decided to go for a merger after a formal approval by the State Bank of Pakistan (SBP).
The banks will be merged forming a new commercial bank – Sindh Bank, which will have a strong branch network of 525 branches, with 330 Sindh Bank branches and 195 Summit Bank branches. The network will comprise both Islamic and conventional banking within the system.
The paid-up capital of the new bank created through the joint venture of the two entities is Rs 27 billion.
In this regard, a high-level delegation of stake holders is scheduled to be held on August 31, 2018 which will meet to discuss the way forward towards seeking NOC from the Supreme Court of Pakistan along with the permission from the SBP. The banks expected to receive confirmation/approval from Supreme Court by September 30, 2018.
The CEO of summit bank Ahsan Khan Durrani denied all allegations and rumors on money laundering by their CEO saying that “We refute all such baseless allegations and are carrying out a structure and calculated legal process to ensure transparency.”
In case of a possible merger, SBP duly ensures that all depositors’ possession remains safe and intact. And whenever a financial institute/Bank finds itself in troubled waters, the SBP either recommends to increase the capital or advises ‘merger’ as the safest resolutions.
Simultaneously, since SBP closely monitors all activities within the banking sector of the country, it ensures that the merger abides by the law of eliminating all possibilities of employee termination or an untimely change in designations within the employees of both banks.
It is pertinent to mention here, that the plan for this merger between the two banks was initiated in June 2016, while it remained in the process of execution throughout 2017 to finally conclude the merger in 2018.
The merger carries some interesting facts as both the banks under all compulsion have to maintain a specified balance sheet, and as well as per the international market, the paid up capital fails to meet the minimum requirement of Rs 37 billion, thus Rs 10 billion short from the announced paid up capital value for the merger.
Director Sindh Bank Mohammad Bilal while commenting on the landmark merger said, “Other than an impact within the listings, an expanded branching network will substantially benefit the financial sector of Pakistan and to add as many as 195 branches of Summit Bank to our existing network would have taken at least 5 year towards completion.”
In a meeting held earlier, the Board of Directors of Sindh Bank had approved the swap ratio of 1:8.37, which meant one share of Sindh Bank to be equivalent to 8.37 shares of Summit Bank, and the swap price had been presented to the shareholders in EOGM and the Sindh Cabinet Committee for their respective approvals.
A conclusive approval on the recommended swap ratio will only be finalized in the meeting that will take place on August 31.