KARACHI: State Bank of Pakistan has approved the amalgamation scheme of KASB Bank Limited with and into Bank Islami Pakistan Limited as per Section 47 of the Banking Companies Ordinance, 1962.
The SBP scheme of amalgamation will result in the acquisition of KASB Bank, the smallest lender of the Pakistan, by Bank Islami Pakistan the second largest Islamic Bank of Pakistan at a ‘token value’, according the statement released by both banks.
On April 27, 2015, SBP has prepared a draft scheme of amalgamation of Khadim Ali Shah Bukhari Bank (KASB Bank Limited) with and into Bank Islami Pakistan Limited.
The reason behind amalgamation scheme was non-compliance by KASB Bank of SBP targets. The KASB Bank has been facing severe capital shortfall in terms of both Minimum Capital Requirement (MCR) and Capital Adequacy Ratio (CAR) since 2009.
Despite giving the KASB Bank several opportunities, the Bank repeatedly failed to take any corrective measures with the result that the SBP had to recommend to the Federal Government, to place the Bank under moratorium. The Federal Government accordingly, imposed moratorium on the Bank vide order dated November 14, 2014.
KASB Bank has 104 branches in 43 cities of Pakistan and was offering investment, corporate, and consumer banking services to the customers. Total equity of the KASB Bank on year ended November 30, 2014 was of Rs. 1.323 billion.
After considering the scheme of amalgamation, Bank Islami will forwards its comments, suggestions, or objections it today April 29 meeting of the board of directors. After the successful completion of the amalgamation scheme will lift the FG’s moratorium that makes restrictions on the maximum amount depositors can withdraw from KASB Bank.
Condensed Interim Unconsolidated Statement of Financial Position of KASB Bank Limited