BankIslami

NAB to investigate #merger of KASB bank into BankIslami

#Pakistan's National Accountability Bureau (NAB) initiated an inquiry into the alleged misuse of authority by SBP officials at the amalgamation of KASB Bank into BankIslami. According to the State Bank of Pakistan (SBP), a smear campaign was run in the media against them. SBP added that the onesided views presented in the media led to misjudgment about the authority of SBP as a guardian of the financial sector. All stakeholders of the defunct KASB Bank were well aware of the poor financial conditions of the bank. The State Bank gave ample time to the sponsors of KASB Bank to inject further capital into the bank. Besides capital shortfall, the bank and its sponsors engaged in fraudulent practices and were siphoning off more than Rs 3 billion from the bank. SBP stated that none of its officials misused authority nor were involved in any kind of corrupt practices.

JSCL restricted from buying Dubai Bank’s stakes in BankIslami

The State Bank of Pakistan (SBP) rejected request of Jehangir Siddiqui and Company Limited (JSCL) to review its decision to disallow Dubai Bank to sell out its shares to its sponsor shareholders of BankIslami. JSCL approached the central bank in September 2015 to submit an application to the central bank with suggestions in order to getting additional shares in BankIslami. However, the central bank retained its decision and disallowed the management of BankIslami to sell its stakes of Dubai Bank to JSCL in pursuant to Founding Shareholding Agreement under which sponsor shareholders are not allowed to increase its shareholding. Earlier in August 2015, a consortium led by Ali Hussain of JSCL and Alkaram Group offered Dubai Bank to purchase its 144.200 million in the BankIslami.

JSCL to increase its stake in BankIslami

Jahangir Siddiqui and Company is going to increase its stake in BankIslami Pakistan by at least 7.4% in coming weeks. According to a note sent out to members of the Karachi Stock Exchange (KSE) on Tuesday, the board of Jahangir Siddiqui and Company has decided to make a long-term equity investment of Rs749.3 million in BankIslami by purchasing 74.9 million shares from Dubai Bank PJSC at Rs10 per share. The shareholding of Jahangir Siddiqui and Company in BankIslami was 21.2% as on June 30. The total stake of the financial conglomerate in the Islamic lender will stand at 28.7% in case the company’s shareholders approve the equity investment decision taken by the board.

Dubai Bank to divest holding in BankIslami

Dubai Bank PJSC wants to sell its shareholding in BankIslami Pakistan, a stock filing said on Wednesday. Another shareholder, Jahangir Siddiqui and Company, reported that it has received a letter from the UAE-based bank, saying it wants to sell 144.2 million shares in BankIslami Pakistan. The stake that Dubai Bank PJSC wants to sell constitutes 14.3% of the total issued shares of BankIslami Pakistan. Dubai Bank is offering its stake to Jahangir Siddiqui and Company and another (unnamed) shareholder of BankIslami Pakistan under its shareholders’ agreement that mandates a right of first refusal on a proportionate basis.

Bankislami: Funds given to meet depositors’ demand, says SBP

The State Bank of Pakistan (SBP) and BankIslami have clarified a news story titled “SBP grants Rs20b to BankIslami”. The SBP said it is a normal practice for central banks to provide funds to banks whenever they are under liquidity stress or to meet unexpected deposit withdrawal requests. Liquidity support up to Rs15 billion was offered to BankIslami in anticipation of heavy withdrawal by the depositors of defunct KASB Bank after its amalgamation with the former. This facility, valid for 180 days, is fully secured by the sukuk held by BankIslami. BankIslami said the support it received from the SBP had been used to pay off the depositors of KASB Bank, which to date amounted to more than Rs22 billion.

Concessionary loan: SBP grants Rs20 billion to BankIslami

The State Bank of Pakistan has given a Rs20-billion concessionary loan, including Rs5 billion at an incredibly low rate of 0.01%, to BankIslami to meet capital requirements following the amalgamation of KASB Bank into it. It has highlighted transparency issues pertaining to the BankIslami and KASB Bank amalgamation, as the central bank did not extend the facility through competitive bidding.In protest against the move, a minority shareholder of KASB Bank has lodged a complaint with the National Accountability Bureau (NAB). The complainant, Shaheena Wajid Mirza, requested the anti-corruption watchdog to investigate the SBP governor and other officials of the central bank and Ministry of Finance for alleged corrupt practices and misuse of authority.

In violation of earlier claim: BankIslami appoints new officials at KASB Securities

The management of BankIslami has appointed Shahid Ali Khan as the new CEO of KASB Securities, the subsidiary of KASB Bank. Khan replaces outgoing CEO, Irfan Nadeem Sayeed. The management, which had earlier pledged not to force officials of KASB Bank to quit, is now placing its officials on key positions in sheer contradiction of the claim it made at the time of merger of KASB Bank with BankIslami. In the emergent meeting of the board of directors recently, BankIslami management appointed new leadership for KASB Bank’s subsidiary, including new CEO and a board of director, M Nasurur Rahman, in the place of Tahir Iqbal.

LHC issues notices to govt, SBP on merger of KASB, BankIslami

The Lahore High Court (LHC) on Thursday issued notices to the Ministry of Finance, State Bank of Pakistan (SBP), the Securities and Exchange Commission of Pakistan (SECP) and others on the petition of a shareholder against amalgamation of KASB Bank with BankIslami. The petitioner, First Capital Equities Limited, who owned approximately 94,000,000 shares worth approximately Rs 210 million in the KASB Bank, moved the court against SBP’s moratorium and amalgamation of the bank with BankIslami. The petitioner maintained that its fully paid-up shares in the bank were unlawfully cancelled and extinguished due to the merger without its consent and opportunity of hearing.

Depositors of former KASB Bank start transactions with Bank Islami

State Bank of Pakistan informed that the amalgamation of the defunct KASB Bank into Bank Islami Pakistan Ltd has been implemented smoothly. As a result all the depositors which are over 150000 in number and have Rs 57 billion in deposits are free to operate their accounts. Many of them have already started operating their accounts and more than 1200 employees have continued their jobs, a statement of SBP said. An important issue is the notional value at which the defunct bank has been handed over to BankIslami. Following international practices, a notional value of Rs 1000 was set for the defunct bank. BankIslami has planned to gradually transfer the defunct bank's conventional banking operations into Shariah based operations.

SECP asks SBP to review KASB-BankIslami merger

The Security and Exchange Commission of Pakistan (SECP) has asked the State Bank of Pakistan (SBP) to review the deal to merge KASB Bank and BankIslami, which cost millions of rupees to the equity investors. Sources said that SECP Chairman Zafar Hijazi wrote a letter to SBP Governor Ashraf Mehmood Wathra, urging him give compensation to equity traders who faced losses as a result of the amalgamation of BankIslami with KASB Bank. The value of KASB Bank’s shares became zero after the amalgamation process – as the shares now stand cancelled and retired – and there was no protection to investors’ money, mainly that of shareholders.

BankIslami takes over KASB Bank

The federal government has approved the merger of KASB Bank Ltd with BankIslami Pakistan Ltd (BIPL). KASB Bank had been in trouble since 2009 as it failed to meet the Minimum Capital Requirement (MCR) and Capital Adequacy Ratio (CAR). The case became complicated when a Chinese company showed interest in buying the bank but the request was turned down by the SBP. However, the SBP clarified that the Chinese company neither had required capital nor was willing to show its credential as required by the SBP’s fit and proper condition needed to run a bank. All branches and customers of the former KASB Bank will be considered as BankIslami’s from Friday.

BankIslami stays in green—only just

Pakistani BankIslami more than offset the negative effect of discount rate cuts by an growth of 24 percent and 72 percent in its investments and financing, respectively. However, the costly fixed deposits drove up the bank’s mark-up expenses squeezing its spread ratio to 40 percent in 1H CY13 from 43 percent in the corresponding period of last year. Moreover, During 1H CY13, the non-performing loans (NPLs) swelled by 31 percent year on year. Resultantly, provisioning expenses mushroomed by more than four times in 1H CY13. Besides, the bank has been working aggressively to enhance its branch network which piled up bank’s non-mark-up expenses. Whether or not, BIPL enjoys the discount rate hikes will largely depend on how it works on is to improve its CASA (low-cost deposits) and curb its surging NPLs.

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