IslamicFinance.de

The shareholders of Jahangir Siddiqui & Co Ltd, the flagship company of JS Group, in their general meeting held on February 2, have unanimously approved to invest up to Rs1.669 billion in the Bank Islami Pakistan Limited. On December 30, 2014, the Board of Directors of Bank Islami Pakistan Limited had approved to issue ordinary shares of Rs10/- each by way of rights to its members to raise the paid up capital of the bank by Rs4.320 billion.

Bank Islami Pakistan has received regulatory approval to study the acquisition of KASB Bank Limited. An acquisition could see Karachi-based Bank Islami add 105 branches to its existing network of 213, while the transaction would require the conversion of KASB Bank's conventional financial products into sharia-compliant ones. In November, the central bank placed KASB Bank under a six-month moratorium as it struggled to meet capital adequacy requirements. Last week, Bank Islami's board of directors approved a plan to raise 3.5 billion rupees ($34.8 million) via subordinated Islamic bonds to fund its expansion strategy.

Bank Islami Pakistan aims to raise Rs3.5 billion ($34.8 million) via subordinated sukuk. With Basel III global banking standards being introduced around the globe, several Islamic banks have issued such capital-boosting instruments, including those in Turkey, Malaysia, Saudi Arabia and the United Arab Emirates. Last week, Bank Islami’s board of directors approved a plan to raise Tier 2 capital in tranches of Rs500m to help fund its expansion, the Karachi-based lender said in a bourse filing.

Bank Islami Pakistan Limited has planned to issue rights shares up to Rs750 million, as the exemption granted by the State Bank of Pakistan (SBP) for minimum capital requirement (MCR) expired on March 31. The SBP had declined to extend the extension unless Bank Islami improves its equity position substantially. The board of the bank will consider the rights issue at the board meeting scheduled on October 31, where the price of the right shares will be decided. The SBP through a circular increased the MCR for banks up to Rs10 billion to be achieved in a phased manner by December 31. Moreover, the central bank had also advised the bank to submit concrete time bound capital plan by March 31, 2013 to comply with the future and prevailing regulatory capital requirements.