Islamabad: On a complaint of a minor shareholder of the Bank of Punjab, the Senate Standing Committee on Thursday took it up in regard to the issuing of right shares for meeting its capital requirements.
Ali Nadeem, minority shareholder of BOP stated in front of the standing committee that the banks decision to issue right shares at Rs12 per share was done to aid the underwriters which had abruptly risen from two to six parties. Nadeem accused the management of BOP to be a part of it and mentioned minority stakeholders couldn’t subscribe to the rights issue because they would have incurred a big loss.
Concurring with the views offered by Ali Nadeem, the Senate Standing Committee Chairman, Saleem Mandviwalla endorsed that the BOP’s right shares issue was prearranged and carried out to benefit specific people.
Jameel Ahmed, Deputy Governor State Bank of Pakistan for banking affairs, said that BOP had followed the convened rules for right shares offering and the nomination of underwriters also conformed to the set regulations. He added that the right shares issue hadn’t generated major public interest and only a nominal value of it had ended being subscribed.
Nadeem accused the BOP president, Naeemudin Khan of having indulged in insider trading. He said Khan had amassed a huge amount of money by having sold off the shares before BOP sent an advertisement in the press seeking consultancy services for the right issue. He added that Khan obtained shares at a price of Rs8.50 per share and offloaded them at Rs18.70 per share three weeks before advertising the consultancy services in the newspapers.
Securities and Exchange Commission of Pakistan will be asked to probe these insider trading accusations against the BOP President, said the senate standing committee.
Earlier in mid-May, The Bank of Punjab (BOP) had decided to do a right shares issue of around Rs13b, which would enable it to give out more loans, improve its capital structure and help in expanding its network. As per President of BOP, Naeemuddin Khan who said “The new issue of right shares is purely a business decision taken by the management to further strengthen the bank’s balance sheet. The stronger equity base of the bank will improve its credit ratings, provide additional comfort to stakeholders, and enable the management to expand its branch network and explore new business avenues for enhancing our earnings.“ This will be the thirds rights issue for BOP in the last three years.
