Malik Riaz’s Escorts Bank now compliant with SECP regulations

KARACHI: Bahria Town-owned Escorts Investment Bank Ltd (EIBL) told the stock exchange on Friday it is now compliant with the minimum equity requirement under the existing rules.

A non-banking finance company (NBFC), EIBL was acquired by Malik Riaz-led housing development company last month. According to the bank, which has a licence to provide investment finance services, Bahria Town wants to use its platform to offer high-yield housing finance products.

Equity of the company on Sept 30, 2017, was Rs208.68 million, which was below the minimum capital requirement of Rs750 million. Its announcement did not state the amount by which the equity went up. Company Secretary Ajwad Ali did not respond to repeated requests for comment.

The housing giant also plans to run EIBL’s brokerage business as a separate subsidiary in expectation of increased equity market activities and offer margin financing and equity portfolio.

Article continues after this advertisement

Bahria Town acquired 31.3 million shares, about 71.2 per cent of total issued shares, from past sponsors of EIBL at an aggregate price of Rs1 through a share purchase agreement. Separately, the housing company purchased 2.2 million shares at Rs15.87 per share from general investors through a public offer.

EIBL has so far had a small footprint in the investment banking industry, which itself accounts for a fraction of mainstream commercial banking.  Total assets of investment banks amounted to Rs25 billion, down 15.4 per cent from Rs29.7 billion in June 2010. In contrast commercial banks had total assets of more than Rs17.5 trillion at the end of September 2017.

Bahria Town initially showed interest in acquiring Burj Bank, but the central bank stopped it from entering commercial banking. Later on, it set its eyes on purchasing EIBL, which is regulated by the Securities and Exchange Commission of Pakistan. EIBL is an investment bank and is barred from taking deposits from the general public.

The bank reported a loss of Rs25.10 million for July-September 2017 against the loss of Rs25.97 million a year ago. Its share price gained 5 per cent to trade at Rs40.32 at 3:17pm.

 

- Advertisement -
Kazim Alam
Kazim Alam
Is a senior financial and economic correspondent at Pakistan Today
- Advertisement -

Must Read

Snack Video partners with Edhi Foundation to raise donations via video...

Snack Video has partnered with Edhi Foundation to provide an indoor opportunity for people to support the vulnerable in Ramadan 2021, raising donations by...