LAHORE: Summit Bank on Wednesday said it was making all-out efforts to conclude its merger with and into Sindh Bank Limited and the mechanism for arriving at the recommended revised shares swap ratio/revised scheme of amalgamation had also begun.
In a notification sent to the stock exchange on Wednesday by Summit Bank, it disclosed the field work by its due diligence experts/teams for the latest due diligence of Sindh Bank Limited based on its audited financial statements of the latter until December 31, 2017, had been concluded.
The notification said a reciprocal fresh/updated due diligence of Summit Bank Limited has been carried out by the due diligence experts/teams of Sindh Bank Limited based on the audited financial statements of Summit Bank Limited as of December 31, 2017.
Also, Summit Bank said the mechanism for arriving at the recommended revised shares swap ratio/revised scheme of amalgamation had begun.
It added “process is completed, and the proposed revised shares swap ratio/revised scheme of amalgamation is approved by the Board the Directors of the Bank, the same will be submitted to the shareholders of the Bank for their approval subject to all applicable regulatory approvals and compliances (including the approval of State Bank of Pakistan (SBP) and the permission of the Honourable Supreme Court of Pakistan). All the applicable approvals and compliances will also be needed to be carried out by Sindh Bank Limited.”
Summit Bank said “following a prudent business strategy, the Bank has also put in place a contingent capital restoration plan, whereby Sponsor ((Suroor Investments Limited) of the Bank has given a firm commitment to State Bank of Pakistan to provide required amount of capital funds to the Bank on or before December 31, 2018 for enabling the Bank to meet the applicable regulatory capital requirements (MCR, CAR and LR) in case the Board of Directors of the Bank decided not to pursue the proposed merger/amalgamation option.”
Last month, the apex court had said the proposed amalgamation of Sindh Bank and Summit Bank won’t go ahead without its approval.
The proposed merger of Summit Bank and Sindh Bank would be overseen and managed by the Supreme Court (SC), for which a three-member bench was formed and is being chaired by Chief Justice, Pakistan Mian Saqib Nisar.
A fresh report was presented by the State Bank of Pakistan before the apex court saying both banks were willing to start the amalgamation anew.
However, the apex court cautioned the merger would be blocked if it didn’t follow the rules and regulations.
Both banks were instructed by the apex court to present a detailed report regarding the proposed amalgamation.
In mid-April, the apex court had extended its restraining order regarding the merger of Sindh Bank and Summit Bank until further orders and had put off the court hearing to May 5.
The apex court bench comprising Justice Faisal Arab and Justice Sajjad Ali Shah had heard the suo moto case against the merger at its Karachi registry.
The State Bank of Pakistan (SBP) Governor Jamil Ahmed appeared before the court and informed that the central bank had no objection to the merger of the two banks.
Ahmed stated the State Bank was monitoring the proposed merger of the banks in accordance with the rules and regulations.
Justice Arab back then had said that Summit Bank had incurred losses and asked if its merger would have an adverse effect on Sindh Bank.
On the court’s query, the Sindh Bank director had then apprised the judges that the employees of Summit Bank would be paid salaries by the Sindh Bank for one year, after which they could seek new contracts.
He said that the merger would not have any negative effects on Sindh Bank as the bank’s branches and foreign exchange would increase in the wake of the merger.
The representative of the Summit Bank informed the judges that the proceedings of the merger of the two banks were still in its starting stage.
The proposed merger faced a setback, after Supreme Court’s suo moto intervention over alleged financial irregularities.
Previously, a note from the Supreme Court Registrar office stated that Summit Bank was formed via the amalgamation of Atlas Bank, Arif Habib Bank and My Bank, and according to regulations of the central bank, it is compulsory for all banks to have a paid-up capital of Rs10 billion.
The apex court had directed a detailed report to be prepared regarding the merger of these two banks and the progress made in this transaction.
The note added, “Summit Bank has failed to comply with such requirement for years and on the contrary, the capital has been raised fraudulently by misusing depositors’ money against shell companies and fake grower loans through sugar mills and power project in Nooriabad, Sindh.”
Summit Bank’s shares closed at Rs2.09, down Rs0.06 (-2.79 per cent). KSE 100 index closed the day at 41,717.99 points, up 471.90 points (+1.14 per cent) on Wednesday.