LAHORE: The State Bank of Pakistan (SBP) in a circular Wednesday notified it had disposed of all the objections raised by the shareholders regarding the amalgamation of the defunct KASB Bank into BankIslami.
On May 14, 2018, the notice inviting objections to the valuation of KASB Bank was published in the leading national and regional dailies informing therein that the valuation report of the bank was posted on the SBP website.
To extend the reach of it to the maximum number of shareholders, the notice was placed on the Central Depository Company (CDC), BankIslami, Pakistan Stock Exchange (PSX) websites.
The notification from the central bank said a copy of the notice was also issued to the 3,999 members/shareholders of the Bank on the given addresses, as per the list obtained from Banklslami, CDC and Pakistan Stock Exchange, however, 720 letters were returned as undelivered.
According to the notice, the members and shareholders of the bank, as on 27-04-2015, were invited to file their written objections to the valuation of the bank as set out in the scheme of amalgamation to the Director, Banking Policy & Regulations Department, State Bank of Pakistan, within 15 days of the notice.
SBP said a total of 319 members/shareholders submitted their objections by the given date i.e. 29-5-2018. In addition, objections from 15 members/shareholders were received after the due date. Objections of all the 334 members/shareholders were considered.
It added “based on the assessment of the objections to the evaluation conducted by the independent evaluator of the bank was considered reasonable.
There was no reason raised by the objecting member and shareholders, which could be considered to necessitate fresh evaluation, said the central bank.
Furthermore, “therefore, the objections, as analyzed above, have not raised any substantial ground for an increase in valuation justifying payment of any compensation to the members and shareholders of the bank,” said SBP.
It concluded hence “the objections stand disposed of accordingly.”
Previously, shareholders of defunct KASB Bank had sought a minimum compensation of Rs14.2 billion from the State Bank of Pakistan (SBP), terming the Rs5.9 billion negative valuation of the bank, determined by AF Ferguson, mala fide and dubious.
On the basis of the negative valuation given by AF Ferguson chartered accountancy firm, the central bank had amalgamated KASB Bank with BankIslami at a nominal price of Rs1,000 in 2015.
The shareholders filed Rs14.2 billion claims on account of their valuation of KASB Bank’s investments in other companies and subsidiaries.
While accepting a plea of the shareholders in April 2018, the Sindh High Court (SHC) had ordered the SBP to reconsider valuation of KASB Bank and ruled that the central bank did not adequately fulfil its statutory duty to protect the interests of all stakeholders.
The shareholders pointed out that AF Ferguson did not bother to undertake market-based valuation of KASB Bank’s 40.2% stake in Shakarganj Food Products despite having clear scope envisaged under a tripartite agreement.
Similarly, KASB Securities was one of the core assets of KASB, which had not been properly valued in the valuation report, said the shareholders in their objections.
“If the unbiased valuation of KASB Bank, including its investments, is made, then its valuation shall not be less than Rs14.2 billion,” said the claim filed by the shareholders.
On the basis of income approach using the Discounted Cash Flow methodology, AF Ferguson arrived at a combined negative value of Rs5.9 billion.
In mid-April, Sindh High Court (SHC) directed the State Bank of Pakistan (SBP) to re-examine the valuation of the defunct KASB Bank and labelled its role in the merger as “breaches of statutory duty.”
According to SHC’s order, it was observed the central bank had not given adequate time to KASB Bank for meeting the obligatory requirements.
Earlier, at beginning of April, the central bank published a press release in response to media reports regarding AGP’s report on defunct KASB Bank which said “SBP would like to clarify that all the audit observations raised from the office of the AGP have been duly responded.
Although the AGP observation is still at the stage of draft para, the entire reporting in both print and electronic media has distorted to give the impression as if the observation had attained finality.”
“Further, they are one-sided and does not reflect the SBP’s point of view. It is reiterated that the SBP being the regulatory and supervisory authority of the banking system has legal mandate to safeguard the interest of the depositors and to ensure the stability and soundness of the banking system.
The decision concerning defunct KASB Bank has been taken on merit and in the valid exercise of jurisdiction under the Banking Companies Ordinance, 1962. Media is, therefore, advised to refrain from speculative reporting on audit paras that are yet to attain finality.”
BankIslami shares were trading at Rs11.95, up Rs0.20 (+1.70 percent). KSE-100 index was up by 11.84 points, trading at 40,357.52 points on Wednesday morning.
It is duty of SBP to settle the matter of KASAB BANK MERGER CASE ACCORDING TO THE FACTS with the share holders.Please note the MERGER of KASB BANK WITH THE BANK ISLAMI WAS NOT CORŔECT IN THE CASE OF MERGER THE SOB,KASAB BANK,BANK ISLAMI AND FORMER GOVENMENT.Request to the Chairman NAB PLEASE IVESTIGSTE THE MATTER.
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