For the past three years, it has almost been as if Summit Bank was pretending it did not exist. In that time multiple finance ministers came and went, the coronavirus pandemic began, peaked, ebbed after vaccines were rolled out, and peaked a few more times for good measure. But in all that time Summit Bank remained stuck in time.
In 2018, following a highly publicised and politically entangled money laundering scandal, the bank failed to release its financials prompting raised eyebrows. In 2019, the bank once again failed to release its financials and as a result of this non-compliance shifted to the defaulters segment of the Pakistan Stock Exchange (PSX).
Following the demotion at the stock exchange, the bank made a feeble attempt to correct course by releasing their 2018 financials in 2020, but for a third consecutive year failed to call an Annual General Meeting (AGM).
And a full-blown money laundering investigation initiated by the FIA and NAB following a scandal involving political bigwigs such as Asif Ali Zardari and his sister Faryal Talpur was not the extent of their troubles. The bank was also facing constantly rising pressure from the State Bank of Pakistan (SBP) over its inability to fulfil regulatory requirements due to a deteriorating financial condition. In response, it very much appeared that Summit Bank had wilfully buried their head in the sand and were trying to ride the tide of the scandal out.
That is, until now. Over the past three months the bank has publicly released their financial statements for 2019, 2020, and 2021 (up until 2021). Following all of these mandatory disclosures, the PSX has also moved them up from the defaulters segment to its “normal counter” – meaning the bank’s stocks are up for trading once again. That will not be the end of it, as Summit Bank looks to recover and get back into the race after three years in the wilderness.
Profit spoke to senior officials in the bank including its CFO and marketing head to get an understanding of what happened at Summit, how it got to the point that it did, and what measures it is now taking to climb out of the financial, legal and regulatory quicksand it has been stuck in for so long.
Bad results
Summit is not a very profitable bank. In fact, it has posted a net profit after taxation only twice, in 2014 and 2015, in the past 10 years, that too a small one, Rs217 and Rs230 million respectively. On the other hand, its losses in the other eight years under consideration have been in the billions; a net loss of Rs 9.45 billion in 2019 is no small number. The content in this publication is expensive to produce. But unlike other journalistic outfits, business publications have to cover the very organizations that directly give them advertisements. Hence, this large source of revenue, which is the lifeblood of other media houses, is severely compromised on account of Profit’s no-compromise policy when it comes to our reporting. No wonder, Profit has lost multiple ad deals, worth tens of millions of rupees, due to stories that held big businesses to account. Hence, for our work to continue unfettered, it must be supported by discerning readers who know the value of quality business journalism, not just for the economy but for the society as a whole.To read the full article, subscribe and support independent business journalism in Pakistan
Good Information.
Sad commentary on the regulatory authorities. The bank should have been closed down long time ago. this is a disaster waiting to happen. SBP will probably end up having to bail out the depositors. Political pressure and incompetent regulators favorite recipe in the country.
Enough is enough.
May God Save Us.