Sindh Bank to apply for PSX listing in 2018

Would still be short of Rs10b to meet capital adequacy ratio despite acquiring Summit Bank

KARACHI: Sindh Bank, currently engaged in acquiring Summit Bank, would put its shares on sale to the public in 2018 as it looks to raise capital at the Pakistan Stock Exchange (PSX) and meet capital adequacy ratio (CAR) requirements.

The state-owned entity is currently in the process of acquiring approvals for the amalgamation and merger with Summit Bank.



“We (Sindh Bank and Summit Bank as one entity after merger) would still be short of Rs10 billion to meet the 11.90% CAR for December 2018 and 12.5% for December 2019,” Sindh Bank board  member Bilal Sheikh said at a media talk at the Summit Bank head office on Thursday.

The two banks hold a combined paid-up capital of Rs27 billion, which comes to 11.275% CAR at present, he said.

He said the plan to raise capital amounting to Rs10 billion through sale of shares and/or through injection of equity by the Sindh government would increase CAR to 13%.

He said the board of directors may recommend the government to put 30-40% shares of Sindh Bank on sale to the public right after completing the acquisition process for Summit Bank. The two banks have convened a combined Extraordinary General Meeting (EGM) of shareholders on August 31 to acquire their approval for the amalgamation and merger of Summit Bank with and into Sindh Bank.

Afterwards, the merged entity would request the Supreme Court on September 30 for its final approval, which if and when granted, would merge the two banks into one entity as Sindh Bank.

Last week (August 6), the board of directors of the two banks revised down the value of Summit Bank and recommended the same for approval. They recommended one share of Sindh Bank equivalent to 8.3 shares of Summit Bank from the previously recommended swap ratio of 1:4.17, according to a notification sent to the PSX by Summit Bank.



Prior to this, the two banks calculated a swap ratio of 1:3.85, according to a notice sent to the PSX on August 7, 2017.

Now, the two banks need to acquire formal approval for the swap ratio from the Supreme Court, State Bank of Pakistan (SBP), EGM and other relevant authorities to move forward and complete the merger process, which kick-started sometime in 2016, but was delayed for one reason or the other.

Summit Bank’s share price dropped 0.67%, or Rs0.01, to close at Rs1.49 with 26,500 shares changing hands on Thursday.

Sheikh said irrespective of any development, Sindh Bank was committed to apply for listing at the PSX in due course of time. “The government has granted a banking licence to Sindh Bank on the condition it would become a listed bank after 3 years from beginning of its operations,” he said.

Summit Bank operating smoothly

Summit Bank CEO and Acting President Ahsan Raza Durrani dismissed rumours on social media about the bank shutting down. “The bank has continued to operate smoothly and effectively,” he said at the talks.

He said the National Clearing Company of Pakistan Limited’s (NCCPL) recent notice in which it stopped the bank from continuing the shares-settling trading business at the PSX gave birth to the rumour.

“Depositors’ money (at Summit Bank) remains protected, safe and secure under the SBP’s laws,” he said.

He also dismissed the rumour that the bank is affiliated with a leading political party and said “it is a scheduled (commercial) bank, which works under the central bank laws.” 

Published in The Express Tribune, August 17^th, 2018.

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