The federal government has put the name of a banker, who owns majority shares in a troubled private bank, on exit control list (ECL) on recommendation of State Bank of Pakistan (SBP) after he allegedly refused to sell his institution to a Lahore-based business tycoon.
The limited bank, headquartered in Karachi, is among the three commercial banks that are falling short of capital adequacy ratio (CAR) requirements – the ratio of a bank’s capital to its risk. The move reminds the arm-twisting measures of the 1990s politics when certain people were favoured at the expense of others.
Question has also been raised as to whether the government can put the name of the majority-owner on the ECL when the institution is a limited company.
The family friends of the beleaguered banker, sources in Ministry of Finance and sources in State Bank of Pakistan told The Express Tribune that the banker was called by the top management of the central bank and asked either to sell his stakes in the institution to a blue-eyed banker or be ready to face the music.
The family sources said the banker informed the SBP management that his institution was in talks with two other banks for merger and he would soon be in a position to fulfill the statutory requirements. They added the banker refused to sell his shares to the Lahore-based banker, arguing the SBP’s favourite party was not paying the right price.
After the banker refused to comply with the orders, the SBP management called Secretary Finance Dr Waqar Masood on phone and recommended him to prepare a summary to ask the Ministry of Interior to put the banker’s name on the ECL, the sources revealed.
The Express Tribune is withholding the name of the banker and his institution to avoid run on the bank by the depositors. When contacted, the SBP neither denied nor confirmed the report.
There were contradictory reports about Finance Minister Ishaq Dar’s involvement. Some argued that Dr Masood took his consent on the file and others said he sent the summary on his own to Ministry of Interior.
Finance Ministry spokesman Rana Assad Amin did not respond to the question whether the secretary finance got the consent of the finance minister before sending the summary to the Ministry of Interior.
The banker came to know about the move when he reached Karachi airport to travel abroad, said the sources. After coming to know about the pressure tactics that the government was applying, the banker approached a lawyer, who is close to the ruling family and sought his intervention, the sources said.
The renowned lawyer is currently in Saudi Arabia and performing Umra. Despite the intervention of the common friend, the government was not withdrawing the banker’s name from the ECL, confirmed the family friends of the banker. The owner of the bank was not available for comments.
The sources said the latest episode has also widened the gulf between Ishaq Dar and Dr Waqar Masood. They added Dar has conveyed to Prime Minister Nawaz Sharif that he would not be able to work with incumbent secretary any more.
When contacted finance secretary declined that he had any role in putting the name of the banker on the ECL. He also brushed aside speculation that the incident may eventually lead to his ouster from the Ministry of Finance.
The Express Tribune also sent a questionnaire to the SBP on Tuesday. The SBP spokesman Khubaib Usmani promised to give version but requested to hold the story till Wednesday. Probably, knowing the complications, the SBP on Wednesday declined to comment.
The SBP was asked whether it advised the Ministry of Finance to place the name of the banker at the ECL and what were the actual circumstances that compelled the SBP to recommend such an extreme step.
It was also requested to comment whether the SBP management has authority to ask the shareholder to sell the institution to a particular person and why this banker was singled out when two other banks were also not meeting the CAR requirements.
Published in The Express Tribune, July 24th, 2014.