Askari Bank is seeking permission of the State Bank of Pakistan (SBP) to conduct due diligence of KASB Bank, according to a Karachi Stock Exchange (KSE) filing on Monday.
Under the law, any bank wishing to acquire a stake in another bank is required to seek permission from the central bank before conducting an appraisal of the other institution’s assets, liabilities and commercial potential.
The federal government had put KASB Bank under a six-month moratorium last month after it failed to meet its capital adequacy requirement as prescribed by the State Bank of Pakistan (SBP).
Under the moratorium, the bank has not been able to make payments of more than Rs300,000 to its deposit account holders since November 17.
The moratorium was imposed under Section 47 of the Banking Companies Ordinance, 1962. It allows the SBP to prepare a scheme for either the reconstruction of the banking company or its amalgamation with ‘any other banking institution’.
As per the ordinance, the amalgamation scheme may contain provisions for the transfer of business, properties, assets and liabilities of the banking company to the ‘other banking institution’.
The share price of KASB Bank increased Rs0.39 to close at Rs2.21 on Monday. One of the ‘penny stocks’ on the KSE, KASB Bank was the fourth most traded share on the bourse on Monday.
Its turnover clocked up at 9.2 million shares, which is slightly higher than the combined turnover KASB Bank’s share recorded since the beginning of December.
Two other private banks that were short of capital adequacy, Summit Bank and Silk Bank, have taken steps to improve their capital adequacy ratio and minimum capital requirements.
Summit Bank increased its capital by Rs7 billion through the right issue at Rs10 per share in order to meet minimum capital requirements. Similarly, Silk Bank achieved the capital adequacy ratio (CAR) of 10% last week.
Askari Bank’s share also witnessed unusual trading with 585,500 shares exchanging hands on Monday. Its share price came down Rs0.02 a share to close at Rs22.37.
Published in The Express Tribune, December 16th, 2014.
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Editor Express Tribue,
KASB imbroglio and public agony
The world over there are ethos to banking options. Each nation has a central bank whose cardinal job description has to be to set policies autonomously without political interference to protect public and especially private capital and investments. But this being Pakistan its law of the desert, inexorably. Scores of banks in England have been put through financial Stress Test to check their viability in protecting customer investments/deposits. This is a moral approach to give indicators to investors of caution. But this mid night take over on a Friday night preceding a week-end typifies the Ishaq Dar tactless tactic. Since strategy and planning is a taboo commodity and owning responsibility for good governance an old grand mother fable, the consequences of this thoughtful insolvency thrust down the poor customer of the bank was a bludgeon across each customer's body and mind.50,000 customers of just Pindi-Islamabad region are rendered destitute while their hard earned investment lolls at the callous discretion of the Finance Honchos, state bank leadership being just Baboos. Multiply the number with average 5 members dependent for food, school fees, utility bills, rents, marriages and surgery s planned and imminent are helpless in their own land for what are their rightful assets. The vacillation, or intrigue on part of authorities has allegedly caused one self immolation. Doe that move any heart or soulless head honchos of finance? In the name of God almighty, some one at the helm please release people's assets to prevent spawning desolation, desperation and rage. S.Haider