Petition withdrawn: KASB Bank clarifies change in management rumours

Statement says no directive received; comes after massive trading and increase in stock price.


Our Correspondent April 24, 2015
Market players say the decision of the bank’s sponsors to unconditionally withdraw the writ petition is ominous and points to a possible deal behind closed doors. STOCK IMAGE

KARACHI:


The KASB Bank said on Friday that the writ petition filed by its sponsors at the Islamabad High Court has been withdrawn unconditionally.


In response to a massive surge in the traded value and volumes of the KASB Bank stock on the Karachi Stock Exchange (KSE) in recent days, the bank clarified in a statement sent to the KSE that its management “has not received any directive from concerned quarters about the future course of action for the bank or about the management changes that are being speculated and rumoured”.

The share of KASB Bank recorded the highest turnover for three days in a row on rumours about the upcoming injection of fresh equity into the bank coupled with the early lifting of the government’s moratorium.

KASB Bank lacked capital adequacy, which led the federal government to impose a six-month moratorium on it last November in order to allow the SBP to prepare a scheme for either the reconstruction of the banking company or its amalgamation with ‘any other banking institution’.

Word on the stock market has it that sponsors of the bank have found Chinese investors that are ready to inject equity of Rs10 billion. Moreover, the facelift of the bank is supposed to result in a new entity by the name of Pak-China International Bank with 150 branches.

The stock price of KASB Bank has risen from Rs1.75 at the beginning of trading on April 22 to Rs3.45 at the close of trading on April 24. This means the stock price of KASB Bank has gone up by over 97% in just three days.

The bank said the reasons for ‘very high level’ of trading volumes and share price are ‘probably’ the rumours about the future of the bank. “The bank is presently operating under the conditions of the moratorium imposed on it by the federal government,” it said, adding that the bank does not know anything about the rumoured management changes.

However, market players say the decision of the bank’s sponsors to unconditionally withdraw the writ petition is ominous and points to a possible deal behind closed doors. The petition had asked the IHC to direct the State Bank of Pakistan (SBP) to involve the owners of the bank in sell-off negotiations of KASB Bank.

One of the reported reasons for the imposition of the moratorium was a controversy over the Rs20 billion Iranian deposits with the bank, which the United States claimed was in violation of its sanctions.

The sponsors of the bank claimed in the petition that Dr Abdul Hafeez Shain, who was the finance minister at the time, had requested Nasir Ali Shah Bukhari, who controls 40% shares in KASB Corporation, that it would be in the country’s interest to attract foreign currency deposits of Iranian oil proceeds.

The petition maintained that when the US sought an explanation over Iranian deposits with KASB Bank, the SBP put the entire responsibility on the private bank despite giving regulatory approval for accepting the deposits.

Published in The Express Tribune, April 25th, 2015.

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COMMENTS (1)

Fawad | 8 years ago | Reply State bank must clarify when they will solve our problem. Regards Ahmed facebook page kasb bank affactees
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