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Karachi: Summit Bank Ltd, one of the smallest commercial banks by net assets, said on Wednesday that an Emirati investor has become its majority shareholder.
The announcement follows an infusion of Rs 1,000 crore in new equity capital from Gulf national Nasser Abdulla Hussain Lootah, who subscribed for Rs 39.8 crore in the bank at Rs 2.51 a share. billion new shares. As a result, he gained 51% ownership and management control of the commercial bank. Mr Lootah already owns 0.51% of the bank.
The injection of new liquidity is partly to solve the bank’s capital adequacy problem. The IMF did not name the summit bank recently, but urged the State Bank of Pakistan to take a “more aggressive approach” to addressing its undercapitalization.
The bank’s paid-up capital as at end-December 2022 is negative Rs 2,180 crore against the statutory requirement of Rs 1,000 crore. Likewise, its capital adequacy ratio, which reflects how well a bank is prepared to meet its obligations, is negative 79.5%, compared with the regulatory requirement of 11.5%.
It posted a net loss of Rs 3.16 billion in 2022 compared to Rs 2.88 billion in the previous year. Thus, the accumulated losses on Summit Bank’s balance sheet by the end of 2022 total Rs 4,170 crore.
The commercial bank is planning to transform itself into a full-fledged Islamic bank, possibly under a new brand name. It hopes to generate more liquidity by selling its expensive real estate holdings in major urban centers, according to a person familiar with the matter.
Shares of the bank rose 16.7 percent to Rs 2.17 a share on Wednesday.
The path to injecting liquidity has been bumpy for Summit Bank as it battles courts and adjusts to changes in the composition of the buyer syndicate and the share subscription agreement.
In April last year, two people, including stockbroker Aqeel Karim Dhedhi, filed a lawsuit against the planned takeover in the Sindh High Court and received an injunction order. The court recalled the same in July 2022 while allowing the equity infusion to continue.
Separately, Salman Iqbal, owner of ARY Group, expressed interest in joining the consortium to subscribe for up to 25% of the shares at the same price, but he subsequently withdrew from the deal.
Posted by Dawn on April 27, 2023
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