KARACHI: The federal government has approved the merger of KASB Bank Ltd with BankIslami Pakistan Ltd (BIPL), the State Bank said on Thursday.
The amalgamation also lifted a six-month moratorium imposed on the beleaguered bank in November 2014 as “the depositors of the former KASB Bank are now depositors of BankIslami and are free to operate their accounts maintained at the respective branches of the former KASB Bank as per their convenience”, the central bank said in a statement.
KASB Bank had been in trouble since 2009 as it failed to meet the Minimum Capital Requirement (MCR) and Capital Adequacy Ratio (CAR). The case became complicated when a Chinese company showed interest in buying the bank but the request was turned down by the SBP.
However, in a press briefing earlier this month, the SBP clarified that the Chinese company neither had required capital nor was willing to show its credential as required by the SBP’s fit and proper condition needed to run a bank.
BankIslami also said in a statement on Thursday that all branches and customers of the former KASB Bank will be considered as BankIslami’s from Friday (today). “They (the customers) are free to operate their accounts without any restriction whatsoever,” it said.
The merger has made BankIslami the 11th largest bank with a network of 317 branches in 93 cities across the country and having more than 600,000 customers.
“The business of former KASB Bank will be converted into Islamic modes of financing, under the guidance of the Shariah Board of BIPL, chaired by Mufti Irshad Ahmed Ijaz, within an agreed time frame,” BankIslami said.
The equity of BankIslami was Rs9.95bn as of April 30, 2015 and is expected to increase to Rs11.4bn following completion of the rights offering by mid-May. The bank’s CAR was 23 per cent as against 10pc prescribed by the State Bank.
Meanwhile, the marginal size of reduction in KASB’s deposits — from Rs62bn to Rs57bn — during the six-month moratorium suggests that its depositors did not panic during the period.