BankIslami has left behind three banks as the central bank has initiated an amalgamation scheme of KASB Bank with BankIslami as per Section 47 of Banking Companies Ordinance 1962.
Four banks were in the race namely Askari, BankIslami, Sindh and JS— which conducted due diligence of KASB Bank to acquire its operations last year.
This will be the second amalgamation of a conventional bank with Islamic bank after HSBC Bank’s operations were merged with Meezan Bank.
BankIslami will acquire operation of KASB Bank at a token compensation of Rs 1000 with all its losses and liabilities including its overall shareholding after approval of its shareholders and regulator final review.
Later on, an independent auditor and technical expert will further evaluate the restructuring of the banks after its amalgamation.
More than 100 branches of KASB Bank will be renamed along with changes to its conventional operations which will be made Sharia compliant.
KASB Bank has been weak financially as its paid-up capital has been Rs0.958 billion since 2009 as compared with Rs 10 billion requirement of the industry. Its Capital Adequacy Ratio stands at negative 4.63 percent as standard of 10 percent.
The bank failed to enhance its paid-up capital despite repeated warnings from the central bank hence it faced moratorium of six months from November 2014 to April 2015.
Finally the central bank has decided its fate and one more bank is going to get merged with another bank bringing the total number of banks to 37.