Sindh Bank and Summit Bank are likely to get merged in the second quarter of 2017 with the official approval of the banking regulator, sources in the banking sector told ProPakistani. The amalgamation deal of these two banks is in the final stage presently.
The newly merged bank could be named as Sindh Summit Bank.
Official sources said the banks concluded the exercise of due diligence for each of the banking company to ready the merger/ amalgamation scheme of their operations as per mandatory requirement of the central bank, disclosed by a senior banker who is supervising the merger phase of the two banks.
The central bank will issue a No-Objection Certificate (NOC) to these banks in the coming weeks, while the shareholders’ approval will be obtained by Summit Bank in an extraordinary general body meeting, a requirement for listed companies with Pakistan Stock Exchange.
Due to the merger process, Summit Bank has revoked its ambitious plan to convert all of its operations into Sharia-based Islamic banking. On the other hand, Sindh Bank withdrew its application seeking listing with the Pakistan Stock Exchange.
“Currently both banks managements are not authorized bringing any change in the operational structure and business nature of each organization. Rather, these are focusing on day to day affairs of doing business of commercial banking, a C-level banker said on the condition of anonymity. After the marriage of banks, new board and sponsor shareholders will decide the future course of the merged bank.”
However, there is a possibility and option that the two banks will merge their Divisions of Islamic Banking to form a separate subsidiary of an Islamic Bank from conventional bank similar to MCB Islamic Bank.
At present, Sindh Bank is a profitable bank but Summit Bank is in the red.
Sindh Bank showed a double-digit growth in profits by 13 percent and stood at Rs 1.39 billion by the end of 2016. Whereas, the huge and piled up Non-Performing Loans of Summit Bank have dragged the bank into a whopping loss of Rs 2.1 billion in 2016 as against the previous year in which the bank succeeded to book a profit of Rs 217 million.
Summit Bank is already merger of three banks–Arif Habib Bank, My Bank and Atlas Bank—which are all set to merge into Sindh Bank, which is 100 percent owned by the provincial government of Sindh.