National Bank of Pakistan (NBP) has planned to shift operations of its subsidiary under the control of its management for consolidation of its overall operations and containing losses of the services business.
According to the official notification, the central bank has approved a scheme of amalgamation between National Bank of Pakistan and NBP Leasing Company.
State Bank of Pakistan, under Section 48 of the Banking Companies Ordinance (BCO), 1962, had also announced the effective date of the Scheme as close of business on July 31, 2017.
It directed that NBP and NLL shall ensure that it complies with all the requirements laid down in the Sanction Order as well as with all the relevant legal and regulatory requirements, failing which NBP /NLL will become liable to action under the relevant provisions of the BCO, 1962.
NBP Leasing Limited (NLL) formerly NBP Capital Limited a wholly owned National Bank of Pakistan subsidiary, is incorporated as a public limited company. Originally the Company was registered with the name of National Discounting Services Limited in November 1995 and commenced operations in March 1996.
NBP Leasing Limited (NLL) is an active financial institution with a primary focus on leasing operations to support the domestic industrial and commercial sector. The Company has a wide range of financial products and services to offer its corporate and individual clients.
NLL is based in Karachi and its customer base is geographically spread across the country in different sectors like textile, food, engineering, construction, technology, service, health and etc,.
The management of NBP is aggressively focusing on the consolidation of its business and operations to contain losses while creating revenue streams on a sustainable basis. Hence, it is looking for the strengthening of the operations of its subsidiary under merger within its system for effective management and operations.
The businesses of leasing companies are not growing in the country with the increasing penetration of banking and Islamic banking sector.
It has been witnessed in the past that banks such as Standard Chartered Bank had sold out its subsidiaries including Modaraba and Leasing company to focus on the core business of the bank.
This will remove the liability of the banks and will likely generate sustainable earnings for a growing balance sheet.