Summit Bank’s Board of Directors has decided to enhance the authorized capital of the bank from Rs 25 billion to Rs 28 billion. This has been done in order to strengthen bank’s financial credentials before its operational merger with Sindh Bank.
According to the official notification issued to Pakistan Stock Exchange, the board of directors’ decision related to enhancement of authorized capital will be approved later on by the State Bank of Pakistan and its stakeholders in the general body meeting.
Authorized capital is the number of stock units that a publicly traded company can issue as stated in its articles of incorporation, or as agreed upon by shareholder vote. Another reason to keep shares in the company treasury is to retain a controlling interest in the company.
Last year, the bank had raised the authorized capital of the bank from Rs 20 billion to 25 billion for the same purpose of strengthening bank’s financial health.
Summit Bank’s directors also approved the issuance of shares, other than by way of a right’s issue for the existing shareholders, for the advances received against subscription of shares equivalent to Rs 1.85 billion, as a consequence of the proposed merger of Summit Bank with Sindh Bank.
The board also approved the conversion of listed preference shares, both classes A and B into the ordinary shares of Summit Bank Limited as a consequence of the proposed merger of Summit Bank with and into Sindh Bank.
These decisions and measures will be subject to the approval of competent authorities and the shareholders of the bank. Once, the financial and regulatory issues are settled by the management of the Summit Bank, the process of amalgamation or merger will take place with Sindh Bank.
Summit Bank’s board of directors also set a share value of bank at par with 3.85 shares of the Sindh Bank as part of the merger and amalgamation scheme of the two banks.
Setting up share price of the bank is likely to be depended on the merger of the two banks with a share swap as was the case with MCB Bank and NIB Bank. However, sponsors and shareholders will have their stakes in the combined or merged bank.
Summit Bank Financials
The bank announced its financial results which saw a decrease of loss to Rs 292 million in the first half of 2017 from Rs 1.04 billion losses million reported in the similar period of 2016. The bank’s revenue earning improved to Rs 2.76 billion so far in 2017 from Rs 1.56 billion reported in 2016.
Earlier in 2017, Summit Bank surprised the banking industry with the profit of Rs 106 million it posted in the first quarter of 2017, given its previous results.