Silk Bank has successfully raised an amount of Rs 2 billion through a Term Finance Certificate (TFC) for strengthening up its financial soundness and expanding the business and operations of the bank.
The bank received the subscriptions amount of the investors and sponsors in the recent days.
Last month, the central bank gave the final approval to the management of Silk Bank to issue a Term Finance Certificate (TFC). The bank has been also given a choice if it wants to exercise a call option of Rs 500 million, depending on the situation.
The TFC issue will contribute primarily towards the Silk Bank’s Tier II capital for complying with the Capital Adequacy Ratio (CAR) Requirement as prescribed by State Bank of Pakistan under its Basel-III framework.
This additional fund will empower the bank to financially to expand its business operations through its network of services and products.
The capital will help the management of the bank to implement its expansion plan of operations gradually in the coming months and year. Plans for the same have been submitted in the central bank earlier as targets to achieve a certain level of growth in profit, assets, branches network.
Silk Bank witnessed tough financial issues for the past couple of years including the shortfall of paid-up capital and consistent losses on the balance sheet.
However, its growth and profit expectations for 2017 remain very strong especially driven by the Bank’s high earning consumer assets and card portfolios where the Bank maintains a leadership position in several products.
In late 2016, the management of Silk Bank received approval of the State Bank of Pakistan (SBP) to adjust Rs 2 billion in investment through the subscription of its right shares. Accordingly, the bank’s management has allotted shares to four new investors with separate parts of overall 1.28 billion shares at the rate of 1.56 per share at the discount of Rs 8.44 per share).
The bank, supported by Gourment and Arif Habib Limited as its investors, have played a tremendous role in helping the bank control its losses and come back to profitability gradually over the last year.
The bank succeeded in meeting the paid-up capital requirement of the central bank at Rs 10 billion with the help of these two business concerns. It also continued to book profits even in a challenging time of low-interest rates.
Its paid-up capital even exceeded expectations at Rs 16 billion, a figure that will be enough for the next many years.
The present management of the bank is focusing on the ongoing two-fold strategy on the revenue side and the growth side, led by strong contributions from high yielding consumer assets. ​
