Summit Bank Outlines Backup Plan for its Merger with Sindh Bank

Summit Bank Limited will receive additional funds from a major sponsor, Suroor Investments Limited, to improve its financial standing in case its Board of Directors does not pursue its ongoing plan of merger and amalgamation with the Sindh Bank.

According to its recent stock filing, the management of Summit Bank has also put in place a contingent capital restoration plan of the bank as a prudent business strategy.  Hence, if its Board does not approve the merger with Sindh Bank, it will explore other options.

Accordingly, its major sponsor, Suroor Investments Limited, will inject the required funds into the bank to meet the applicable regulatory capital requirements such as Minimum Capital Requirement (MCR), Capital Adequacy Ratio (CAR) and Liquidity Requirement (LR) before 2018.

In this regard, the sponsor of the bank has given a firm commitment to State Bank of Pakistan (SBP) to provide the required amount of capital funds to the bank following a decision to be taken by the board of the banking company.

Suroor Investments Ltd, a Mauritius based investment firm, holds more than 50 percent shares in the bank.

It is pertinent to mention here that the process of merger and amalgamation of the two banks— Sindh Bank and Summit Bank—was halted three months ago by Chief Justice Saqib Nasir in a suo moto notice with the orders to present balance sheets of the two banks before the court.

Summit Bank & Sindh Bank Redo Due Diligence Exercises

At present, the management of the bank is working towards the merger and amalgamation of Summit Bank with Sindh Bank.

Due diligence on the Sindh Bank has been completed by a team of experts from Summit Bank based on the audited financial results of 2017. The same exercise has been completed by Sindh Bank’s officials for Summit Bank mainly to carry forward the process of merger and amalgamation of the two banks.

The exercise of due diligence was done for the second time to get the updated share values of the two banks based on their financial performance in 2017. According to the report sent through the notification of the stock exchange, Summit Bank’s management is making necessary efforts for the earliest completion of the proposed merger/amalgamation transaction of Summit Bank Limited with and into Sindh Bank Limited.

Accordingly, the process for arriving at the proposed revised shares swap ratio/revised scheme of amalgamation has been initiated.  The completion of this process will lead to proposed a revised shares swap ratio/revised scheme of amalgamation, which will be approved by the board the directors of the bank and submitted to shareholders of the bank and all applicable regulatory authorities including State Bank of Pakistan with the permission of Honorable Supreme Court of Pakistan.

Sindh Bank Limited will also carry out all these applicable approvals and compliance procedures.

Summit Bank recorded a loss of Rs. 1.146 billion by end of 2017 which is 90 percent less than the losses reported in 2016 standing at Rs. 2.174 billion. On the other hand, Sindh Bank recorded a profit of Rs. 1.25 billion by end of 2017, which is lesser than the profits of 2016 that stood at Rs. 1.39 billion.

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