KASB Bank Thursday refuted the Ministry of Finance stance on KASB Bank issue saying it is the Ministry of Finance and SBP bona fides that need to be questioned. It said, "On November 14th, while 5 banks were failing to meet Minimum Capital Requirement - SBP and MoF singled out KASB Bank by imposing the moratorium and freezing deposits of more than 3 lac rupees - in a way destroying the reputation of KASB Bank and its credibility amongst depositors
On the day of moratorium, KASB Bank had a cash liquidity of PKR 18 billion- one of the most liquid banks in Pakistan. No depositor check had been returned or bounced because of any liquidity issues.
During the 6 months of moratorium, SBP kept the Board of the Bank along with the sponsor shareholders completely in the dark as to what it was going to do with the bank. Although the board of KASB Bank was allowed to continue, but it was barred taking any decisions. Even the minutes of its meetings could not be approved without the prior approval of SBP.
SBP allowed due diligence permission to Askari, Sindh, JS and BankIslami but the board of KASB Bank and sponsor shareholders to date have absolutely no knowledge as to the negotiations which took place and why it failed with 3 of the banks
sponsor shareholders succeeded in getting one of the largest investment houses in China, managing over USD 6 billion, interested in acquiring majority stake in KASB Bank through new equity cash injection of up to PKR 10 billion (USD 100 million). Sponsor shareholders did not bring Cybernaut Group to purchase their existing shares but to inject fresh capital into the bank up to USD 100 million KASB Bank would have continued existing under a new name as a Chinese bank with a focus on trade and commerce, especially e-commerce.
Had Cybernaut offer been accepted, existing sponsor shareholders will have continued as minority shareholders with their shares rising in value over time as the bank got back on its feet again.
Employees of KASB Bank would have continued with their jobs and small shareholders who were holding shares at a trading price of PKR 3 per share would have seen a rise in their share price. But SBP refused to even allow Cybernaut to conduct due diligence of KASB Bank and demanded PKR 5 billion from Cybernaut before allowing it to conduct due diligence - where is bona fide of SBP in this?
Instead of opting for Chinese takeover of KASB Bank, SBP in the most opaque manner has decided to put an end to KASB Bank by selling it to another struggling bank, BankIslami for just PKR 1000 along with a cash guarantee of PKR 16 billion or more to BankIslami.
Exactly how SBP and MoF have arrived at a value of PKR 1000 is a mystery - why SBP is trying to favour just one party by killing a bank which will result in employees of KASB Bank lose their jobs and shareholders including sponsor and minority shareholders seeing their share price coming to zero is a mystery - MoF and SBP are certainly not bona fide.
The shareholders and employees of KASB Bank are shocked by the decision as they do not find the two options even comparable. One of the leading accounting firms, Earnest and Young audited KASB Bank accounts for the year ending 31st December 2014 reported in March to the board of KASB Bank showed a net equity of PKR 2 billion plus the bank has made a profit of 27 crores for the year 2014.
As for the bona fides of the investor, had MoF and SBP bothered to check with Chinese Embassy or with relevant officials of Chinese Government, they would have realized that Cybernaut is a large investment house and to acquire and run KASB Bank Pakistan, it had partnered with the 12th largest bank in China. That is exactly why Pakistan Embassy in Beijing would have a commercial attaché. SBP decided that Cybernaut is not bona fide without making any enquiry, nor even checking with Pakistan embassy in Beijing.
The only explanation for such a mad decision by SBP and Ministry of Finance is some kind of underhand deal or some expectation having gone unmet. It is scandalous the way that Ministry of Finance has messed up and humiliated one of the largest Chinese investment houses. If this is the way that Chinese companies are going to be dealt with by our Ministry of Finance, through extortion and humiliation, it is not possible for $45 billion investment to take place." -PR
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