A real estate development company with links to former Punjab minister Aleem Khan has made a public announcement that it wants to acquire Silkbank Ltd.
In a regulatory filing on Tuesday, the country’s fifth smallest lender in terms of the value of shares said Park View Enclave Ltd wants to subscribe to at least 51 percent shareholding of the bank and get its control by way of fresh equity injection of up to Rs12 billion. It’ll acquire any additional shares through a public offer under the prevailing acquisition laws.
JS Global Head of Research Amreen Soorani said Silkbank has been in trouble for a long time because of its “consistent losses”. The bank’s accumulated losses amounted to Rs13.5 billion at the end of September 2020, the latest period for which the bank has published its financial accounts.
The potential acquirer didn’t state exactly how many shares it intends to acquire through new subscription and the subsequent public offer.
Ms Soorani said the exact amount of capital injection needed to bring the bank back into regulatory compliance can only be determined after looking at the latest financial accounts. However, the lender’s Tier II capital adequacy ratio at the end of June 2020 stood at 8.36 percent, considerably short of the regulatory requirement of 11.5 percent.
“The bank is in desperate need of new capital,” she said.
The bank has been facing asset quality issues for some time. Its coverage ratio — which is the reserved allowance for loan losses divided by the total amount of non-performing loans — was already “very low” and may have further deteriorated given the considerable increase in interest rates since 2020.
Silkbank posted a net loss of Rs3.95 billion in 2019. Its bottom line for the first nine months of 2020 turned positive with a net income of Rs151 million.
Silk Bank was formerly the Saudi-Pak Commercial Bank. The major shareholders of Silkbank are Arif Habib Corporation Ltd (28.23%), former finance minister Shaukat Tarin (11.55%), International Finance Corporation (7.74%) and Zulqarnain Nawaz Chattha (7.74%).
Fauji Foundation had shown interest in acquiring major stakes in Silkbank in January 2021.
Park View Enclave Ltd is part of Vision Group, which is involved in real estate development, pharmaceuticals, cinemas and education. Kiran Aleem Khan controls 50 percent voting rights in the potential acquirer while the rest of the shareholding is held equally by Abdur Rehman Khan and Zaineb Aleem Khan.