The SBP on Friday issued BPRD Circular No 4 referring to the State Bank letter No BPD(PU-33)682-22(ii)/2004/12355 dated September 28, 2004 and other instructions issued from time to time on the above subject. The circular said that to ensure continued stake/ownership of sponsors/major shareholders in the banks, they are required to deposit their shares in a 'Blocked Account' with Central Depository Company of Pakistan (CDC).
It said that it have come to the notice of the State Bank of Pakistan that sponsor shareholders of certain banks had either not fully deposited their sponsor shares or have not deposited their subsequent bonus/right shares in the (CDC), or have availed financing from financial institutions against the pledge of their sponsor shares. This has been viewed seriously by the SBP.
The SBP said that with a view to facilitate the banks and their sponsor shareholders and to ensure compliance of the SBP instructions, it has been decided to issue new consolidated and revised instructions. As per new instructions, all sponsor shares and subsequent right and bonus shares, including those deposited with SBP Banking Services Corporation (BSC), shall be deposited in a blocked account with CDC.
In addition, no withdrawal of the sponsor shares from the 'blocked account' would be allowed without prior written permission from SBP. 'Blocked account' should be opened by the sponsor shareholders of banks exclusively for deposit of the sponsor shares and subsequent right and bonus shares issued thereon, according to new instructions. Similarly, as per new instruction, charges for opening and operating of the blocked account with CDC will be borne by the sponsor shareholders.
The SBP said that, "sponsor shares" and "sponsor shareholders" shall have mean 5 percent or more paid-up shares of a bank, acquired by a person(s) individually or in concert with his family members (including spouse, lineal ascendants and descendents and dependent brothers and sisters), group companies, subsidiaries, and affiliates/associates.
All shares acquired by common shareholders, who are also sponsor shareholders of amalgamating banking companies in amalgamation transaction, shall be considered 'Sponsor Shares'. 'Sponsor Shareholders' mean all those shareholders of a bank holding sponsor shares. The members of the Board of Directors of a bank holding sponsor shares will be considered Sponsor Directors.
However, the central bank cleared in the circular that these instructions shall not be applicable to the shareholding of Federal and provincial governments in banks. The above instructions have been issued in exercise of the powers conferred on SBP under the Banking Companies Ordinance, 1962.
All the banks are advised to ensure meticulous compliance of these instructions, the SBP said. The SBP said it has directed banks that which banks are already in compliance of these instructions shall confirm the same in writing to SBP through their Company Secretary.
The above instructions shall supersede BPRD Circular Letters No 44 dated 26th August 1997, No 1 dated 3rd January 1998 and No 11 dated 21st April 2000 and letters No BPRD(RU-28)/682-22(ii)/15315/2001 dated 24th October 2001 & BPD(PU-33)682-22(ii)/2004/12355 dated 28th September 2004, the SBP circular concluded.