Industry source said that Summit Bank was facing some financial issues and was unable to meet the minimum capital requirement of SBP. While, Sindh Bank's business was limited to some sectors. Therefore, sponsors of both banks decided for an amalgamation scheme, after which all branches of Summit bank will be converted into Sindh Bank and the name of new bank will remain Sindh Bank. With this proposed merger, the number of branches of Sindh Bank will surge to 450.
The Sindh Bank, owned by the Sindh-government, has earned a profit of Rs 1.4 billion during the first half of this calendar year (CY17). While Summit Bank has posted a loss after tax of Rs 292.17 million in the first half of CY17 as compared to Rs 1.043 billion loss in the same period of last fiscal year.
Summit bank has also called an Extra Ordinary General Meeting of shareholders on November 7, 2017 for formal approval of scheme of amalgamation.
Scheme of Amalgamation of Summit Bank and Sindh Bank has been initiated under Section 48 of the Banking Companies Ordinance 1962 (LVII of 1962) of Pakistan:
As the Summit Bank Share price is less than Sindh Bank's, in consideration for the amalgamation contemplated by the Scheme, every person who is a registered shareholder of Summit Bank will be entitled to receive 01 (one) share of Sindh Bank for every 4.17 shares of Summit Bank held by such shareholder.
The Scheme will be deemed to have come into force on the effective date. As per proposed scheme, effective date will be closing of banking business in Karachi on December 29, 2017 or such other date as may be jointly requested by Summit Bank and Sindh Bank and approved by the State Bank. This Scheme will become operative on the date jointly notified to the State Bank by Summit Bank and Sindh Bank and approved by the State Bank pursuant to Section 48 of the Ordinance.
Under the Amalgamation scheme, the entire undertaking of Summit Bank including all the property, assets and liabilities and all the rights and obligations of Summit Bank as at the effective date shall, without any further act, action or deed and notwithstanding the terms of any contract or other document or any rule of law, stand amalgamated with and vest in Sindh Bank, and as a consequence thereof Summit Bank shall stand amalgamated and vested with and into Sindh Bank.
All rights, benefits and powers, the right to rely on representations, rights of estoppels, powers, authorities, privileges, licenses, permits, authorizations, and other permissions whatsoever of Summit Bank subsisting after the merger.
All properties and assets, movable or immovable of whatsoever nature and all deposits, cash balances, reserves, revenue balances, investments, statutory or other deposits with the State Bank and all title, rights or interest in or arising out of such property as may belong to or be in the possession (physical or constructive) of Summit Bank as at the effective date.
In addition, all books of account and documents of Summit Bank and all Intellectual Property, recorded debts, borrowings, liabilities, commitments and other obligations of Summit Bank will be transferred to Sindh Bank.
As of and after the Effective Date, Sindh Bank will undertake, pay, satisfy, discharge, perform and fulfill all the debts, liabilities, contracts, engagements, commitments and obligations whatsoever of Summit Bank recorded as on the Effective Date, and all agreements, contracts, deeds, bonds, powers of attorney, grants of legal representation, guarantees, letters of credit, negotiable instruments and other recorded instruments of whatever kind subsisting or having effect as at the effective date.
All employees of Summit Bank will also become the employees of Sindh Bank on their existing remuneration, for a period of one year from the effective date. They will however be issued fresh appointment letters in accordance with the employment policies and schemes of Sindh Bank and their designations and assignments could be reviewed.
All tax assessments, suits, appeals and other legal proceedings (including arbitration proceedings) of whatsoever nature by or against Summit Bank and which will be current or pending on merger date in or before any court, tribunal or other authority will be continued prosecuted and enforced by or against Sindh Bank, and the same will not abate, be discontinued or be in any way prejudicially affected by the provisions of this Scheme and any judgment, order or award obtained by or against Summit Bank and not fully satisfied before the effective date shall, to the extent enforceable, be enforceable by or against Sindh Bank and any rights of action enforceable by, or available to Summit Bank, will become enforceable by or available to Sindh Bank.
With effect from the Effective Date of amalgamation, the banking license issued by the State Bank to Summit Bank will stand cancelled and all the branches of Summit Bank will become the branches of Sindh Bank and the branch licenses issued to Summit Bank will be deemed to have been issued to Sindh Bank.
Sindh Bank may shift/merge/close such branches of Summit Bank as deemed necessary in terms of the branch licensing policy of the State Bank.
This Scheme will be governed by and be construed in accordance with the substantive and procedural laws of Pakistan. In addition, for removing any lacuna, doubt or ambiguity contained in the Scheme, the State Bank may issue directions, either generally or specially, to Sindh Bank and Summit Bank and such directions shall be final and binding.
If any provision of the Scheme is found to be unlawful and unenforceable by a competent court of law, then to the fullest extent possible all of the remaining provisions of the Scheme shall remain in full force and effect.
In October 2007, Arif Habib Securities Limited acquired Rupali Bank and formed Arif Habib Bank. In 31st March 2010, Suroor Investments Ltd acquired 59.41 percent stake in Arif Habib Bank and on the 18th August 2010, Arif Habib Bank Ltd was rebranded as Summit Bank Ltd, which later acquired majority shares of MyBank Ltd and Atlas Bank Ltd in Pakistan. The operations of the later mentioned banks were then merged under the single umbrella of Summit Bank Ltd, thus expanding the Bank's network to more than 193 Branches.
Copyright Business Recorder, 2017