Saturday, December 05, 2009
By Riaz Khan Daudzai
PESHAWAR: The minimum capital requirement (MCR) set by the State Bank of Pakistan has forced the NWFP government to transfer management control of the Bank of Khyber (BoK) to the private sector to improve its operating status and overcome the losses it faces due to non-performing loans and other non-profiting assets.
Sources told The News that the provincial government was also planning to inject over Rs1 billion into the bank to prop up its advances portfolio.
They also disclosed that two money market brokers of Karachi have already got sizable shares in the bank and they are interested in getting more of its shares.
The Bank of Khyber was established in 1991 through an Act of provincial legislative assembly and awarded the status of scheduled bank in September 1994.
The bank is operating 16 dedicated Islamic banking branches, while 18 branches are providing conventional banking facilities.
According to its own financial review, the BoK has registered a pre-tax loss of Rs597 million primarily due to provisions for diminution in the value of investments and other assets as well as non-performing loans.
The decision to shift the bank’s management control to the private sector was taken during the provincial cabinet meeting on Wednesday.
It has decided that whosoever would show 26 per cent of the bank shares would get the right to reconstitute its board of directors (BoD), besides appointing its managing director and other key officials.
Talking to The News, BoK Managing Director Bilal Mustafa dispelled the impression that the provincial government was going to privatise the bank and said it would be “just transfer of management to the private sector” which has been a global practice in the banking sector.
However, he acknowledged that the paid-up capital, which is now around Rs5 billion, was one of the factors that forced the provincial government to take the decision of transferring the bank management control to the private sector.
He said as required by the SBP under its MCR policy the bank required Rs1 billion every year to achieve the target of Rs10 billion paid-up capital over the next five years.
He said the government has planned to attract capital from the private sector for which it has to transfer the bank management which would be a healthy sign for the bank and its costumers.
He also spurned the impression that the low operational profit or non-performing loans alone forced the government to take the decision and said that present operational profit of the bank was Rs650 million which by the end of the year would go up to Rs750 million.
He said the government would continue to hold 51 per cent shares in the bank while four per cent of the shares were already with the Karachi-based parties including a company of Aqeel Kareem Dhedi of AKD Group and 30 per cent are being held by general public.
Bilal Mustafa said that the SBP’s no-objection certificate would be required for the change of management to the private sector which will augur well for the bank.
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