LAHORE: The apex court on Saturday stated the proposed amalgamation of Sindh Bank and Summit Bank won’t go ahead without its approval.
The proposed merger of Summit Bank and Sindh Bank would be overseen and managed said the Supreme Court (SC) on Saturday, for which a three-member bench was constituted and is chaired by Chief Justice, Pakistan Mian Saqib Nisar.
A fresh report was presented by the State Bank of Pakistan before the apex court stating both banks were willing to initiate the amalgamation anew.
However, the apex court cautioned the merger would be blocked if it didn’t follow the rules and regulations.
Both banks were instructed by the apex court to present a detailed report regarding the proposed amalgamation.
In mid-April, the apex court had extended its restraining order regarding the merger of Sindh Bank and Summit Bank until further orders and had put off the court hearing to May 5th.
The apex court bench comprising Justice Faisal Arab and Justice Sajjad Ali Shah had heard the suo moto case against the merger at its Karachi registry.
The State Bank of Pakistan (SBP) Governor Jamil Ahmed appeared before the court and informed that the central bank had no objection to the merger of the two banks.
He submitted that the State Bank was monitoring the proposed merger of the banks in accordance with the rules and regulation.
Justice Arab back then said that Summit Bank had incurred losses and asked if its merger would have an adverse effect on Sindh Bank.
On the court’s query, the Sindh Bank director had then apprised the judges that the employees of Summit Bank would be paid salaries by the Sindh Bank for one year, after which they could seek new contracts.
He said that the merger would not have any negative effects on Sindh Bank as the bank’s branches and foreign exchange would increase in the wake of the merger.
The representative of the Summit Bank informed the judges that the proceedings of the merger of the two banks were still in its initial stage.
The proposed merger faced a setback, after Supreme Court’s suo moto intervention over alleged financial irregularities.
Previously, a note from the Supreme Court Registrar office stated Summit bank was formed via the amalgamation of Atlas Bank, Arif Habib Bank and My Bank and according to regulations of the central bank, it is compulsory for all banks to have a paid-up capital of Rs10 billion.
The apex court had directed a detailed report to be prepared regarding the merger of these two banks and the progress made in this transaction.
The note added, “Summit Bank has failed to comply with such requirement for years and on the contrary, the capital has been raised fraudulently by misusing depositors’ money against shell companies and fake grower loans through sugar mills and power project in Nooriabad, Sindh.”