Mybank merged with Summit Bank

Summit Bank, led by prominent banker Hussain Lawai, has successfully finalised acquisition deal with Mybank to acquire its majority shares at Rs 8 per share. The State Bank of Pakistan has already granted no objection certificate (NOC) for the merger of these two entities. Summit Bank has acquired 314.701 million shares of Mybank, taking 59.34 percent stake as well as management control.
The side shares of Mybank have been acquired at Rs 8 per share from Iqbal Alimohammad and others, which will be transferred into the CDC account of the Summit Bank and thereafter will be blocked, and classified as sponsor shares. Sources said that Summit Bank made an investment of about Rs 2.5 billion for the purchase of over 59 percent shares of Mybank.
This is the second successful acquisition deal by the newly launched Summit Bank (formerly Arif Habib Bank) as in November 2009 the Summit Bank had acquired Atlas Bank by buying its majority shares. "Summit Bank is keenly interested to enhance its country-wide operation, besides launching new branches in major cities and rural areas, and acquisition of Mybank is a part of these efforts", said Hussain Lawai.
Talking with Business Recorder on Monday he said that merger negotiations were under process for a long time and finally transfer of majority shares of the Mybank to Summit Bank matured, when the board of directors of Mybank, in its meeting held on April 1, 2011, approved transfer of over 59 percent ordinary shares of the bank in favour of Summit Bank.
The Mybank board also approved any amendment required to be made in the register of members of the bank in order to record such changes in shareholding of the Bank, he added. Mybank has some 80 branches across the country and with current deal Summit Bank''s branch network will extend to 160 branches, he added. "This deal will enable us to further enhance our operation and provide better banking facilities to the middle businessmen focusing on trading business", Lawai said.
Talking about the Minimum Capital Requirement (MCR) condition of SBP he said that Summit Bank has successfully achieved December 2010 target and now its capital is about Rs 7.5 billion, which will be over Rs 8 billion end of this calendar year. Meanwhile, managements of both banks on Monday also formally announced transfer of share through two separate notices to stock exchanges.
According to notice as a result of the changes in the shareholding of Mybank some new directors have been co-opted as directors in Summit Bank, subject to approval of the State Bank of Pakistan. Naseer Abdulla Hussain Lootha, Hussain Lawai, Nasim Beg, Asadullah Khawaja, M. Farid Uddin, Dr Ahmed Khalil Mohamamd Samea Al-Mutawa and Shehryar Faruque will be new directors of Summit Bank.
Sources in banking said that Mybank was facing serious liquidity problems, like other banks, during fiscal year 2009 and was unable to meet the State Bank''s MCR. Mybank`s paid up capital was about Rs 4.243 billion which was much below the SBP criterion for MCR. In 2008, banks were required to raise MCR at Rs 5 billion, which Mybank failed to meet and in 2009. Banks are asked to raise the paid-up capital of Rs 6 billion. The State Bank has given MCR extension to Mybank till December 2009.
"Shareholders of Mybank and Summit Bank have already approved the merger of the two entities, clearing the way for the amalgamation of Mybank into Summit Bank", sources said. Bankers said this acquisition is a major development in the banking sector of Pakistan, which is on path of recovery after facing several difficulties like decline in profit and high non-performing loans during the last two years.