Fauji Foundation to buy majority stake in Silk Bank
Silk Bank records historic highest traded volume of shares in a single stock since March 4, 2005 shortly after announcement of acquisition, says brokerage Arif Habib Limited
January 29, 2021
- Silk Bank agrees to sell majority stake to Fauji Foundation
- Fauji Group serves interests of ex-servicemen. It runs more than 18 industries. The group already owns and operates Askari Bank
- Silk Bank was formerly the Saudi-Pak Commercial Bank. It is mainly owned by Arif Habib Corporation as a 28% shareholder
KARACHI: Fauji Foundation has been given the go ahead by Silk Bank Limited to acquire a majority stake in the bank. Financial terms, however, have not been disclosed.
Silk Bank allowed Fauji Foundation to conduct due diligence of the bank and the company intends to apply to the State Bank of Pakistan for the requisite approval, the bank said in a filing with the Pakistan Stock Exchange on Thursday.
The board of directors of the bank gave an in-principle approval for the Fauji Foundation to evaluate information that will be provided by the bank, according to the notice, The News reported.
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The Fauji Group serves the interests of ex-servicemen. It runs more than 18 industries. The group already owns and operates Askari Bank.
Who are the current shareholders?
Silk Bank was formerly the Saudi-Pak Commercial Bank. It is mainly owned by Arif Habib Corporation as a 28% shareholder, former finance adviser Shaukat Tarin is a 12% shareholder, International Finance Corporation 8%, Nomura 4% and Bank of Muscat 3%.
The bank recorded a net profit of Rs151 million for the nine-month period of calendar year 2020. Its deposits stood at Rs154 billion, advances Rs99 billion and equity Rs8.9 billion. The bank, however, has an accumulated loss at Rs13.5 billion, according to Alpha Beta Core.
Trading spike in Silk Bank shares
A trading spike in the shares of bank was witnessed just as news of the acquisition was reported.
Read more: Interest rates to remain unchanged at 7%: SBP's Reza Baqir
Silk Bank recorded a historic high volume of 355 million shares, the highest traded volume in a single stock since March 4, 2005, according to brokerage Arif Habib Limited.
The SBP, in a report, says the ongoing COVID-19 pandemic presents a multidimensional challenge for the banking sector as their business continuity, profitability, and solvency could experience stress, going forward.
