Summit Bank Ltd following its tradition for mergers has set its eyes on Sindh Bank. According to the material information sent to Pakistan Stock Exchange earlier this week, Summit Bank has decided to evaluate the information for potential merger/acquisition provided by Sindh Bank, subject to the approval of State Bank of Pakistan (SBP).
This move came after the 74th board meeting of the bank where it decided to conduct a due diligence of Sindh Bank in the case of any development relating to a merger/acquisition. The potential merger between the two banks raises a serious question of whether the partnership of a private and a public bank would be a fair deal for others in the financial sector.
The company already has deep roots in the investment sector with its owner Arif Habib being a stock broker and its wholly own subsidiary Summit Capital incorporated in 2006. It begs the question whether a government entity can be tied down with a stock broker and if it can, how will this marriage let him find a way into the decisions of that government. Would there be a level playing field for other banks or with the help of a government bank, Summit can introduce its monopoly. Also with the reality that we live in today, it is not far-fetched to say that Summit Bank can influence different policies and behaviours of the government pertaining to financial and investment sector.
Summit Bank held by Mauritius-based parent company Suroor Investments Ltd has previously merged with MyBank Ltd and Atlas Bank Ltd thus, granting itself a good position in the Pakistan’s financial sector. The bank has a suffered loss of Rs. 1.275 billion after tax in the third quarter of CY 2016 compared to the profit of Rs 90.05 million in the corresponding last fiscal year.
Sindh bank is Sindh government’s enterprise which also includes Sindh Microfinance Bank under its umbrella. It enjoys 17.6 percent growth and its pre-tax profit for the nine months ending September 30, 2016, stands at Rs 1.776 billion as compared to Rs 1.510 billion in the corresponding period of last fiscal year.
It is yet to be pronounced what the decision of the both parties will be and what are the vested interests enabling this partnership, but it cannot be denied that this move will prove to be a mega power play by a private bank. In case of any decision Summit bank will disclose relevant information in the due course under the listing regulations of Pakistan Stock Exchange.