In a stock filing on Wednesday, Summit Bank reported that its paid-up capital is now Rs17.78 billion after the receipt of Rs7 billion subscription money against the issue of 700.6 million ordinary shares of Rs10 each to Suroor Investments, a major shareholder in the bank.
Issuing shares to a sponsor ‘by way of other than right issue’ is different from a regular issue of rights shares: the former is meant for a single investor unlike a typical rights issue that can be availed by all shareholders of a company.
According to the last annual report of Summit Bank, the paid-up capital of the bank at the end of 2014 stood at Rs10.7 billion. It was to increase to Rs17.7 billion after the issue of new ordinary shares.
The bank’s board of directors had approved the issue of shares to Suroor Investments in March last year. Summit Bank was already in compliance with the minimum capital requirement (Rs10 billion) and capital adequacy ratio (10%) as on September 30, 2015.
According to the bank, the issue of new shares will enhance the capital base of the bank and provide additional comfort to its stakeholders. A strong equity base will lead to better credit rating for the bank, it said, adding the availability of further equity will enable it to explore new business avenues for the ultimate increase in its earnings.
The sponsor, Suroor Investments, held 51.46% shares in Summit Bank at the end of 2014. Its stake has increased to 70.58% after the issue of new shares.
In December 2008, Suroor Investments entered the domestic financial sector by acquiring Arif Habib Bank. It also acquired Atlas Bank and then merged the entities with MyBank to form Summit Bank.
Summit Bank posted a net profit of Rs90 million in the first nine months of 2015 as opposed to a loss of Rs1.1 billion in Jan-Sep 2014.
