Case

KASB Bank Limited: Asian Journal of Management Cases

15(1) 1–22
Capital Shortage © 2018 Lahore University of
Management Sciences
SAGE Publications
sagepub.in/home.nav
DOI: 10.1177/0972820117744685
http://journals.sagepub.com/home/ajc
Muntazar Bashir Ahmed1

Abstract
KASB Bank Limited was a small sized bank in Pakistan. Its operations did not generate sufficient profits
and over the years it was unable to meet the regulatory capital as specified by the State Bank of Pakistan.
The bank’s loan portfolio was infected with poor quality borrowers and this resulted in very high non
performing loans which required loan loss provisions. The bank sponsor had other group companies
which the KASB Bank acquired in order to meet the capital needs. The State Bank as part of compliance
with BASEL rules required higher amounts of capital to protect the banking sector and had allowed
KASB Bank extra time to meet the capital needs. However, the State Bank ultimately used its regulatory
authority to put the bank under its supervision. The State Bank placed KASB Bank under a moratoriam so
that the KASB Bank customer deposits were frozen and only withdrawls up to PKR300,000 were allowed
from each account. The State Bank wanted another bank to take over the KASB Bank operations and
allowed other interested banks to conduct due diligence so as to review the financial status of the bank
with a view to take over the troubled bank. There were very few banks interested in taking over because
KASB Bank had negative equity estimated at PKR12 to PKR14 billion. The State Bank in order to protect
the interests of the 150,000 depositors and the stability of the banking system gave a concessionary loan
of PKR20 billion as part of the scheme of amalgamation of KASB Bank with Bank Islami.

Key words
Moratorium, non performing loans, due diligence, amalgamation

Discussion Questions
1. Why was the moratorium placed on the KASB Bank by the State Bank of Pakistan? Determine
the Tier I capital shortage for the years 2012 and 2013 assuming there was no reduction required
as per Exhibit 5.
2. What methods were adopted by KASB Bank management to resolve the shortage of capital?
3. What plan was prepared by the Board of Directors (BOD) to deal with the situation and what is
your opinion of this plan?
4. Analyse the conditions prevailing during 2009 to 2014 that affected the small bank such as
KASB Bank.

1
Visiting Faculty Accounting, Information Technology University (ITU), Lahore.

Corresponding author:
Muntazar Bashir Ahmed, Visiting Faculty Accounting, Information Technology University (ITU), Lahore.
E-mail: muntazar.bashir@gmail.com
2 Asian Journal of Management Cases 15(1)

5. Do you think the State Bank of Pakistan acted impartially in resolving the KASB Bank situation
and what is your opinion of the amalgamation of the bank into Bank Islami?

Fahim was a financial analyst with a local funds management company in Lahore, Pakistan. On 25 May
2015, he had been assigned the task of preparing an important report. This report discussed how the
State Bank of Pakistan (SBP) had placed a moratorium on KASB Bank’s activities on 14 November
2014. Fahim also wanted to analyse how the SBP had resolved the issue of KASB Bank. The SBP had
merged KASB Bank with another bank known as Bank Islami Pakistan Limited, and Fahim wanted to
understand how this amalgamation had resolved the matter.
The KASB Bank Limited had PKR57 billion in customer deposits which the SBP wanted to protect,
so the moratorium did not close KASB Bank, but only restricted the bank from paying certain debts. The
SBP had allowed depositors up to PKR300,0001 to operate their accounts normally. The bank would also
continue to collect its loans and advances. The general public was assured by the SBP that KASB Bank was
a small bank and had less than 0.7 per cent of the banking sector deposits as a whole (SBP, 2014a). There
was no effect on any other bank, and all other banks were functioning normally. KASB Bank had reported
losses continuously over the preceding five years; its losses for the calendar year ending 31 December 2013
were PKR1,625 million and a very high percentage of its loans and investments portfolio were non-
performing. As a result, the bank had been facing severe capital shortages in terms of both minimum capital
requirement (MCR) and capital adequacy ratio (CAR). As of 30 September 2014, its MCR was about
PKR0.958 billion (SBP, 2015) with a CAR of negative 4.63 per cent against the required levels of PKR10
billion and 10 per cent, respectively. As KASB Bank could not meet the SBP capital adequacy requirements,
this had resulted in regulatory action by the SBP—the latter had warned the bank’s board of directors that as
the regulatory capital had become negative, the SBP would take action if arrangements were not made to
enhance the capital base. Fahim planned to conduct the analysis of the financial statements of KASB Bank
to arrive at an estimate of the capital deficit by calculating the Tier 1 capital which represented the bank’s
internal resources. He also wanted to analyse the actions of the State Bank in resolving the matter.

Background
KASB Bank Limited was a public limited company which had been incorporated in 1994 (KASB Bank
Limited, 2012). It was listed on all the stock exchanges in Pakistan and was licensed to undertake the
business of commercial, consumer and investment banking. The bank was a holding company with
many associates as part of a group of companies known as the KASB Group (see Exhibit 1). It was
reporting losses due to poor profitability, as a result of which its regulatory capital was eroded and fell
below the statutory minimum requirement. In order to meet the State Bank requirements of capital,
the management and board of directors decided on a series of mergers with other group companies.
Two major companies that were merged into the bank were International Housing Finance Limited
(IHFL), in 2006, and KASB Capital Limited (KCL), in 2008, which were non-banking finance companies.
Another company, Network Leasing Company Limited (NLCL), was merged by the end of 2008.

Banking Sector Outlook (2009–2014)2

The banking industry in Pakistan had grown at a compound annual growth rate (CAGR) of 13.2 per cent
over the period 2009–2014, while deposits of the industry had posted a CAGR of 14 per cent. The banks,
Ahmed 3

Table 1. Market Segments of Banking Industry

Size Deposit Market Share (%) Number of Banks

Very Large Banks Greater than 10  2
Large Banks Greater than 5  5
Medium Sized Banks Between 2 and 5  6
Small Banks Less than 2 13
Source: Retrieved from http://jcrvis.com.pk/docs/CommercialBanks201511.pdf

Table 2. KASB Bank Financial Performance

2013 (%) 2012 (%)

Weighted Average Lending Rate 11.3 12.8
Weighted Average Deposit Rate 5.1 5.8
Overall Banking Spread 6.2 7.0
Spread of Large Banks 5.5 7.0
Spread of Medium-sized Banks 4.3 5.2
Spread of Small Banks 4.1 5.5
Source: Retrieved from http://jcrvis.com.pk/docs/CommercialBanks201511.pdf

in general, had adopted a conservative lending strategy as a result of high problem advances during
2008–2010. The banks invested in high returning government securities which ensured that profitability
remained strong without exposure to credit risks. For investors, a return on equity on bank stock of
16.2 per cent was very attractive. The banking industry was divided into the various market segments,
mentioned in Table 1.
KASB Bank was among the small-sized banks and, along with its peers, was having difficulty in
meeting the enhanced capital requirements of the SBP. As Basel III3 was being implemented, the pres-
sure on asset quality and a narrowing of spreads made the operating environment for banks having a
weak financial risk profile more challenging (see Table 2). The spreads achieved by various categories
of banks are shown in Table 2.4
Over the years, the bank had made poor credit decisions in building its loans and advances portfolio and,
as a result, its non-performing loans (NPL) were very high. The bank’s performance from 2009 to 2013 was
seriously affected by the NPLs and other strategic investments that were also non-earning. The banking
sector continued to operate in one of the most challenging times during 2009 due to tight liquidity condi-
tions, distressed corporate performance and an overall weak macroeconomic situation. During 2010–2011,
the bank’s investments did not generate enough earnings and the net interest margin became negative. This
fact, and the amount of loan loss provisions and impairments in 2009 of PKR3,328 million and PKR1,509
million in 2010, caused the bank to report huge losses of PKR4.3 billion in 2009 and PKR2.7 billion in
2010. There were also further provisions required for subsequent years. In 2011, due to the high cost of
funds, the net interest margin was again negative at PKR485 million which, together with administrative
expenses of PKR2.8 billion, resulted in the bank reporting a loss of PKR2.5 billion. The bank also posted
losses in dealings in foreign exchange due to a weak currency. The administrative expenses increased to
a high of PKR3.1 billion in 2012 and the bank’s loss for the year was PKR806 million. The net interest
margin in 2013 was insufficient to cover the loan loss provision of PKR1.18 billion and the administrative
expenses of PKR2.9 billion, causing a loss of PKR1.6 billion in 2013. By the end of 2013, the accumulated
loss was a massive amount of PKR12,500 million.
4 Asian Journal of Management Cases 15(1)

Asset Quality
On a quarterly basis, the bank reviewed the entire loan portfolio and made provisions for any NPL.
This was in compliance with the prudential requirements stipulated by the SBP. The bank management’s
focus had been mainly on the recoveries of its stuck up advances (NPLs; see Exhibits 2 and 3).
The overall advances portfolio registered no significant movement, but the NPLs were very high—these
increased from 21 per cent of advances in 2009 to a high of 36 per cent of the advances during 2012.
This was due to an increase in the interbank rate called KIBOR (Karachi Interbank Offer Rate) which
caused a large number of customers to default. These advances not only took up a lot of management
time but also required different expertise to restructure them. The bank took measures to strengthen the
security structure and initiated prompt restructuring and rescheduling to limit the deterioration of the
loan portfolio. The prudential regulations prescribed age-based criteria for the classification of NPLs and
advances as held by the bank.
The SBP Quarterly Report for the October to December 2014 quarter (SBP, 2014b) stated that the
asset quality of banks, in general, continued to improve from July 2013 to December 2014 as the NPLs
to loans ratio decreased by 70 basis points to 12.3 per cent. The report also noted that the operating per-
formance of the banking industry showed a marked improvement as the profit before tax increased by
52 per cent during 2014.
However, the performance of KASB Bank was very different in 2013. While the new NPLs identified
were low at PKR649 million compared to PKR2.9 billion that were recovered in cash or regularized,
their total as a percentage of the entire portfolio remained high at 35 per cent. Management had set up a
Special Assets Management Group (SMAG) to adopt an aggressive follow-up of NPLs. The bank had
developed measures to put likely NPLs on a watch list to address and reduce the accounts being classi-
fied. The bank had a dedicated recovery team that dealt with NPLs on a regular basis. Experience showed
that a substantial number of companies and customers who had been classified and were not current on
advances repayment were still operating their businesses; the bank staff was in contact with such cases
to restructure their facilities wherever possible.

Bank Regulatory Capital

The SBP (2013) had prescribed various levels of regulatory capital for the banks operating in Pakistan.
The financial year of all the banks followed the calendar year, and the minimum regulatory capital that
all the banks were required to maintain was judged on 31 December. The amount of regulatory capital had
been raised in a phased manner and was PKR6 billion in 2009, which increased to PKR10 billion in 2013
(see Exhibit 4; see also SBP, 2008). Section 14 Clause (i) of the Banking Companies Ordinance 1962 stated:

No banking company incorporated in Pakistan shall carry on business in Pakistan unless it satisfies the following
condition: that the subscribed capital of the company is not less than one-half of the authorized capital and the
paid-up capital is not less than one-half of the subscribed capital. (SBP, 1962)

Under this overriding condition, there were the some capital standards as defined by the SBP that we
will discuss here.
Ahmed 5

Minimum Capital Requirement (MCR)

MCR (SBP, 2013) was a standard that established the minimum amount of capital that had to be held by
banks. No bank could carry on its business in Pakistan unless it met the nominal capital requirements
prescribed by the SBP from time to time. The existing MCR standard of paid-up capital (net of losses)
consisted of the sum of the following elements:

• Fully paid-up common shares

• Balance in share premium accounts
• Reserve for issue of bonus shares
• Any other type of instrument approved by the SBP
Less
• Accumulated losses/discount offered on issue of shares
• Negative general reserves
• Regulatory adjustments

This was known as Tier 1 capital and represented the internal financial resources of the bank. Tier II
capital included general provisions for loan losses (up to a maximum of 1.25 per cent of risk-weighted
assets or RWA), reserves on the revaluation of fixed assets and equity investments (up to a maximum
of 45 per cent of the balance in the related revaluation reserves gross of any deferred tax liability), after
deduction of 50 per cent of the equity investment of the subsidiary company.
Tier III supplementary capital consisted of short-term subordinated debt, which was solely for the
purpose of meeting a proportion of capital required for market risks. The bank did not have any Tier III
capital. The total of Tier II and Tier III capital had to be limited to Tier I capital.

Capital Adequacy Ratio (CAR)

CAR (SBP, 2013) was a ratio that indicated the level of risks faced by the banks; it was calculated on a
consolidated and standalone basis. Certain deductions were required from MCR by the SBP to calculate
the required eligible capital (see Exhibit 5). CAR was calculated by taking the eligible capital as the
numerator and the total RWA as the denominator.

Total Eligible Capital

CAR =
Credit RWA + Market RWA + Operational RWA

Banks were required to calculate their RWA with respect to credit, market and operational risks. This
ratio was a measure of the financial strength of the bank by comparing the capital with the risk assets.
Any bank which was not complying with the required CAR had to inform the SBP and state the remedial
measures it had taken. The SBP could take the following actions against any bank that failed to meet the
regulatory capital requirement:

1. Penalties that may include restrictions on business operations, including withdrawal of permis-
sion to accept deposits and any other as deemed fit by the SBP
2. Withdrawal of the license as a scheduled bank
3. Cancellation of the banking license if the bank failed to meet both the regulatory requirements of
CAR and MCR
6 Asian Journal of Management Cases 15(1)

KASB Bank’s goals for managing capital were identified as follows (KASB Bank Limited, 2013):

1. To be an appropriately capitalized institution as defined by the regulatory authorities and compar-

able to the peers
2. Maintenance of strong ratings and protecting the bank against unexpected events
3. Availability of adequate capital at a reasonable cost so as to enable the bank to expand and
achieve low overall cost of capital with appropriate mix of capital elements

The required CAR was to be complied with by the bank by managing its assets more effectively. Various
assets including off-balance sheet assets were subject to different risks, and the bank management was
required to recognize these different risks to obtain a balanced risk portfolio. The formula of calculating
CAR was prescribed by the SBP and included credit and market risks.

Steps Taken to Improve the MCR

Merger with International Housing Finance Limited

The bank sponsor, Mr Nasir Ali Shah Bukhari, was a major shareholder in a public company called
IHFL (KASB Bank Limited, 2007). This company provided mortgage financing in the housing and non-
residential sector. The bank was in need of regulatory capital, and during a meeting on 27 October 2006,
the bank’s board of directors decided to merge with IHFL. The SBP granted ‘in principle’ approval on
30 October 2007 to the merger. It also granted a period up to 31 March 2007 for the bank to meet the
minimum capital of PKR3 billion needed by 31 December 2006. The scheme of amalgamation of IHFL
with the bank was a share swap that resulted in additional capital of PKR585 million which raised the
bank’s paid in capital to PKR3,106.9 million (see Exhibit 6) on 31 December 2007.
The merger was considered a strategic decision as it was expected to jump-start the business of
mortgage finance, a product that the bank management had already approved. The merger added a robust
amount of PKR522 million in advances to the existing bank portfolio. After the year ended, 31 December
2007, a rights issue amounting to PKR907.9 million increased the paid in capital to PKR4,014.8 million
on 31 December 2008.

Merger with KASB Capital Limited and Network Leasing Company Limited
During 2008, there was a significant restructuring of the KASB Group which involved separating the
group’s non-banking financial businesses from the bank. This resulted in the formation of a non-banking
financial conglomerate called KASB Capital. The bank invested in 68 million shares of KASB Capital
which was 27.5 per cent shareholding of the new entity. As a result of the global financial crisis in 2008,
the economic scenario for the banks changed drastically, and the board of directors and management
were required to act quickly. The board decided to amalgamate with the two group companies, that is,
KCL and NLCL, and the scheme of amalgamation was approved by the SBP (KASB Bank Limited,
2008). KCL and NLCL were both non-banking finance companies and provided investment and lease
finance services, respectively. The bank held 27.5 per cent shares of KCL, and KCL held 78.84 per cent
of the shares in NLCL.
By 31 December 2008, the bank had also acquired the remaining 72.5 per cent of KCL shares to
merge it with the bank. Because of this amalgamation, the bank became the holder of 78.84 per cent of
NLCL. It then acquired the remaining 21.16 per cent of shares to merge NLCL into the bank.
Ahmed 7

After the issue of shares worth PKR3,618 million upon the amalgamation of KCL and NLCL into the
bank, the paid-in capital was increased to PKR7,632 million. The bank then recognized a share premium
of PKR1,989 million in the bank’s books. The bank’s board of directors later decided on 28 August 2009
to issue bonus shares of 26 ordinary shares for every 100 shares by utilizing the share premium of
PKR1,989 million. All the shareholders of KCL and NLCL were also eligible for the shares under the
amalgamation agreement. The additional shares were issued in two tranches—first 3,618 million shares
were issued as fully paid ordinary shares as the purchase consideration by the bank. The balance of 1,962
million bonus shares was against the share premium recognized on the amalgamation of the KCL and
NLCL; this raised the bank’s paid in capital to PKR9,508 million as of 31 December 2009.

Issue of Rights Shares

A rights issue of one billion shares with each share at a discounted price of PKR3 per share was planned
by the board, as this would increase the capital by PKR3 billion. Additionally, the bank holding company
had planned to augment the capital by issuing subordinated debt up to PKR1,500 million. In 2011,
the bank offered the one billion rights shares at PKR3 per share. In accordance with the underwriting
agreement, the unsubscribed rights were claimed by KASB Finance Private Limited. The subscription
of the rights shares increased the paid-up capital from PKR9,509 to PKR12,509 million (net of discount)
as of 31 December 2011 (see Exhibit 6).

Capital Investment by Asia International Financial Limited

By 31 December 2010, due to accumulated losses, the regulatory capital of the bank amounted to a
negative of PKR1,078 million, while its CAR stood at negative 2.2 per cent and did not meet the SBP
requirements (see Exhibit 4). In view of the continuing deficiency in regulatory capital, the bank’s spon-
sors entered into an agreement with a foreign investor whereby equity investment was to be made into
the bank. In 2010, the KASB Group sponsor, Nasir Ali Shah Bokhari (NASB), introduced a restructu-
ring proposal whereby a Chinese company M/s Asia International Financial Limited (AIFL) would be
given 50 per cent shareholding against injection of funds in the group holding company KASB Finance
Private Limited (SBP, 2015). The funds were to be used for capital injection into the bank and to purchase
certain group companies. Later in 2014, the SBP was informed that the AIFL ownership structure had
changed without SBP approval, which violated the SBP regulations; hence, the scheme was rejected.

Management Initiatives
Management had diversified its approach in 2013 and was pursuing new ideas which included converting
over 20 branches into business branches (KASB Bank Limited, 2013); this separated these branches
from typical branch banking. The objective was to reduce branch losses and serve customers at their
doorstep by offering full banking services. There was a new focus on the growth of non-funded income
by strengthening existing relationships with exchange companies regarding remittance. The bank
reviewed its correspondent banking and cash management services and started offering mobile banking
to tap unbanked markets.
The need for expense rationalization was addressed by setting up a central budget control cell and
placing a freeze on hiring except staff for new products. There was a new focus on service quality and
human resource initiatives such as the following:
8 Asian Journal of Management Cases 15(1)

• Monitoring of service quality

• Focusing on training and development
• Recognizing and rewarding people
• Improving corporate communication
• Reengineering processes to enhance efficiency

Branch Banking
The bank’s management was aware of the role that technology played in running a large branch network.
The volume of transactions was very high and the transaction processing system had to be reliable and
efficient. To improve the systems in use, in 2007, the management of KASB Bank decided to upgrade its
banking software and implemented the Misys packaged solution (a well-known global banking software).
They expected that the software would allow access to information for the purposes of monitoring and
provide timely information to business managers. It would also enable the branch staff to offer complex
financial solutions.
An annual branch expansion plan was required to be submitted to the SBP for approval. The bank’s
management delayed submitting its plan for 2009 until the effects of the mergers in 2008 had stabilized.
The bank opened 27 new branches towards the end of the third quarter of 2009 so that the network of
branches amounted to 100 (see Exhibit 7). The expanded network of 100 branches performed for the first
12 months in the year ending on 31 December 2010 and had a positive impact as the overall cost of
deposits declined to a single figure. The bank had 105 branches by 2013, and these continued to generate
non-interest bearing deposits that reduced the cost of the bank’s funds.

Future Plan
To address the capital deficiency and financial condition (see Exhibits 8 and 9), the board of directors
approved a plan that envisaged the following:

1. Reshaping the bank through a demerger process by separating core banking assets from the non-
core businesses and assets
2. Re-capitalizing the demerged core by either direct equity injection or amalgamation with another
bank

The bank’s board of directors had also prepared a forward plan covering the period from 2014 to 2018.
However, achieving the results included the following risks:

1. Maintaining asset quality, retaining customers and meeting forecast net interest margins
2. Raising additional capital as envisaged under the restructuring mentioned earlier
3. Failure in meeting the minimum regulatory capital (the bank was exposed to action by the SBP
as the regulator under the banking laws)
4. Assessing the appropriateness of using the going concern as the basis for accounting was also
relevant under the risks mentioned previously
Ahmed 9

Capital Injection Proposal of Cybernaut Investment Group

After filing a writ petition in the Islamabad High Court, KASB Bank’s major shareholder NASB sent
a letter in March 2015 to the SBP that they had identified an investor, namely, Cybernaut Investment
Group (CIG), and requested for approval to carry out due diligence. The SBP, in response, requested that
complete information be provided about the CIG to establish its being a bona fide party and including
the arrangement of funds of PKR5 billion. The CIG staff requested to meet the SBP officials, and, at
the meeting, they were informed that as per the existing laws, any investor who intended to acquire
5 per cent or more stake in a Pakistani bank was required to establish its fitness and propriety before
conducting due diligence. In April 2015, NASB sent a letter to the SBP that Cybernaut had proposed
to inject USD 100 million by the end of the year 2015; however, the letter from Cybernaut to SBP only
mentioned an amount of USD 50 million. The SBP felt that Cybernaut had not been able to establish its
bona fide intention and their request for due diligence was declined.

State Bank Regulatory Action

On 14 November 2014, the central bank, that is, SBP, had placed KASB Bank Limited under a moratorium
for six months in order to protect the interests of depositors and other stakeholders. This restrained the
bank from payment of certain obligations and debts while it continued to receive all payments/recoveries
due to the bank.
The SBP had clarified that offices and branches of KASB Bank would remain open as per routine
because the bank’s operations had not been suspended. In a press release on 16 November 2014, the SBP
said it had already advised KASB Bank to begin making payments of up to PKR300,000 to its account
holders. Consequently, 92.3 per cent of the bank’s depositors would be able to withdraw their total
deposits if they so desired. The rest of them would be able to withdraw up to PKR300,000.
The SBP then held discussions with different banks, such as, Allied Bank Limited (ABL), Habib Bank
Limited (HBL), Bank AL Habib, Saudi American Bank (SAMBA) and National Bank of Pakistan (NBP),
regarding merger or takeover of KASB Bank Limited. However, none of them showed any interest and
did not formally approach the SBP for even due diligence due to proscribed Iranian $200 million in the
bank, which was subsequently frozen. An official of the SBP added that four banks, that is, JS Bank,
Sindh Bank, Askari Bank and Bank Islami, had shown interest in the possible acquisition of KASB
Bank. Accordingly, the SBP allowed these banks to conduct due diligence of the defunct bank.

Banks Interested in KASB Bank Limited

Four banks had responded to the opportunity to conduct due diligence prior to a decision of taking
over KASB Bank Limited. Their recent brief results and capital adequacy are discussed here in brief
(see Exhibits 10 and 11).
Askari Bank
Askari Bank had been incorporated in 1991 and in 2014, had a network of 321 branches/sub-branches
including 53 dedicated Islamic banking branches. It had an equity of PKR23.7 billion on 31 December
2014, an MCR5 of PKR26.7 billion and CAR6 of 13.3 per cent.
JS Bank
JS Bank Limited (JSBL) was incorporated on 15 March 2006 and in 2014, it had 238 branches across 122
cities. On 19 February 2014, the bank issued 150 million unlisted, convertible, irredeemable, perpetual,
10 Asian Journal of Management Cases 15(1)

non-cumulative and non-voting preference shares of PKR10 each, which qualified for Tier I capital
under Basel III requirement. As a result of this transaction, the paid up capital of the bank had increased
by PKR1.5 billion and the bank was in compliance with the MCR prescribed by the SBP. The paid-up
capital (free of losses) of the bank as of 31 December 2014 stood at PKR10.119 billion. In addition, the
bank was also required to maintain a minimum CAR of 10 per cent of its risk-weighted exposure. The
Bank’s CAR as of 31 December 2014 was 16.73 per cent of its RWA.
Sindh Bank
The Sindh Bank had 225 branches in 111 cities and these included 5 dedicated Islamic banking branches.
The bank had reported a profit of PKR1.07 billion in 2014 up from PKR665.9 million in 2013. The paid-in
capital (free from losses) was PKR10 billion in compliance with the MCR, and the CAR was 22.57 per cent.
Bank Islami
Bank Islami was incorporated in Pakistan under the Companies Ordinance, 1984, as a public limited
company on 18 October 2004 to engage in the business of an Islamic commercial bank. The SBP issued
a license of a ‘Scheduled Islamic Commercial Bank’ (Bank) and the bank commenced operations from
7 April 2006. It was mainly engaged in corporate, commercial, consumer, retail banking activities
and investment activities. Bank Islami had 213 branches at the end of 2014 with total equity of
PKR6.2 billion. Its profit after tax for 2014 was PKR313.6 million, up by 69.3 per cent from the
preceding year’s earnings.

Bank Islami Capital Adequacy History

Earlier, the SBP circular no. 07, dated 15 April 2009, had increased the MCR for banks to PKR10 billion,
which was to be achieved in a phased manner by 31 December 2013. The capital of Bank Islami at the
time was below PKR6 billion (see Exhibit 12) that was required to be achieved by the bank before 31
December 2009. In order to meet the requirement of PKR6 billion, the board of directors had decided in
their meeting on 7 February 2011 to issue rights shares, but this issue was delayed till 2014.
The SBP, through its various letters, granted extension in time for meeting the MCR of PKR6 billion
till 31 March 2013 and required Bank Islami to submit a time-bound capital injection plan to comply
with the requirements. In 2013, the board of directors approved a plan for capital injection which was
submitted to the SBP. Subsequently, the SBP, in its letter dated 12 March 2014, increased the CAR
requirement of the bank to 18 per cent so long as the banks regulatory capital was below PKR6 billion.
During 2014, the bank obtained permissions from both the SBP and the Securities Exchange Commission
of Pakistan (SECP) to issue 47.9 million shares at a discounted price of PKR8.35, thereby increasing the
paid-in capital by PKR400 million (net) to PKR5.68 billion.
In order to meet the next MCR limit of PKR10 billion, the board held a meeting on 29 October 2014 and
decided to raise the paid-in capital by a further PKR4.3 billion through a second rights issue. To enable this
increase, the bank obtained permissions from the SBP and the SECP. Approval from the SECP was required
to grant relaxation from the requirement of Rule 5(i) of the Companies (Issue of Capital Rules) Rules, 1996,
which related to the second issue of shares within a year by a company. These approvals were granted by the
SBP and SECP vide letters dated 5 November 2014 and 2 December 2014, respectively.
After receiving the two approvals, the board of directors in their meeting on 30 December 2014
approved the issuance of 432,040,000 rights shares to all the shareholders in the ratio of 75.0236 shares
for every 100 shares held. This rights issue was fully underwritten, and it would enable the bank to meet
the MCR requirement of PKR10 billion by the second quarter of the calendar year 2015. The board of
Ahmed 11

Bank Islami in its meeting on 10 January 2015 approved issuing Tier II capital up to PKR3.5 billion in
tranches of PKR500 million.

Due Diligence by Banks

The four banking companies interested in taking over KASB Bank, after conducting due diligence,
indicated a possible negative equity gap of around PKR10–12 billion in the bank, in addition to the
shortfall of PKR10 billion in capital requirements. After conducting due diligence, apart from Bank
Islami, none of the other three banks showed interest in acquiring KASB Bank.

Amalgamation
To protect the lifelong savings of depositors of around PKR57 billion and to protect the jobs of 1,200
employees, as well as to ensure the stability of the financial system as a whole, amalgamation of KASB
Bank with and into Bank Islami Pakistan Limited was considered the most appropriate option. Bank
Islami was going to take over KASB Bank in line with an amalgamation scheme prepared by the SBP.
The SBP’s confidential scheme would result in the acquisition of KASB Bank, the country’s smallest
lender, by Bank Islami (see Exhibit 13) at a ‘token nominal value’, according to the statements released
by the two banks. Following international practices, the SBP set a notional value of PKR1,000 for the
amalgamation. The decision had come as a surprise to bankers and banking experts in the country, who
believed that Bank Islami did not even deserve permission to conduct due diligence. They noted that
the financial strength of Askari Bank and Sindh Bank was much better comparatively, and they could
acquire a troubled bank.
At the end of 2014, Bank Islami was in the process of increasing paid-in capital by issuing rights
shares amounting to PKR4.3 billion to cover the shortfall of approximately PKR4 billion in paid-up
capital (see Exhibit 12). It had failed to meet the SBP deadline of 31 December 2014 to raise its capital
of PKR10 billion despite repeated warnings by the SBP, which had strictly directed banks to comply with
the directives of the International Monetary Fund (IMF). Other banks such as Summit Bank and SAMBA
had raised their respective paid-up capital before the set date, with the help of the injection of billions of
rupees from their investors. The two banks left were KASB Bank and Bank Islami, who could not meet
the MCR by the year ended 31 December 2014.

Moratorium Lifted
The SBP issued a press release on 7 May 2015 informing all the depositors of KASB Bank Limited that
the scheme of amalgamation7 of the bank had been approved by the federal government. KASB Bank
had been merged with and into the Bank Islami Pakistan Limited. Accordingly, the moratorium placed
on what was previously KASB Bank Limited had been lifted. The depositors of the bank had become
depositors of Bank Islami Pakistan Limited, and were free to operate their accounts maintained at the
respective branches of the former KASB Bank Limited.
After the merger, the SBP granted PKR20 billion to Bank Islami, consisting of a concessionary loan
of PKR5 billion at a low rate of 0.01 per cent and PKR15 billion for temporary liquidity. As there was
no competitive bidding for this facility, the market considered that this grant raised transparency issues.
Bank Islami, on the first day of its operations after taking over KASB Bank, paid billions of rupees to the
depositors. The biggest payment was made to Bahria Town which amounted to PKR2.5 billion.
12 Asian Journal of Management Cases 15(1)

As Fahim started organizing his report, he first prepared the amount of Tier I regulatory capital avail-
able to the KASB bank management from the financial statements so as to arrive at an amount of the
shortage. He also wondered what the impact would be on the banking industry as a result of the incorpo-
ration of KASB Bank into one of the smallest banks in Pakistan.

Exhibit 1. KASB Group at Year Ending 31 December 2013

The KASB Group comprised of

Holding Company
KASB Bank Limited
Holding
Subsidiaries %
My Solutions Corporation Limited 100%
KASB Securities Limited 77%
KASB Invest (Private) Limited 96%
KASB Modaraba 52%
Structured Venture (Private) Limited 77%
Associates
New Horizon Exploration and Production Limited 36%
KASB Funds Limited 44%
Shakarganj Food Products Limited 40%
KASB Capital Limited 22%
KASB Asset Allocation Fund 95%
Crosby Dragon Fund 91%
KASB Income Opportunity Fund 43%
KASB Islamic Income Opportunity Fund 23%
KASB Cash Fund 16%
KASB Group at year ending 31 December 2008
Subsidiaries
KASB Securities Limited 77%
KASB Funds Limited 67%
KASB Capital Limited (Formerly KASB International Limited) 100%
KASB Modaraba Management (Private) Limited 99%
KASB Technology Services Limited 100%
KASB Modaraba 50%
Associates
New Horizon Exploration and Production Limited 40%
Shakarganj Food Products Limited 43%
KASB Stock Market Fund 28%
KASB Balanced Fund 26%
KASB Islamic Fund 32%
Network Microfinance Bank 22%
Source: Author’s notes from Company Annual Reports.
Ahmed 13

Exhibit 2. Non-performing Loans and Provisions

Advances and Provisions Rupees in millions

Year ended
December 31 2013 2012 2011 2010 2009
Loans, running 30,843 34,744 33,100 33,534 32,018
finance, etc
Net investment in 891 974 933 1,235 1,516
finance lease
Bills discounted 1,996 2,662 1,211 751 519
33,730 38,380 35,244 35,520 34,053
Provisions –8,464 –7,290 –5,857 –5,311 –4,138
Net 25,266 31,090 29,387 30,209 29,915
Non performing loans and advances–NPL
Substandard 57 1,701 1,163 942 29
Doubtful 179 1,636 2,145 2,190 1,915
Loss 11,405 10,530 8,830 6,486 5,145
Total NPLs 11,641 13,867 12,138 9,618 7,089
NPL as % of 35% 36% 34% 27% 21%
Gross Advances
Source: Author’s analysis of Company Annual Reports.

Exhibit 3. Financial Performance Summary

SUMMARISED P & L ACCOUNTS Rupees in millions

Year ended December 31 2013 2012 2011 2010 2009
Operating loss before provision and taxation 288 185 –2,861 –1,978 –2,536
Provisions and impairments –1,762 –1,781 –285 –1,509 –3,328
Loss before taxation –1,474 –1,596 –3,146 –3,487 –5,864
Reversal of provisions for taxation –151 790 622 760 1,545
Loss after taxation –1,625 –806 –2,524 –2,727 –4,319
Loss attributable to equity holders –1,602 –805 –2,510 –2,741 –4,223
Accumulated loss brought forward –10,926 –10,121 –8,012 –5,296 –2,741
Transfer from surplus on revaluation 37 1,989
Transfer to statutory reserve 28 –12
Accumulated loss carried forward –12,500 –10,926 –10,121 –8,012 –5,296
Source: Author’s analysis of Company Annual Reports.
14 Asian Journal of Management Cases 15(1)

Exhibit 4. Capital Requirements

State Bank Requirement KASB Bank Consolidated

Minimum Capital Capital Adequacy Ratio
Requirement[MCR] [CAR] MCR CAR
Year end Dec 31 PKR billion percent PKR billion percent
2008  5 10 5.97 11.63
2009  6 10 2.6 5.62
2010  7 10 –1.07 –2.22
2011  8 10 0.65 1.18
2012  9 10 0.6 1.07
2013 10 10 –0.84 –1.85
Source: Author’s notes from Company Annual Reports and SBP.

Exhibit 5. Regulatory Capital Deductions

In order to calculate the eligible capital for the numerator of CAR, the
following deductions were required from the MCR:
1. Book value of goodwill and all other intangible assets
2. Shortfall in provisions required against classified assets
3. Deficit on account of revaluation
4. Deferred tax assets
5. Defined benefit pension fund assets
6. Gain on sale related to securitization transactions
7. Cash flow hedge reserve
8. Investment in own shares

Source: Author’s analysis of Company Annual Reports.

Exhibit 6. Summary of Various Categories of Shares Issued

Number of shares Values Rupees

Periods in thousands   in thousands Paid in capital
AUTHORISED CAPITAL
2,500,000 Ordinary shares of PKR 10/–each 25,000,000 NA
PAID IN SHARE CAPITAL
Issued, subscribed and paid up
122,124 Ordinary paid up shares 1,221,240 1,221,240
11,600 Bonus shares 116,000 1,337,240
89,001 Ordinary shares issued on amalgamatiom of 890,010 2,227,250
investment segment of KASB & Co
8,835 Ordinary shares issued on amalgamatiom of 88,350 2,315,600
KASB Leasing
2005 and –30,089 Ordinary shares cancelled previously held by –300,899 –2,014,701
earlier investment segment of KASB & Co
2006 27,800 Rights shares 278,000 2,292,701
2007 22,927 Rights shares issued 229,270 2,521,971
Ahmed 15

Number of shares Values Rupees

Periods in thousands   in thousands Paid in capital
2007 58,500 Fully paid ordinary shares issued as consideraton 585,000 3,106,971
for acquisition of International Housing Finance
Limited
2008 90,791 Rights shares issued 907,910 4,014,881
2009 361,797 Shares issued to KASB Capital and Network 3,617,970 7,632,851
Leasing Corporation
196,210 Bonus shares 1,962,100 9,594,951
–8600 Shares cancelled –86000 9,508,951
2010 nil nil 9,508,951
2011 1,000,000 Shares issued for cash at PKR 3 per share 3,000,000 12,508,951
2012 nil nil 12,508,951
2013 nil nil 12,508,951
1,950,896 12,508,951
Small differences are due to rounding in thousands

Source: Author’s analysis of Company Annual Reports.

Exhibit 7. Summary of Branches and Employees

Year ended December 31 2013 2012 2011 2010 2009

No of branches 105 106 104 104 100
No of Employees 1623 1,203 1,126 1198 1,118
Rupees in millions
Administrative expenses –2,978 –3,142 –2,803 –2,989 –2,796
(Loss) after tax –1,625 –806 –2,524 –2,727 –4,319
Capital (net) 1,067 1,951 2,438 1,683 4,388
Source: Author’s analysis of Company Annual Reports.

Exhibit 8. Five Year Profit & Loss Accounts

CONSOLIDATED FINANCIAL STATEMENTS KASB Bank Limited

Year ended December 31 2013 2012 2011 2010 2009
Rupees in millions PKR
Mark-up/return/interest earned 5,114 6,595 4,712 5,158 5,120
Mark-up/return/interest expensed –2,893 –4,252 –5,196 –5,169 –5,570
Net mark-up/return/interest income 2,221 2,343 –485 –11 –450
Provision against loans and advances-net –1,185 –1,459 –583 –1,180 –1,295
(Provision) reversal for diminution in value of –576 –318 306 –106 –601
investments
Bad debts written off directly –1 –4 –8 –21 –1
(Exhibit 8 continued)
16 Asian Journal of Management Cases 15(1)

(Exhibit 8 continued)

CONSOLIDATED FINANCIAL STATEMENTS KASB Bank Limited

Year ended December 31 2013 2012 2011 2010 2009
Investments written off directly –74
–1,762 –1,782 –285 –1,307 –1,971
Net mark-up/return/interest after 459 561 –769 –1,318 –2,421
provisions
NON MARK-UP/RETURN/INTEREST INCOME
Fee, commission and brokerage income 778 903 596 594 564
Dividend income 2 13 24 47 123
(Loss)/income from dealing in foreign 18 361 109 64 –16
currencies-net
Gain on sale of securities-net 80 56 119 152 322
Unrealised loss on revaluation of investments 17 –7 –20 4 8
held for trading
Other income 95 128 125 109 110
Total non mark/return/interest income 990 1,454 953 970 1,111
1,449 2,015 184 –348 –1,310
NON MARK-UP/RETURN/INTEREST EXPENSES
Administrative expenses –2,978 –3,142 –2,803 –2,989 –2,796
Other provisions/ write offs 5 17 –162 177 –227
Other charges –95 –752 –291 –3 –35
Total non mark-up/return/interest –3,068 –3,877 –3,256 –2,815 –3,058
expenses
–1,619 –1,862 –3,072 –3,163 –4,368
Loss on remeasurement of previously held –124 –129
equity interest in Associate
Impairment of goodwill –200 –1,357
Share of profit (loss) of associated companies 145 265 –74 –10
Loss before taxation –1,474 –1,596 –3,146 –3,487 –5,864
Taxation-current year –91 –45 –9 –9 –59
-prior years 11 –5 – 5
-Deferred –71 836 636 769 1,599
–151 791 622 760 1,545
Loss after taxation –1,625 –806 –2,524 –2,727 –4,319
Source: Author’s analysis of Company Annual Reports.
Ahmed 17

Exhibit 9. Five Year Balance Sheets

CONSOLIDATED FINANCIAL STATEMENTS KASB Bank Limited

Year ended December 31 2013 2012 2011 2010 2009
ASSETS Rupees in millions
Cash and balances with treasury banks 4,944 4,767 4,823 3,273 2,852
Balances with other banks 608 2,039 10,930 360 235
Lendings to financial institutions and others 1,063 353 623 40 2,804
Investments-net 26,861 39,969 15,589 12,019 13,581
Advances 25,266 31,090 29,387 30,209 29,916
Operating fixed assets 3,151 3,704 4,366 4,542 4,027
Deferred tax assets-net 4,655 4,599 3,863 3,810 3,037
Other assets-net 3,996 3,756 3,610 4,306 4,546
70,544 90,277 73,191 58,559 60,998
LIABILITIES
Bills payable 871 878 892 541 386
Borrowings 1,883 21,245 4,607 6,636 8,696
Deposits and other accounts 63,535 62,600 61,994 46,694 43,807
Sub-ordinated loans –
Liabilities against assets subject to finance lease – 2 2 6
Other liabilities 2,552 2,527 2,170 1,989 2,685
68,841 87,250 69,665 55,862 55,580
NET ASSETS 1,703 3,027 3,527 2,697 5,418
REPRESENTED BY
Share capital 19509 19,509 19,509 9,509 9,509
Subscription for Rights shares
Reserves 53 53 31 162 151
Discount on issue of rights shares –6,976 –6,976 –6,976
–
Accumulated losses –12,500 –10,926 –10,126 –8,012 –5,296
Advance against future rights shares 981 291 24 24
1,067 1,951 2,438 1,683 4,388
Non controlling interests 378 411 502 535 525
1,445 2,362 2,940 2,218 4,913
Surplus on revaluation of assets / securities net 258 665 587 479 505
of tax
1,703 3,027 3,527 2,697 5,418
Source: Author’s analysis of Company Annual Reports.
18 Asian Journal of Management Cases 15(1)

Exhibit 10. Comparative Financials (Consolidated)

BALANCE SHEETS JS Bank ASKARI Bank Islami Sindh Bank

ASSETS Year ended December 31, 2014
Cash and balances wih treasury banks 9,042 19,130 6,361 5,066
Balances with other banks 433 7,121 848 538
Due from financial institutions 16,807 3,428 18,143 12,666
Investments 85,762 217,214 30,511 59,467
Advances 56,716 170,501 41,097 41,185
Operatng fixed assets 3,913 8,351 3,387 1,812
Deferred tax assets 898 –
Other assets 6,708 20,968 1,643 4,138
179,381 447,611 101,990 124,872
LIABILITIES
Bills payable 1,380 6,855 918 400
Borrowings 50,538 13,742 561 46,077
Deposits and other accounts 107,430 387,535 90,330 61,885
Subordinated loans – 7,993 – –
Liabilities leased assets – – –
Deferred tax liabilities 304 199 902
Other liabilities 3,532 7,460 3,110 1,506
163,184 423,585 95,118 110,770
Net assets 16,197 24,026 6,872 14,102
Represented by
Share Capital 10,120 12,603 5,679 10,000
Reserves 513 4,823 273 676
Unappropriated Profit/Accumulated 1,385 2,151 269 2,101
Loss
12,018 19,577 6,221 12,777
Non controlling interest 2,136 32 –
Surplus on revaluation of assets 2,043 4,417 651 1,325
16,197 24,026 6,872 14,102
Source: Company Annual Reports.
Ahmed 19

Exhibit 11. Comparative Financials (Consolidated)

PROFIT & LOSS ACCOUNT

PKR in millions JS Bank ASKARI Bank Islami Sindh Bank
Year ended December 31 2014
Profit/ return earned 11,254 34,621 7,819 8,932
Profit/Return expensed 7,185 22,712 –4,456 5,497
Net interest income 4,069 11,909 3,363 3,435
Provisions on non performing loans –658 –83 21 19
Impairment on investments 237 208
Provisions in diminution investments 197
Other
–421 322 21 19
Net Spread after provision 3,648 11,587 3,384 3,416
Non mark-up/ interest income
Fee, commission and brokerage 1,450 1,476 184
Dividend income 67 351 181
Income dealing in foreign currencies 272 985 66
Gain on sale of securities 1,551 1,812 521
Other Income 237 902 632 4
3,577 5,526 632 956
7,225 17,113 4,016 4,372
Non mark-up/ interest expense
Administrative expenses 4,532 11,117 3,546 2,740
Other provisions/ write offs 24 47 2
Other Expense 81 126 19
4,637 11,290 3,546 2,761
2,588 5,823 470 1,611
Share of associate 45
Profit before tax 2,588 5,868 470 1,611
Taxation –691 1,775 –156 532
Profit after taxation 1,897 4,093 314 1,079
Source: Company Annual Reports.
20 Asian Journal of Management Cases 15(1)

Exhibit 12. Bank Islami Tier 1 Regulatory Capital

REGULATORY CAPITAL June 30 Dec-31

Period ended 2015 2014 2013 2012 2011
Rupees in millions
Share capital 6,222 5,758 5,280 5,280 5,280
Issue of rights shares 4,320
General/ Statutory Reserves 18 273 210 173 91
Discount on issue of rights shares –79
Unappropriated profits (accum losses) 77 270 27 101 –227
Tier 1 capital before adjustment 10,637 6,222 5,517 5,554 5,144
Less
Cost of investment in subsidiary-50% –95 –95
Shortfall in classified provisions – –38
Intangibles and goodwill –47 –74
Regulatory adjustment –153 –124
Common equity Tier 1 capital 10,637 6,069 5,393 5,374 4,975
Source: Company Annual Reports.

Exhibit 13. Bank Islami Five Year Financials

Year ended December 31

ASSETS PKR in millions 2014 2013 2012 2011 2010
Cash and balances with treasury banks 6,361 4,883 4,939 4,685 3,035
Balances with other banks 848 1,019 806 549 570
Due from financial institutions 18,143 6,511 8,476 4,436 4,513
Investments 30,511 31,429 28,994 21,067 13,732
Financing 41,097 38,309 27,433 24,665 19,566
Operatng fixed assets 3,387 2,966 1,913 1,812 2,067
Deferred tax assets – – 79 182 402
Other assets 1,643 1,683 1,608 1,437 1,151
101,990 86,800 74,248 58,833 45,036
LIABILITIES
Bills payable 918 836 1,251 799 563
Due to financial institutions 561 2,538 1,621 800 353
Deposits and other accounts 90,330 75,170 64,216 50,569 38,198
Deferred tax liabilities 199 175 – – –
Other liabilities 3,110 1,836 1,569 1,341 1155
95,118 80,555 68,657 53,509 40,269
Net assets 6,872 6,245 5,591 5,324 4,767
Represented by
Share Capital 5,758 5,280 5,280 5,280 5,280
Ahmed 21

Year ended December 31

ASSETS PKR in millions 2014 2013 2012 2011 2010
Discount on issue of shares –79
Reserves 273 210 173 91 9
Unappropriated Profit/Accumulated 269 27 8 –215 –555
Loss
Surplus on revaluation of assets 651 726 130 168 33
6,872 6,243 5,591 5,324 4,767
PROFIT & LOSS ACCOUNT
PKR in millions
Profit/ return earned 7819 6,290 5,992 5,502 3,807
Profit/Return expensed –4456 –3,781 –3,507 –2,883 –2,058
Net Spread earned 3,363 2,509 2,485 2,619 1,749
Provisions 21 –123 –91 –85 –4
Net Spread after provision 3,384 2,386 2,394 2,534 1,745
Other Income 632 454 333 227 206
Other Expense –3546 –2,518 –2,264 –2,152 –1,907
Profit before tax 470 322 463 609 44
Taxation –156 –123 –156 –199 2
Profit after taxation 314 199 307 410 46
Source: Company Annual Reports.

Notes
1. USD 1 = PKR101.50
2. Data source: JCR-VIS Sector update Commercial Banks; accessed 3 August 2016.
3. With the implementation of Basel III, all banks/ DFIs would be required to comply with the capital adequacy
framework which comprises the following three capital standards:
1. Minimum Capital Requirement (MCR): The MCR standard sets the nominal amount of capital banks are
required to hold. No bank/ DFI shall commence and carry out its business in Pakistan unless it meets the
nominal capital requirements prescribed by SBP from time to time.
2. Capital Adequacy Ratio (CAR): The CAR assesses the capital requirement based on the risks faced by the
banks/DFIs. The banks are required to comply with the minimum requirements as specified by the SBP on
standalone as well as consolidated basis.
3. Leverage Ratio: Tier-1 Leverage Ratio of 3 per cent is being introduced in response to the recently published
Basel III Accord as the third capital standard which is simple, transparent and independent measure of risk.
4. Data source: SBP and KPMG Banking Survey 2013.
5. MCR was the Minimum Capital Requirement for banks’ paid up capital (free of losses) which, as per the SBP
circular no. 7 of 2009, was PKR10 billion to be achieved by 31 December 2013
6. CAR was the Capital Adequacy Ratio which was to be 10 per cent with effect from 31 December 2009 as per the
SBP circular no. 7 of 2009.
7. Source: letter of SBP dated 27 April 2015, accessed on 15 November 2015.
22 Asian Journal of Management Cases 15(1)

References
KASB Bank Limited. (2007). KASB Bank Limited annual report for 2007. Retrieved from http://121.52.153.178:
8080/xmlui/bitstream/handle/123456789/8174/Annual%20Report%202007.pdf?sequence=1&isAllowed=y
———. (2008). KASB Bank Limited annual report 2008. Retrieved from http://121.52.153.178:8080/xmlui/
bitstream/handle/123456789/8175/Annual%20Report%202008.pdf?sequence=1&isAllowed=y
———. (2012). KASB Bank Limited annual report for 2012. Retrieved from http://121.52.153.178:8080/xmlui/
bitstream/handle/123456789/12293/20130412095214259_Ann12.pdf
———. (2013). KASB Bank Limited annual report for 2013. Retrieved from http://www.sbp.org.pk/stats/
Balance/2013/KASB%20bank.pdf
State Bank of Pakistan. (SBP). (1962). Banking companies ordinance 1962. Retrieved from http://www.sbp.org.pk/
publications/prudential/ordinance_62.pdf
———. (2008). Minimum capital requirements for banks/DFIs. Retrieved from http://www.sbp.org.pk/about/
banks_nbfis/capitalbanks/creq1.htm
———. (2013, May). Guidelines on Basel III implementation in Pakistan. Retrieved from http://www.sbp.org.pk/
bsrvd/pdf/DCGuidelines/Draft%20Basel%203%20Guidelines%20(BPC).pdf
———. (2014a, November 16). Press release on affairs of KASB Bank Limited. Retrieved from http://www.sbp.org.
pk/press/2014/KASB-17-Nov-2014.pdf
———. (2014b, December). Quarterly performance review of the banking sector. Retrieved from http://www.sbp.
org.pk/publications/q_reviews/q_review_Oct-Dec_14.pdf
———. (2015, April 30). Press release on KASB Bank related issues. Retrieved from http://www.sbp.org.pk/
press/2015/KASB-30-Apr-2015.pdf