Pakistan’s KASB Bank is facing a six-month moratorium by the State Bank of Pakistan, and there’s word that something big may be about to happen. The moratorium is also having a significant negative impact on those who have accounts at KASB because they are not allowed to withdraw more than 300,000 Rs.
Is a merger underway at KASB?
Sources at the bank who asked not to be identified told ValueWalk that the issue is political in nature and that the Nawaz-led government is attempting to merge the bank with another bank. The same rumor is making the rounds of Twitter as well:
Rumour mills rife that action on KASB Bank taken to facilitate its takeover by a ‘friend’ of the prime minister
— omar r quraishi (@omar_quraishi) November 15, 2014
KASB fails to meet required capital levels
The reason KASB Bank is under moratorium is because the bank recently failed to meet the minimum requirements for capital levels. Business Recorder reports that the State Bank appears to believe that KASB management is not to blame for the issue and that the issue is due to shareholders failing to bring in more capital and keep the level of capital that is required.
Some account holders at the bank have even been having trouble get a payment as small as 3 lacs after the bank reopened after the weekend. The State Bank of Pakistan said in its notification of the moratorium that 92% of account holders would not face any problems because of what’s happening at KASB. From what we’re hearing, however, it seems as if many more account holders than just 8% of them are experiencing problems. Some media outlets reported that some of KASB’s account holders might even go bankrupt due to the moratorium on the bank.
The bank has about 85,000 account holders with about Rs 62 billion in deposits. KASB’s branches are remaining open during the moratorium. Customers are also able to open their lockers as needed, and the State Bank said all of the other banks in Pakistan will continue to operate as usual.