KARACHI: Summit Bank Ltd said on Tuesday it’s going to change its name to Bank Makramah Ltd (BML).

One of the smallest commercial lenders in terms of net assets told investors it received consent from the State Bank of Pakistan (SBP) on July 17 to change its name. The new name will become effective once “other relevant regulatory approvals” materialise.

The move is part of Summit Bank’s ongoing effort to fully convert into a Shariah-compliant entity after a UAE investor became its majority shareholder in April.

Nasser Abdulla Hussain Lootah, a national of the Gulf nation, injected fresh equity to the tune of Rs10 billion by subscribing to 3.98bn new shares of the bank at Rs2.51 apiece. As a result, he gained 51pc shareholding as well as management control of the commercial lender.

The injection of fresh liquidity is meant to partially fix the bank’s capital adequacy issues.

Without naming Summit Bank, the International Monetary Fund said in a detailed report released on Tuesday that the Pakistani authorities should ensure that the two undercapitalised private-sector banks enter resolution if they are not fully capitalised. Resolution here means restructuring of a failing bank at a point where regulators believe that there’s no prospect of recovery.

At the end of March 2022, the bank’s paid-up capital stood at negative Rs22.6bn as opposed to the statutory requirement of Rs10bn. Similarly, its Capital Adequacy Ratio, which reflects how well a bank is prepared to meet its obligations, stood at negative 94.9pc versus the regulatory requirement of 11.5pc.

It incurred a net consolidated loss of Rs934.5 million in the January-March quarter versus a net loss of Rs1.18bn a year ago. As a result, total accumulated losses on the balance sheet of Summit Bank were Rs42.7bn at the end of March.

Summit Bank said in its latest quarterly accounts that with the capital injection, growth factors and other key assumptions stipulated in the business plan, it’ll be able to achieve compliance with applicable regulatory requirements.

The commercial lender expects to generate further liquidity by selling its pricey real estate assets in major urban centres, according to one person familiar with the matter.

The bank’s share price jumped 7.3pc on Tuesday to Rs1.91 apiece.

Published in Dawn, July 19th, 2023