KARACHI, Jan 7: Banks may not restore all the branches looted or burnt in the recent violence. The loss creates a new history in the banking industry.

Bankers said the totally damaged branches require a second thought for their reopening as fears still persist due to political uncertainty.

The State Bank has stated that 699 branches were damaged during violence, which the bankers belied never happened before as banks would have to face a total loss of Rs1.2 billion as 290 branches were totally destroyed.

Bankers were reluctant to openly talk about their policies regarding destroyed branches as they fear that any comment may ignite fire against them and more branches might be targeted in case of any disturbance in future.

However, bankers said the loss would not affect their balance- sheet as size of the balance-sheet is much higher than the total loss to the banking sector.

The SBP reported that the most hit was Sindh where 521 branches were damaged, followed by 164 in Punjab.

The SBP said the banks have ensured continuity of operations of the damaged branches by making necessary arrangements.

Bankers were of the view that opening all the branches was not under consideration mainly because of serious damages to about 300 branches.

They also said that complete restoration of all the branches might take up to one year, while relocation of some branches was possible.

A senior banker said security concern in Sindh had become a prime concern for banks but they would still do their best to reach the people as much as possible.

It was also felt that recent violence which costs banks Rs1.2 billion may cost them more as a result of halt in the banking business in the affected areas.

Bankers said business would suffer more in Sindh as a significant area of business had been affected due to closure of banks.

Banking industry has been in booming business for the last four years and earned record profits.

The recent violence and warnings from the State Bank that economy could face devastating impact of fiscal imbalances, could weaken economy and hurt the overall profitability of the banking sector.

Banks are also worried that investment the sentiment was also hit by violence and political uncertainty prevailing in the country for the last six months.

This ‘damaged investment sentiment’ would also get its share in the form of less banking business and less interest income for the sector.