International Commercial Bank (ICB) of South Sudan may invest up to 50 million euros ($54.5 million) according to a statement released by Silkbank on Thursday.
“We would like to inform you that M/s. International Commercial Bank (“ICB”) of South Sudan has expressed interest in subscribing to the shares of Silkbank Limited (hereinafter referred to as the “Bank”) for up to fifty million euros (Potential Investment), subject to all regulatory requirements and financial due diligence,” the bank stated in a filing to the Pakistan Stock Exchange.
In September, the Pakistani government promised the International Monetary Fund (IMF) that two of the country’s commercial banks would be placed in resolution by May if the first phase of their recapitalization plan did not pass by March. As a result of the talks, Silkbank shares increased by nearly 8%.
While the IMF has not identified the two banks, analysts have reported that Silkbank and Summit Bank’s capital adequacy fell below the State Bank of Pakistan’s requirements. The government’s plan for bank resolution could involve forced restructuring, mergers, or outright sales.
According to the website of the Pakistan Stock Exchange, Silkbank has a market capitalization of $34.9 million, and 35% of its shares are listed. The Silkbank has had difficulty raising capital. Last year, Park View Enclave (Pvt) announced its intention to acquire at least 51 percent of Silkbank Limited’s shares and control.
The SBP granted Habib Bank Limited and Bank Alfalah Limited permission to conduct due diligence on Silkbank’s consumer banking business in 2021. Prior to HBL and BAFL, Fauji Foundation also expressed interest in acquiring Silkbank, but ultimately decided against it for unexplained reasons.
Silkbank discussed a potential investment with Park View Enclave (Private) Limited, a company owned by Pakistani industrialist and politician Aleem Khan, but negotiations broke down last year.
The bank stated that its Board of Directors, at a meeting held on April 5, 2023, reviewed and considered the letter of intent and approved the bank’s management to pursue the prospective investment formally.
“The board has further authorised the management to engage in discussions with the ICB to finalise the terms and conditions and documentation, and to present the same to the board for its consideration and implementation, if deemed appropriate,” the statement continued. According to the bank, the proposed investment is subject to approval by the board, shareholders, Securities and Exchange Commission of Pakistan, and State Bank of Pakistan.
Fahad Rauf, head of research at brokerage firm Iqbal Iqbal Securities, stated, “This intention (by ICB to invest) will not solve the problem until the deal closes and the bank is adequately capitalised.”