Business

Bank Islami to study purchase of KASB Bank

KARACHI: Bank Islami Pakistan, the country’s second-largest full-fledged Islamic bank, has received regulatory approval to study the acquisition of KASB Bank Limited.

Last week, Bank Islami’s board of directors approved a plan to raise 3.5 billion rupees ($34.8 million) via subordinated Islamic bonds to fund its expansion strategy.

An acquisition could see Karachi-based Bank Islami add 105 branches to its existing network of 213, the lender said in a filing to the stock exchange late on Friday, while the transaction would require the conversion of KASB Bank’s conventional financial products into sharia-compliant ones.

In November, the central bank placed KASB Bank under a six-month moratorium as it struggled to meet capital adequacy requirements.

Islamic banks in Pakistan are expanding, buoyed by a government-wide push to develop the Islamic banking sector in the world’s second-most populous Muslim nation.

In May, Karachi-based Meezan Bank received central bank approval to buy the local banking business of HSBC, while Summit Bank and Faysal Bank have plans to convert into full-fledged Islamic lenders in the next two to three years.

There are five full-fledged Islamic banks in Pakistan as well as 14 Islamic windows, a practice which allows conventional lenders to offer Islamic financial services. -Reuters

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