ISLAMABAD: United Bank Limited (UBL), one of Pakistan’s largest commercial banks, has taken a significant step toward expanding its operations. On Friday, UBL submitted an offer to Silkbank Limited for an amalgamation, aiming to merge Silkbank into UBL. This announcement marks a pivotal moment in the banking sector.
UBL shared the development with its stakeholders through a notice to the Pakistan Stock Exchange (PSX). The notice highlighted UBL’s commitment to the merger, stating, “Further to our disclosure dated 28 April 2023, United Bank Limited (UBL) is pleased to inform that it has submitted an offer to Silkbank Limited for the amalgamation of Silkbank with and into UBL pursuant to a scheme of amalgamation to be filed with and sanctioned by the SBP under Section 48 of the Banking Companies Ordinance, 1962 (amalgamation).”
Details of the Offer
Under the offer, UBL proposed a share exchange ratio for Silkbank’s shareholders. Specifically, UBL intends to issue one new ordinary share for every 325 ordinary shares held in Silkbank. This proposal aims to provide Silkbank’s shareholders with a seamless transition into UBL. However, the amalgamation remains subject to several conditions. These include the approval of the Board of Directors (BoD) and shareholders of UBL, the execution of definitive transaction documents between UBL and Silkbank, and the receipt of all necessary corporate, regulatory, and third-party approvals and consents required for the amalgamation.
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Recent Financial Performance
UBL has demonstrated strong financial performance in recent months. According to the bank’s latest financial results, UBL recorded a consolidated Profit After Tax (PAT) of Rs49.7 billion for the nine months ended September 30, 2024. The board of UBL declared an interim cash dividend of Rs11 per share, indicating the bank’s commitment to delivering value to its shareholders.
Previous Discussions on Merger
Last year, UBL informed its stakeholders about exploring a potential merger with Silkbank Limited. In April 2023, UBL announced that it intended to seek permission from the State Bank of Pakistan (SBP) to commence due diligence on the merger. At that time, UBL emphasized that any potential merger would be contingent upon due diligence, internal and regulatory approvals, and the signing of definitive documents. This proactive approach shows UBL’s strategy to strengthen its market position.
Implications for the Banking Sector
This proposed amalgamation could have significant implications for the banking sector in Pakistan. If approved, it may lead to increased market consolidation and improved financial stability. UBL’s move to acquire Silkbank highlights the growing trend of mergers and acquisitions in the banking industry, as banks look to expand their customer base and enhance their service offerings.
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