United Bank Limited (UBL) has announced the approval of a landmark merger with Silk Bank Limited (SBL) through a share swap arrangement, marking a significant move in Pakistan’s financial sector. The decision, made by UBL’s Board of Directors, aligns with Section 48 of the Banking Companies Ordinance, 1962, which governs such mergers.
The proposed amalgamation will involve UBL issuing 27,944,188 ordinary shares, each valued at Rs. 10, to SBL shareholders. This exchange is based on a ratio of one UBL share for every 325 SBL shares. The new shares will be issued exclusively for this merger and will not include any rights issues. The Agreement to Amalgamate, along with the Scheme of Amalgamation and other relevant documents, will be executed to formalize the transaction.
To secure shareholder approval, UBL has scheduled an Extraordinary General Meeting (EOGM) on December 30, 2024, in Islamabad. At the meeting, shareholders will deliberate on the merger and related matters, including the issuance of new shares and necessary procedural steps. UBL has announced that its Share Transfer Books will remain closed from December 23 to December 30, 2024, to facilitate the transaction.
The merger remains contingent on several approvals. These include the execution of definitive agreements by the parties, the consent of shareholders from both UBL and SBL, regulatory clearances from the Competition Commission of Pakistan, and the sanctioning of the Scheme of Amalgamation by the State Bank of Pakistan (SBP). The SBP’s approval under Section 48 of the Banking Companies Ordinance, 1962, is a critical requirement for finalizing the merger.
The strategic merger is expected to significantly strengthen UBL’s market position and enhance its ability to serve a broader customer base. By integrating Silk Bank’s resources and operations, UBL aims to create synergies that will result in improved operational efficiencies and a better customer experience.
This merger comes at a time when Pakistan’s banking sector is experiencing rapid evolution, with financial institutions seeking innovative ways to remain competitive and meet regulatory requirements. UBL’s decision to pursue this amalgamation highlights its focus on long-term growth and its commitment to delivering value to its shareholders.
Market analysts have noted that the merger aligns with UBL’s strategy to expand its footprint in the financial sector and increase its capabilities in providing advanced banking solutions. By absorbing Silk Bank into its operations, UBL could achieve greater economies of scale and reinforce its position as a leading player in the market.
The financial industry and investors are closely monitoring the progress of this merger. As UBL navigates the regulatory landscape and completes the required formalities, the successful integration of the two banks will likely set a precedent for future consolidation efforts in Pakistan’s banking sector.