SME Bank Limited has taken a significant step in its corporate restructuring by approving an action plan to wind down its subsidiary, SME Leasing Limited. The Board of Directors has not only sanctioned the winding-down process but also kept open the possibility of selling SME Leasing as a going concern, signaling a strategic approach to manage the subsidiary’s future.
In an official communication to the Pakistan Stock Exchange, SME Bank outlined that while the board has approved the winding-down plan, management has been directed to update the Securities and Exchange Commission of Pakistan (SECP) on the progress of the liquidation of SME Bank itself. Furthermore, a request has been made to defer the scheduled hearing concerning SME Leasing to a later date. This deferment aims to allow the incoming liquidator adequate time to assess the affairs of SME Leasing comprehensively before any legal proceedings resume.
This development follows an order from the Islamabad High Court, which empowered the State Bank of Pakistan (SBP) to appoint a liquidator for SME Bank Limited. Subsequently, SBP appointed Adnan Imran, Chief Manager of the Islamabad Office, as the liquidator of SME Bank with immediate effect. The liquidator will oversee the winding-down process, ensuring regulatory compliance and orderly management of SME Bank’s assets and liabilities.
SME Leasing Limited, established in July 2002 and publicly listed since December 2006, operates as a Non-Banking Finance Company (NBFC) under the regulatory framework of the Securities and Exchange Commission of Pakistan (SECP). SME Bank Limited holds a controlling 73.14 percent stake in SME Leasing, underscoring the subsidiary’s strategic importance within the group. SME Leasing specializes in leasing services and has been an integral part of SME Bank’s efforts to support small and medium enterprises in Pakistan through tailored financial products.
The decision to wind down SME Leasing comes amid broader challenges faced by the SME banking sector, including shifts in regulatory landscapes, financial performance pressures, and evolving market dynamics. By initiating this winding-down process with an option for sale, SME Bank aims to optimize value for its stakeholders while addressing operational and financial sustainability concerns related to its leasing subsidiary.
This move aligns with the bank’s broader objectives to streamline its operations and comply with directives from regulatory authorities. It also reflects a measured approach to protect the interests of creditors, investors, and customers associated with both SME Bank and SME Leasing.
As SME Leasing undergoes this transition, the role of the appointed liquidator will be critical in managing the legal, financial, and operational aspects of the process. The liquidator’s evaluation will provide a clearer picture of the subsidiary’s financial health and the feasibility of either its liquidation or sale as a functional entity. This assessment will form the basis for subsequent decisions on how best to proceed with SME Leasing’s future.
The unfolding developments at SME Bank Limited and SME Leasing Limited will be closely monitored by industry observers, financial institutions, and market participants, given their potential impact on Pakistan’s SME finance ecosystem. The bank’s transparent communication with the SECP and the Pakistan Stock Exchange highlights its commitment to regulatory compliance and shareholder engagement during this significant transition.
Overall, SME Bank’s approved action plan marks a decisive moment in the restructuring of its leasing arm, signaling a strategic pivot as it navigates complex regulatory and market challenges in Pakistan’s financial sector.