The National Bank of Pakistan (NBP) has taken a significant step in its banking operations by approving the Scheme of Arrangement for the demerger of a portion of SME Bank’s lending portfolio. This landmark decision was made during an Extraordinary General Meeting (EGM) held on January 6, 2025, at the NBP Head Office, with provisions for electronic participation to ensure wider shareholder involvement.
The approved scheme facilitates the transfer of the Demerged Lending Portfolio from SME Bank to NBP. This includes all associated rights, obligations, contracts, benefits, and liabilities tied to the portfolio. Meanwhile, SME Bank will retain assets and liabilities that fall outside the scope of the demerger under what is termed the “Retained Undertaking.”
The demerger plan aligns with the regulatory framework outlined in Sections 279-283 and 285(8) of the Companies Act, 2017. It was initially approved by NBP’s Board of Directors before being presented to shareholders for final consent. With shareholder approval now secured, the scheme has been filed with the Islamabad High Court for further review and official sanction.
Shareholders have also empowered NBP’s key officials to oversee the implementation of the demerger process. This includes ensuring compliance with all corporate, legal, and regulatory requirements. Additionally, stakeholders have agreed to accommodate any modifications to the scheme that may arise as part of the court’s review.
The move is expected to streamline NBP’s operations and enhance its lending portfolio capabilities. By integrating SME Bank’s lending portfolio into its operations, NBP aims to strengthen its position in the small and medium enterprise (SME) sector. This sector is pivotal for economic growth, particularly in Pakistan, where SMEs contribute significantly to employment and GDP.
The demerger also reflects NBP’s strategic focus on modernizing and expanding its offerings to meet evolving market demands. By acquiring SME Bank’s portfolio, NBP not only broadens its customer base but also positions itself to better serve the financial needs of small and medium businesses. These businesses often face barriers in accessing credit, and NBP’s larger infrastructure and resources are expected to provide them with improved financial solutions.
From a regulatory perspective, the demerger underscores the importance of structured and transparent banking practices. It highlights NBP’s commitment to adhering to the legal framework while pursuing strategic growth. The decision to involve the Islamabad High Court in the approval process further emphasizes the bank’s dedication to transparency and accountability.
The demerger aligns with global trends where financial institutions are increasingly focusing on specialized portfolios to enhance efficiency and customer-centric services. For NBP, the move is a step toward consolidating its role as a leading player in Pakistan’s banking sector, particularly in areas that drive economic development.
As the process unfolds, all eyes will be on how NBP executes the integration of SME Bank’s lending portfolio. With the necessary corporate and legal mechanisms now in place, the bank is positioned to leverage this strategic move to support Pakistan’s burgeoning SME sector while strengthening its overall financial ecosystem.