March 5, 2025 — Silkbank Limited is grappling with mounting financial uncertainty, according to the recent report from Grant Thornton Anjum Rahman, a well-established firm of Chartered Accountants. The auditors have raised significant red flags concerning the bank’s financial health, particularly its ability to continue operations in the future.
In their Independent Auditors’ Report, Grant Thornton outlined several concerns about the bank’s solvency. Silkbank reported a net loss of Rs. 13.04 billion for the fiscal year ending December 31, 2024. This is a slight increase in losses compared to Rs. 12.79 billion reported in the previous year. These ongoing losses have significantly impacted the bank’s financial standing, with accumulated deficits reaching Rs. 64.7 billion as of December 31, 2024—up from Rs. 51.64 billion in the prior year. The negative net equity of Silkbank stands at Rs. 38.22 billion, worsening from Rs. 26.35 billion in 2023.
The auditors have pointed out that these financial setbacks have left Silkbank struggling to meet regulatory capital requirements. Specifically, the bank’s paid-up capital, net of losses, its Capital Adequacy Ratio (CAR), and its Minimum Capital Requirement (MCR) fall short of the thresholds mandated by the State Bank of Pakistan (SBP). This failure to meet SBP’s regulatory standards further raises concerns about Silkbank’s ability to continue operations and meet its financial obligations going forward.
One of the major developments outlined in the report is the proposed amalgamation of Silkbank with United Bank Limited (UBL). The merger, which could provide a way out for Silkbank, hinges on obtaining necessary regulatory approvals, including the sanction of the Scheme of Amalgamation from the SBP. However, until these approvals are granted, Silkbank’s future remains in a state of limbo, with significant uncertainty surrounding its ability to continue as a going concern.
Adding to the bank’s already fragile position, the auditors highlighted significant legal challenges. Silkbank is facing claims totaling Rs. 1.06 billion, as noted in section 26.3 of the financial statements. Furthermore, a number of lawsuits for damages, amounting to Rs. 25.60 billion, have been filed against the bank by various borrowers and employees. These lawsuits stem from disputes related to loans and advances, further exacerbating Silkbank’s financial troubles.
The auditors have emphasized that the combination of mounting losses, inadequate capital levels, regulatory concerns, and unresolved legal issues presents a serious challenge to Silkbank’s long-term viability. As a result, Grant Thornton has warned of material uncertainty regarding Silkbank’s ability to continue operating in its current form.
The bank’s future hinges on the success of the proposed merger with UBL, as well as the resolution of its legal disputes and capital shortfall. Until these issues are addressed, Silkbank faces an uncertain future in Pakistan’s banking sector. The situation demands urgent intervention and strategic measures to stabilize the bank and ensure its continued presence in the competitive financial landscape.
This financial turmoil at Silkbank highlights the risks faced by banks with significant operational losses and regulatory challenges, and serves as a reminder of the volatile nature of the banking sector in Pakistan.