Bank of Punjab facing equity problems

SBP governor says bank is still a viable franchise.
ISLAMABAD: The Bank of Punjab (BoP) is facing equity problems and negotiations are going on with the stakeholders to inject more money, revealed State Bank of Pakistan (SBP) Governor Shahid Hafiz Kardar.
Giving a first statement on the financial health of BoP during a meeting of the Senate Standing Committee on Finance and Revenue on Tuesday, Kardar said that due to bad debts “bank has an equity problem”. He, however, refrained from commenting on other causes of the deteriorating condition but said that BoP has not yet released its financial statement.
Kardar added that despite problems the bank is still a viable franchise, nonetheless, the government of Punjab will have to inject more money. Punjab government had recently pumped Rs10 billion into the bank. He did not disclose the exact amount of injection required.
Responding to a question, an official of the SBP said the central bank flagged the issue of Rs9 billion loan given to Haris Steel without collateral. He said the SBP advised the board of directors of the bank to initiate an internal inquiry and fix responsibility.
Hamesh Khan, former president BoP, is under the custody of Federal Investigation Agency on charges of approving the Rs9 billion loan without any collateral for Haris Steel.
The Senate Standing Committee on Finance and Revenue had recently sought a report from the central bank on the state of affairs in BoP.                                     

Published in The Express Tribune, January 5th, 2011.