- Official says KASB Bank employees given Islamic banking training and their jobs are secured now
The management of BankIslami has started retrenchment of senior bankers of the head-office of KASB Bank it had taken over in May last year, Pakistan Today has learnt.
According to an official of the bank, more than 150 senior employees of KASB Bank had been removed from their posts between December 2015 and January 2016, while many others are being forced to resign. “Fearing unemployment, some of these employees have approached the Sindh High Court (SHC) for job security,” he added.
Another official said that “those who did not resign have been posted out of Karachi or to small cities, such as Khairpur, Thatta, by the bank management after their demotion”.
One such official said, “After the court’s order, the management of BankIslami did give me a post but in interior Sindh. I have filed a contempt plea against the bank management in this connection.”
In May 2015, Karachi-based BankIslami acquired KASB Bank with its 105 countrywide branches, after the approval of the State Bank of Pakistan (SBP).
“The SBP had approved this amalgamation scheme as per Section 47 of the Banking Companies Ordinance, 1962 under which the BankIslami has to bear all liabilities and hire employees of KASB Bank, and cannot force them to resign till their retirement,” said Syed Asghar Ali, counsel for one of the petitioners.
He said BankIslami acquired the operations of KASB Bank at a token compensation of Rs 1,000 ($10) with all its losses and liabilities, including its overall shareholding after the approval of its shareholders. At the time, the SBP had rejected bids of three banks, Askari Bank, Sindh Bank and JS Bank, which had conducted due diligence of KASB Bank, the counsel added.
This exercise began after the central bank imposed a moratorium on KASB Bank in November 2014 for a period of six month, ending in April, as the bank failed to meet its paid-up capital requirement which was less than Rs 1 billion along with the capital adequacy ratio of negative 4.63 per cent.
After the merger, KASB Bank’s licence was cancelled by the SBP while its branches were taken over by BankIslami.
Sources however said BankIslami had trouble as it was required to convert the whole operations of the merged branches of KASB Bank with additional compliances of Sharia financing. “The top management of KASB Bank practiced conventional banking, so they were asked to resign,” added a former employee of the bank.
The sources said that the merger of KASB Bank with BankIslami had created serious doubts over performance of the finance managers in the government.
Media reports had said that the merger had been done even without the consent of the existing owners which raised serious questions on the intent of the regulator.
Moreover, a senior BankIslami official said KASB Bank employees had been given training of Islamic banking and their jobs were secured now.