Pakistan's Silk Bank In Talks With International Commerce Bank To Raise $54 Million

The International Commercial Bank (ICB) of South Sudan is in negotiations with Pakistan's Silkbank regarding a prospective investment of up to 50 million euros ($54.5 million).

The talks sent Silkbank shares up nearly 8% after the Pakistani government promised the International Monetary Fund (IMF) in September that two of the country's commercial banks would be placed in resolution by May if the first phase of their recapitalization plan did not complete by March.

While the IMF has not identified the two banks, commentators have stated that Silkbank and Summit Bank's capital adequacy has been below the State Bank of Pakistan's standards.

The government's resolution strategy might include forced reorganization, merger, or outright sale of the banks.

According to the Pakistan shares Exchange website, Silkbank has a market value of $34.9 million and 35% of its shares is listed.

Silkbank discussed a prospective investment with Park View Enclave (Private) Limited, a firm owned by Pakistani billionaire and politician Aleem Khan, last year, but the talks fell through.

"This (ICB's) intention to invest does not solve the problem until the deal is completed and the bank is adequately capitalized," said Fahad Rauf, head of research at brokerage Ismail Iqbal Securities.

Silkbank said in a statement that at a meeting on Wednesday, its board of directors evaluated ICB's letter of intent and approved Silkbank management to formally explore the prospective investment.