State Bank of Pakistan has granted approval to BankIslami Pakistan to conduct due diligence of the KASB Bank for its acquisition and merger.
The board of directors of the Karachi-based BankIslami approved a plan last week to raise PKR3.5bn ($34.8m) through subordinated Islamic bonds in order to fund its expansion strategy, Reuters reported.
The lender said in a filing to the stock exchange that with the acquisition, the bank is expected to add 105 branches to its existing network of 213.
In November 2014, KASB Bank struggled to meet the capital adequacy requirements and was subsequently placed under a six-month moratorium by the central bank, reports the news agency.
The deal would require the conventional financial products of KASB Bank to be converted into sharia-compliant ones.
BankIslami Pakistan was the first Islamic Commercial Bank to receive the Islamic banking license under the Islamic banking policy of 2003 from State Bank of Pakistan on 31 March 2005.
The bank, which commenced operations in April 2006, offers shariah compliant retail banking, investment banking, consumer banking and trade finance products.
Image: KASB Bank struggled to meet capital adequacy requirements in November. Photo: courtesy of suphakit73/ FreeDigitalPhotos.net