Faysal Bank Report

INTRODUCTION OF FAYSAL BANK:
Faysal Bank Limited (Bank) was incorporated in Pakistan on October 03, 1994 as a public quoted company listed on Karachi & Lahore stock Exchanges. The six Pakistan branches of Faysal Islamic Bank of Bahrain E.C. amalgamated with the Bank when it commenced business operations effective January 01,1995. FBL is a banking company carrying on business in Pakistan and duly licensed as a Scheduled Bank under the provisions of Section 27 of the Ordinance. The year 2002 is the 15th year for Faysal Bank serving the Pakistani economy and market.
INTRODUCTION OF AL FAYSAL INVESTMENT LIMITED:

Al Faysal Investment Limited was incorporated in Pakistan in 1991 as the investment arm of the group and make valuable contributions in the public and private sectors based on Shariah approved modes of funding. AFIBL is an investment finance company, authorized to carry on investment banking business in Pakistan under the provisions of S.R.O 585(I)/85 issued by the erstwhile Controller of Capital Issues under the provisions of the erstwhile Capital Issues (Continuance of Control) Act, 1947.
HISTORY AND BACKGROUND:
Faysal Bank Limited as incorporated as a public limited company under the Companies Ordinance,1994 on October 3,1994 in Lahore vide Certificate of incorporation No,LO7391 of 1994-95 with an authorized capital of Rs.1,500 million ordinary shares of RRRs.10/-each.The Ban has been established by Faysal Islamic Bank of Bahrain E.C.,pursuant to the federal Government permission/sanction letter no.F 8(23) Bkg.IV/92 -5443 dated April 7,1993 ,as amended, for establishment of a commercial bank The state Bank of Pakistan-SBP, vide its letter no . BRD (NBFI)676/625 -E-93 dated September 16, 1993 has also agreed in principle to the setting up of the Bank in term of the governments aforementioned permission letter. SBPs said letter also contains interalia, its agreement in principle for they merger (amalgamation) with the Bank of the existing branches of Faysal Islamic Bank of Bahrain E.C. (hereinafter referred to as FIBB- Pakistan Branch) subject to meeting with the requirements of the law, in particular section 48 of the Banking companies Ordinance, 1962 & on the condition that the transfer of assets &liabilities shall be on the basis of the break-up value or networth of the FIBB-Pakistan Branch as per the books. The FIBB- Pakistan branch will merge with the Bank on a going concern basis.
MERGER BY WAY OF AMALGAMATION:

AL FAYSAL INVESTMENT BANK, an investment finance company (investment bank) limited by shares, incorporated under the laws of Pakistan, having its registered office at 15 West, Jinnah Avenue, Blue Area, Islamabad, (hereinafter referred to as the "AFIBL"); INTO FAYSAL BANK LIMITED, a banking company, limited by shares, incorporated under the laws of Pakistan and having its registered office at Trade Center, I.I. Chundrigar Road, Karachi (hereinafter referred to as the "FBL")
RETENTION OF ENTITY AFTER MERGING:
As of January1,2002, the two entitles of the group in Pakistan, Faysal Bank Limited and Al Faysal Investment Bank Limited, merged into one and today only Faysal Bank Limited remains as a larger, stronger and much more versatile institution among private banks in the country. In fact it is amongst three largest in terms of quality, which after the merger stands at over Rs.4.0 billion. The total balance sheet size of Faysal Bank after the merger is in excess of Rs. 40 billion
REASONS OF THE MERGER:

The principal reason ssof the Scheme is to effect amalgamation of AFIBL by transfer to and vesting in FBL, of the whole of Undertaking of AFIBL , against allotment of fully paid ordinary shares of FBL to the shareholders of AFIBL in lieu of the shares of AFIBL held by them and dissolve AFIBL without going into winding up as per the procedure for amalgamation under section 48 of the Ordinance.
BENEFITS OF THIS SCHEME:

Larger Equity Base
The merger would lead to increased asset base and the size of the entity. This would in turn assist the management to have access to more external funds at competitive rates. The larger size of equity would provide greater comfort to potential creditors
Synergies
The merged entity would be in a position to offer varied financial products, thus giving the opportunity of one-window operations to its clients. Further, it would also eliminate the competition between the two companies in terms of resource mobilization from money market.
Increase In Risk Absorption Capacity

The larger size of the merged company would increase its risk absorption capacity thus, enhancing the capacity to manage the potential risks arising out of the adverse and uncertain operating environment.
Reduction in Administrative Costs

The merger would result in substantial administrative cost savings and economies of scales leading to enhanced profitability as the merger would enable the merged entity to carry out operations of an investment bank
Increase in trading volumes:

The increase in number of paid up shares of FBL by allotment of fully paid ordinary shares of FBL to the shareholders of AFIBL in lieu of the shares of AFIBL held by them, will result in increase in trading volumes of FBL's shares in the market and hence enhanced liquidity
Capital of AFIBL BEFORE MERGING:

The authorized share capital of AFIBL is Rs.l,000,000,000/- divided into 100,000,000 ordinary shares of Rs. 10/- each, out of which Rs.978,750,000 is the issued and paid up capital divided into 97,875,000 ordinary shares of Rs. 10/each and the remaining shares are un-issued.
Capital of FBL BEFORE MERGING:

The authorized share capital of FBL is Rs.3,500,000,000/- divided into 350,000,000,000 ordinary shares of Rs.10/- each, out of which 151,250,000 ordinary shares of Rs.10/- each are issued and fully paid up and remaining are un-issued. VALUE PER SHARE BEFORE MERGING: Break up value Discounted forecast future earning Market price(june 29,2001) Average FBL 16.24 9.73 7.55 11.17 AFIBL 15.58 12.79 10.50 12.9
TYPE OF MERGING:
Its an acquisition because FBL acquire all assets and liabilities of AFIBL.AFIBL will have to face a great loss in future, so the management of AFIBL decided to merge with FBL.FBL also gained profitability after merging with AFIBL and shares of FBL also increased.Both banks achieved benefits after merging. BENEFITS ACHIEVED AFTER MERGING:
Faysal Bank posted a profit after tax (PAT) of Rs 1200 million , which is 8% higher than the last year.ss

Faysal Bank Report

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INTRODUCTION OF FAYSAL BANK:

INTRODUCTION OF AL FAYSAL INVESTMENT LIMITED:

HISTORY AND BACKGROUND:

MERGER BY WAY OF AMALGAMATION:

RETENTION OF ENTITY AFTER MERGING:

REASONS OF THE MERGER:

BENEFITS OF THIS SCHEME:

Increase In Risk Absorption Capacity

Reduction in Administrative Costs

Increase in trading volumes:

Capital of AFIBL BEFORE MERGING:

Capital of FBL BEFORE MERGING:

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