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KARACHI, Pakistan - Pakistan's Silkbank said on Thursday it is in talks about a potential investment of up to 50 million euros ($54.5 million) by International Commercial Bank (ICB) of South Sudan.
The talks sent shares in Silkbank up nearly 8% and come 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 go through by March.
While the IMF has not named the two banks, analysts have said Silkbank and Summit Bank's capital adequacy have been below the criteria set by the State Bank of Pakistan.
The government's resolution plan could involve forced restructuring, amalgamation or an outright sale of the banks.
Silkbank has a market capitalisation of $34.9 million and 35% of its stock is listed, according to the Pakistan Stock Exchange website.
Silkbank held talks last year with Park View Enclave (Private) Limited, a company owned by Pakistani businessman and politician Aleem Khan, about a possible investment but the negotiations broke down.
"This intention (by ICB) to invest does not solve the problem until the deal goes through and the bank is adequately capitalized,” said Fahad Rauf, head of research at brokerage Ismail Iqbal Securities.
Silkbank said a statement that its board of directors considered ICB's letter of intent at a meeting on Wednesday and gave approval for Silkbank management to formally pursue the potential investment.
($1 = 0.9170 euros)
(Reporting by Ariba Shahid; Editing by Susan Fenton)