KARACHI, March 25, 2026 — Bank Makramah Limited (BML), formerly known as Summit Bank Limited, has filed a significant corporate disclosure with the Pakistan Stock Exchange (PSX), revealing a proposed settlement of its outstanding Term Finance Certificate (TFC) obligations through the issuance of new ordinary shares — a move that could substantially reshape the bank’s capital structure and ownership.
What Is Being Proposed?
Bank Makramah Limited is seeking formal shareholder approval to settle the full outstanding liability on its rated, unsecured, and subordinated Term Finance Certificates (TFCs). The total redemption amount comprises two components:
- Outstanding principal: PKR 1,495,515,000 (Rs. 1.495 billion)
- Accrued profit up to December 31, 2025: PKR 1,854,511,777.28 (Rs. 1.854 billion)
- Total Redemption Amount: approximately PKR 3.35 billion
Instead of repaying this liability in cash, the bank proposes to settle it by issuing 27,888,469 fully paid-up ordinary shares to the existing TFC holders, at an issue price of PKR 118.69 per share, with each share carrying a par value of PKR 10.
These newly issued shares will be issued other than by way of rights, under Section 83(1)(b) of the Companies Act, 2017, and will form part of the Bank’s Tier I Capital.
Why Does This Matter?
This is a debt-to-equity conversion — a mechanism where a company’s creditors (in this case, TFC holders) receive shares in lieu of cash repayment. For Bank Makramah, this approach:
✔ Eliminates a Rs. 3.35 billion liability from the balance sheet ✔ Strengthens the bank’s Tier I Capital base without a cash outflow ✔ Avoids further strain on liquidity ✔ Converts creditors into equity shareholders of the bank
However, existing shareholders should note this will result in dilution of their ownership stake, as new shares are being issued at PKR 118.69 — which may or may not reflect the current market price.
Regulatory Approvals Required
The proposed settlement is subject to receipt of all necessary regulatory approvals, specifically:
- State Bank of Pakistan (SBP) — as the primary banking regulator
- Securities & Exchange Commission of Pakistan (SECP) — for capital market compliance
The Board resolution authorizes the Chief Executive Officer and the Company Secretary — singly or jointly — to take all steps necessary to execute the Proposed Settlement. This includes filing statutory forms, preparing regulatory submissions, executing agreements, and paying all associated fees and charges.
BML Reorganisation Scheme
In addition to the TFC settlement, the PSX disclosure also references a separate agenda item: a Scheme of Arrangement between BML and its members for the reorganisation of the Bank’s shareholding — referred to as the “BML Reorganisation Scheme.”
This suggests that BML may be undertaking a broader corporate restructuring exercise, of which the TFC-to-equity conversion is one component. Details of the full reorganisation scheme are expected to be presented to shareholders for approval at an upcoming meeting.
Background: From Summit Bank to Bank Makramah
Bank Makramah Limited was formerly known as Summit Bank Limited, one of Pakistan’s smaller commercial banks. The bank rebranded as part of a broader transformation effort. The issuance of TFCs — subordinated debt instruments — is a common tool used by Pakistani banks to raise Tier II capital, though subordinated TFCs can also contribute toward meeting capital adequacy requirements under SBP guidelines.
The conversion of these TFCs into Tier I equity capital marks a significant shift in the bank’s capital management strategy.
Key Numbers at a Glance
| Detail | Amount |
|---|---|
| TFC Principal Outstanding | PKR 1,495,515,000 |
| Accrued Profit (to Dec 31, 2025) | PKR 1,854,511,777.28 |
| Total Redemption Amount | ~PKR 3.35 billion |
| New Shares to be Issued | 27,888,469 shares |
| Issue Price Per Share | PKR 118.69 |
| Par Value Per Share | PKR 10 |
| Capital Classification | Tier I Capital |
| Legal Authority | Section 83(1)(b), Companies Act 2017 |
What Should Investors Watch For?
- Regulatory green light from SBP and SECP — until both approvals are received, the settlement cannot be executed.
- Impact on share count and EPS — issuance of ~27.9 million new shares will dilute existing shareholders’ earnings per share.
- Details of the BML Reorganisation Scheme — the broader restructuring plan could have further implications for share price and ownership structure.
- Book value vs. issue price — the share issuance at PKR 118.69 per share is significantly above the PKR 10 par value, which reflects the bank’s negotiated valuation with TFC holders.
Disclaimer: This article is based solely on the regulatory disclosure filed by Bank Makramah Limited with the Pakistan Stock Exchange on March 25, 2026 (PSX Document No. 272985). This article does not constitute investment or financial advice. Readers are advised to consult a licensed financial advisor before making any investment decisions. TaxToday.pk is not affiliated with Bank Makramah Limited or any of its group companies.