مضمون کا ماخذ : بلوچستان لاٹری
SC directs NBP to give benefits to pensioners
KARACHI: The Supreme Court (SC) Monday dismissed the National Bank of Pakistan (NBP)’s appeal against pensioners and maintained the decision of the Lahore High Court (LHC). The LHC had allowed the writ petitions and directed the NBP to release pensionary benefits to the bank’s pensioners in early 2016. In a recent development, the SC has […]
KARACHI: The Supreme Court (SC) Monday dismissed the National Bank of Pakistan (NBP)’s appeal against pensioners and maintained the decision of the Lahore High Court (LHC).
The LHC had allowed the writ petitions and directed the NBP to release pensionary benefits to the bank’s pensioners in early 2016.
In a recent development, the SC has set aside the decision of the Peshawar High Court (PHC) and maintained the verdict of the LHC given on the January 15, 2016 on the NBP’s pension liability contingencies.
The NBP informed its shareholders through stock filing that the pension liability has a financial impact of Rs 47.7 billion or Rs 14.6/share (after-tax), calculated as on December31, 2016.
According to industry sources, the future legal options remain unclear, but there remains a possibility of the NBP challenging the decision in larger bench of the Supreme Court.
If immediately expensed, this would result in Rs 14.6/share hit to book value of equity per share (BVPS), which currently stands at Rs 80.3. The BVPS would subsequently reduce to Rs 65.7/share. In terms of profitability, the amount would wipe out roughly two years of profitability, in addition to increasing the recurring impact of pension expense on the bottom-line going forward.
Industry sources said that this would also result in a 3.85 percent deduction from Tier-1 capital based on 2016 Tier-1 capital and risk weighted assets. The Tier-1 ratio would reduce from 11.86% as on December 2016 to 8.8% as on December 2017 if the bank chooses not to pay any dividend for 2017. This would result in the bank meeting the Tier-1 capital requirement by a few basis points.
The regulatory capital limit is 7.775% based on 6.0% Tier-1 requirement, 1.5% additional Tier-1 requirement and 1.275% capital conservation buffer.
The NBP had an ongoing contingency in regards to its pension liability case. As per the 2016 annual report, the NBP, on January 1, 1999, through circular No 37/1999, had revised the pay structure of its employees where the compensation formula was altered from 70 percent of gross emoluments to 33 percent.
At the same time, the bank raised salaries, which resulted in the gross pension amount remaining roughly the same.
Several bank employees filed a petition praying for the re-calculation of their pensions based on the old formula in front of the Peshawar High Court and the LHC.
The PHC s decision was in favour of the bank whereas the LHC’s decision was in favour of the bank employees. The bank had challenged the decision of the LHC in the SC.
Published in Daily Times, September 26th 2017.
