2009–present: Bailout, clean-up, and growth
By this time, the bank's balance sheet had suffered extensive damage, leading to a three-year delay in publishing financial statements.[3] During this period, the Punjab government and the State Bank of Pakistan negotiated arrangements to keep the bank operational without declaring bankruptcy.[3]
The Bank of Punjab received substantial taxpayer-funded bailouts amounting to Rs20 billion between 2009 and 2010.[3] However, the bank still struggled to publish its financial statements, raising concerns about its stability within the financial sector.[3] The bank also faced marginalization in the interbank lending market of KIBOR, where it had to offer government bonds as collateral to secure loans, indicating a lack of trust from other banks.[3]
In March 2012, the Bank of Punjab disclosed financial statements for the years 2008 to 2011, revealing loan losses of Rs19.2 billion, Rs10.2 billion, and Rs3.3 billion for the respective years.[3] These losses were particularly alarming given that the total loan portfolio prior to the crisis was Rs134 billion.[3] The 2011 financial statements also noted an additional Rs33.1 billion in non-performing loans that were exempt from provisioning by the State Bank of Pakistan, due to an implicit guarantee from the Punjab government.[3] Ultimately, nearly half (49 percent) of all loans issued by the Bank of Punjab prior to 2008 defaulted, highlighting mismanagement that contributed to the institution's financial crisis.[3]
By the end of 2017, the problematic Rs33.1 billion in bad loans was reduced to Rs14 billion.[3] In the same year, Naeemuddin Khan made the decision to fully absorb the remaining amount within the year, aiming to clean the bank's balance sheet and eliminate doubts about its financial health.[3] As a result of this decision, the bank's financials went from a net profit of Rs4.9 billion in 2016 to a net loss of Rs3.3 billion in 2017.[3] However, this move effectively removed the burden of the problematic loans.[3]
In December 2018, Naeemuddin Khan stepped down from his role as president in December 2018, creating a leadership vacancy that lasted until April 2020.[3] In April 2020, Zafar Masud was appointed as the president and CEO of the bank by the Government of Punjab, Pakistan and later was approved by the State Bank of Pakistan.[8]
In December 2020, Pakistan Stock Exchange designated Bank of Punjab a market maker for debt securities.[9][10][11]
