Summary

The Crescent Standard Investment Bank Limited (CSIBL) was the greatest investment bank
reported on all the stock marketplaces in Pakistan when it declared a massive insufficient Rs 2.1
billion (US$35.5 million) for your year December 31 2005 industry was surprised. The
investment banking regulator Opportunities and Exchange Commission of Pakistan (SECP) had
sent an organization to check out the matters in the bank. Since the primary traders were people
or companies in the well known business group known to as Crescent Group there enormous
fascination with the CSIBL matters by financial and political circles. The case describes the
different organizations that have been merged to produce the CSIBL mainly to guard the
stakeholders by creating a company getting a sizable capital. The bank had reported within the
annual reviews the interior control systems permanently governance stipulated with the SECP
were in place as well as the auditors had reported they were acceptable. The case focuses on the
flaws inside the structure in the corporate governance regime in Pakistan.

Company introduction
Crescent Standard Investment Bank Limited, an investment bank, provides corporate finance and
advisory services in Pakistan. It provides various deposit products, including certificates of
deposits, such as term, income, payment, and savings certificates; Islamic certificates; and senior
citizen certificates. The bank offers various loans and advances comprising car/vehicle financing,
machinery and equipment financing, working capital financing, project financing, and letter of
guarantee. It also involves in term finance certificate floatation and underwriting of shares; debt
restructuring and rescheduling; business sale and liquidation; and mergers and acquisitions; as
well as provides feasibility studies and research reports. The bank was founded in 1990 and is
headquartered in Lahore, Pakistan. As of June 28, 2007, Crescent Standard Investment Bank
Limited operates as a subsidiary of Innovative Investment Bank Limited.

Causes of problem:

The large holder Pak-Oman investment company started court proceedings against CSIBL
and this shook the financial markets as it was the first ever default of a listed instrument in
the country. The market was surprised when crescent show earing in negative. The account
show huge loss of PKR 2.118 billion which converted loss per share of 16.85 and the book
value was negative Rs6.85 per share.

Reasons:
Chief executive of CSIBL receives notice from SECP the bank was maintaining parallel
books of accounts.
The inspector found that the bank had involved into violation of various accounts which
is against the rule companies ordinance 1984 and non-banking financial ordinance.
The parallel book of account showed a placement amount 1.817 billion made by 20.896
million share of PICIF-DFI.
In the market competition is very high they did not change policy and they focus only
mergers and acquisition with other companies.
They merge Altowfeek Company but this company has paid up capital 310 million and
loses 275 million.
It also violation of prudential regulation issued by the SECP under 230 section. The main
purpose of prudential regulation provides new way to investment in leasing companies
and they provide operations company guideline.
OPTIONS:
There are two options in this Case first one is company should focus on stability rather than
merger and acquisition. Second one is Company should make committee meeting to solve the
issue of internal fraud.
OPTIONS EVALUATION:

Company should arrange a meeting of companys member and communicate with them in order
to solve the issue of internal fraud so they can overcome the issue and company will not get
closed by the losses. Company were more focusing on merger and acquisition and this was
making loss to the company as competition was very high, company should change their strategy
and policies to make profit and compete in the market.
DECISION:
I would go with the first option. Company should not do more merger and acquisition with other
companies because it occurs loss to them.
Conclusion
According to market situation, they should change their strategy because environment is very
difficult. Books of accounts show true picture. CSIBL bank shows growth in starting but they
should not merge with more companies. Higher management should keep on eye and make
check and balance on daily basis. Make strict policies about which shows wrong accounts and
implement strictly to avoid violate the policies.

https://www.scribd.com/doc/30524941/Corporate-Governance-in-Pakistan
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