While the sponsors of KASB Bank had their total stake (85% shareholding) in a blocked account after the imposition of the moratorium, retail investors with 15% shares could not have imagined that their entire investment would practically be zero once the amalgamation of the bank with Bank Islami was over.After all, trading of KASB Bank’s share on the stock market was allowed until recently where small investors bought and sold 15% shares of the bank at unusually high prices and volumes.Now that the merger scheme is finally out, investors are horrified to learn that all shares of KASB Bank stand cancelled and retired, including those 15% shares that are held with the general public and traded in the stock market.“In view of the negative value of shares of the (KASB) bank, as determined by the independent valuator, the shares and all rights and interest therein stand extinguished, as the shares are not represented by capital and accordingly stand cancelled,” according to the merger scheme prepared by the State Bank of Pakistan (SBP).Addressing a press conference at the SBP head office on Thursday, Executive Director Syed Irfan Ali said the merger scheme prepared by the central bank was aimed at protecting the interests of depositors.“The number of shareholders (of KASB Bank) is 9,000. Now compare it with Rs57 billion of deposits and 150,000 depositors,” Ali said, implying that protecting the interests of depositors was more important than saving the investments of 9,000 investors.The price of the KASB Bank share was Rs2.24 when its trading was suspended on April 29 by the Securities and Exchange Commission of Pakistan (SECP). With a free float of 292.63 million shares, the estimated loss of retail investors in the wake of KASB Bank’s merger with Bank Islami amounts to Rs655.5 million.“SBP’s primary mandate is to protect (the interests of) depositors. Please remember that shareholders are risk-takers. Risk taking involves loss as well,” Ali said while noting that the net value of KASB Bank is negative.Under the Banking Ordinance, the SBP enjoys powers to change the value of shares of any bank and to merge it with any other bank. According to the merger scheme prepared by the SBP, the acquisition of KASB Bank by Bank Islami will take place at a ‘token nominal value’ of Rs1,000.In simple words, if the merger scheme is approved by the federal government, the value of KASB Bank shares will become almost nil for its current shareholders.According to the merger scheme, every shareholder of KASB Bank will be entitled to receive compensation per share, or shares from Bank Islami.However, since the break-up value of KASB Bank determined by the independent valuator is negative, Bank Islami is going to pay a token compensation Rs1,000 for all 1.95 billion outstanding shares in proportion to investors’ respective shareholding.“It’s like taking out a loan of Rs10 million on a house whose value has decreased to Rs8 million. The owner will obviously receive a notional value when the house is sold,” Ali said.