HBL, MCB interested in acquiring Royal Bank of Scotland Pakistan

[LahoreEstate]

By Mushfiq Ahmad

KARACHI: Two giants of Pakistan’s banking industry have shown interest in acquiring the Royal Bank of Scotland Pakistan, it emerged on Monday.

Habib Bank announced on Monday that it had expressed an interest in acquiring the shareholding of RBS in RBS Pakistan and that it would be applying to the central bank for obtaining approval to commence due diligence of RBS Pakistan.

It said that upon being granted the requisite permission by the central bank it would commence due diligence in order to evaluate HBL’s offer for the acquisition.

MCB Bank Limited is the other bank that has announced its interest in the foreign bank. It also said it had expressed an interest in acquiring the shareholding of RBS in RBS Pakistan. It has already applied to State Bank for obtaining approval to commence due diligence of RBS Pakistan.

RBS Pakistan had announced in February that it was exploring new ownership for the retail, commercial, GBM and GTS businesses in Pakistan. It said there had been several reasons why this decision had been made. “The current capital constraints on the RBS Group and the need for RBS to reduce the size of its balance sheet means it is unable to provide the investment the business in Pakistan requires to achieve its growth potential.”

Analysts said HBL and MCB had expansive branch networks and so did not need to acquire any bank for increasing number of branches. They said the two banks were interested in the foreign bank due to its attractive customer base.

“Both banks are looking at the quality of customer base that RBS has,” said an analyst.

The bank reported loss after tax of Rs 517 million in 2008, which was lower than the loss after tax of Rs 1.5 billion it recorded in 2007. RBS’s gross NPLs to gross advances ratio stands at 10 percent, slightly above the banking sector average. Its net NPLs to net advances ratio stands at 3 percent.

“The interest shown by two big banks of the country in RBS is evidence of the fact that banking business is viable in the country,” said Muzammil Aslam, KASB Group Economist. “This shows that Pakistan banking sector is resilient and it has good prospects.”

He said RBS’s exit did not mean the local banking sector was not attractive. He said the foreign bank was leaving because of the problems it was facing worldwide. “The bank is not selling its operations in Pakistan only, but it is also selling its units in other countries of the region.”

RBS is exploring new ownership for its units in 15 countries.

Habib Bank Limtied is owned by Aga Khan Economic Fund. Habib Bank was one of the two banks that Pakistan had inherited from pre-partitioned India. The other was Australasia Bank, later renamed as Allied Bank. MCB Bank Limited is owned by the Mansha family that also owns Dera Ghazi Khan Cement, Nishat Textile Mills and Adamjee Insurance.

http://www.dailytimes.com.pk/default.asp...2009_pg5_1