KARACHI: The deal for sale of Royal Bank of Scotland (RBS) Pakistan comes under serious trouble as State Bank has refused to issue a no-objection certificate for the deal, reliable banking sources told Dawn on Friday.
The MCB Bank had signed an agreement in August to buy RBS Pakistan operations, and both the parties had also issued welcome statements after the deal, and it was decided that the deal would materialise by the end of Dec 31.
The sources claimed that the RBS has, so far, failed to meet the basic conditions of the regulator, the central bank.
When a bank is sold, the bank places its shares with the State Bank and these shares are then transferred to the party which acquires the bank.
The deadline to place sponsors’ shares is Dec 31, while the remaining working days are just a few due to holidays.
‘I believe that the deal is not possible as only few days are left while shares have been pledged with the creditors who issued loans on behalf of these shares,’ said a senior banker who knew the new development in the deal.
The RBS sale is a high profile deal as it sold its share at much less price than expected by the market.
According to the details of the agreement, the MCB Bank had to acquire from the seller 1,707,107,891 of ordinary shares in RBS Pakistan, representing a 99.37 per cent stake, for a cash price of Rs4.22 per share.
The total amount of the entire RBS Pakistan was set as Rs7.2 billion (approximately $87 million).
The RBS, which was one of the largest banks of Europe, had to face fatal consequences of financial meltdown which started from the US in 2007 and which hit the entire global financial system.
The major shares of RBS were finally purchased by the British government while the RBS sold its operations in various countries.
The RBS Pakistan is a leading international bank in Pakistan with a branch network of over 75 in 24 cities, of which 30 serve the affluent retail customer segment, and there are three Islamic banking branches also and over 90 ATMs.
On Dec 31, 2008, RBS Pakistan had total assets of Rs108 billion.
At the time of acquiring the RBS, the MCB’s chairman, Mian Mohammad Mansha, had issued a statement calling the deal an important transaction as it would strengthen the MCB’s franchise in key urban centres and broaden product offering to retail as well as corporate customers.
‘The deal is still important for the MCB, but the issue of sponsors’ shares could be a serious problem as it has a potential to destroy the agreement between the two banks,’ said the senior banker.
The RBS Pakistan’s sale attracted large banks, like Habib Bank and MCB Bank, while a relatively small bank, JSCL was in the race to win the RBS.
The HBL latter withdrew itself, making it easier for the MCB Bank to hit the deal which it did at the lowest price.
No comments:
Post a Comment