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State Bank receives 12 EoIs for ABL take-over

KARACHI (July 19 2003) : The State Bank of Pakistan has received 12 Expression of Interest (EoI) letters for acquisition of the management stake in Allied Bank Limited, it is reliably learnt.

The 12 aspirants for ABL are: United Bank Limited; Bank of Punjab; Prime Commercial Bank; Askari Commercial Bank; Dawood Bank; Prime Commercial Bank; Pak-Kuwait Investment Company; Saudi-Pak Investment Company; Jahangir Siddiqui Investment Bank; NDLC; Union Leasing; Ibrahim Leasing/Ibrahim Fibre; and Al-Zamin Leasing Modaraba in collaboration with Iqbal Ali Muhammad (formerly of the Gul Ahmed Group).

For nearly seven years, Privatisation Commission has been trying to sell the remaining 49 percent stake of the Federal Government in ABL. At first, PC's attempts were blocked by the Employees, who hold 51 percent shares in the bank. Subsequently, the three buyers who had bought nearly 40 percent of the employees' shares, managed somehow to hold the PC to ransom and even efforts by the National Accountability Bureau (NAB) to lend a helping hand did not bear fruit.

In frustration, PC handed over the task to the SBP as ultimately the central bank is the guardian of the banking system and all the years of dilly-dallying about management of the already privatised bank was causing haemorrhage to the institution.

SBP issued an invitation under Section 47 of the Banking Companies Act to all commercial banks, investment banks and leasing companies operating in the country to bid for management stake in ABL, indicating that it intends to reconstruct the bank's balance sheet through an offer of a right issue to these institutions.

This route, it is believed in banking circles, is meant to block the three business groups already in possession of the employees' shares from claiming majority on the bank's board.

One of these parties–a textile-cum-garment magnate from Hyderabad–is said to be a defaulter in ABL itself to the tune of Rs 400 million besides default in other banks.

The second, is a construction fat cat from Sindh.

He has had an uneasy relationship with PC on his previous acquisitions and is also not acceptable to SBP as a player in the financial system.

And the third party is said to be a newspaper owner from Islamabad/ Rawalpindi.

Business Recorder understands the textile and construction groups hold 31 percent shares between themselves.

They have reached an understanding with as many as four intending buyers that they would sell their shareholding to them in case their bid was successful and SBP was willing to hand over the management stake of ABL to them.

Employees had paid Rs 70 per share to the government in 1992.

Over the years they have been receiving bonus shares and have sold the shares to the private parties in the range of Rs 23 and Rs 24 per share.

ABL is the fifth largest bank in Pakistan. It has declared Rs 1.5 billion operational profit for the last six months.

The bank, however, needs injection of capital to the tune of Rs 4/5 billion to meet the Capital Adequacy Requirement. Knowledgeable sources say that SBP would need to offer the right issue at a discount in order to conclude the deal with a buyer.

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