ISLAMABAD (April 01 2003) : The Privatisation Commission has entrusted the task of selling the government stake in Allied Bank Limited to the State Bank of Pakistan, it is reliably learnt.
Decision in this regard is believed to have been taken after all attempts made during the last three years, to persuade the three private groups holding 37 percent of the equity in ABL, to sell their shares to a group acceptable to SBP, did not work.
It may be recalled that the Nawaz Sharif government had sold 51 percent of the government shares to the employees of the bank.
After the expiry of the three years holding period, the employees sold their shares to Fateh Group of Hyderabad, Sikander Jatoi of Ashraf D. Baloch & Company, and Mehtab Abbasi of Darby Ausaf, Islamabad.
As per law any individual who buys more than five percent shares of a bank is required to report the deal to SBP in order to obtain certification as being “fit and proper” as a trustee of public deposit.
It is alleged that the Fateh Group used SBP's export refinance credit-line to fund the buy-out of shares, and Sikander Jatoi had defaulted in payments to PC for purchase of Metropolitan Steel Corporation and Zeal Pak Cement.
Both the buyers todate have not got these shares registered in their names.
ABL has not been able to hold its Annual General Meeting for approval of accounts despite the new management succeeded in turning the operational loss of Rs 839 million in the year 2000, into a profit of Rs 840 million in 2001, and doubling it to Rs 1.7 billion (profit before provisions) in 2002.
With over 800 branches, ABL is the fifth largest bank in the country and it is learnt that institutions like Askari Commercial Bank, PICIC and even the new buyers of United Bank have been eyeing the institution.
SBP has so far refused to meet the shortfall in capital adequacy in ABL since it regards the bank as a private entity.
However, the Central Bank is said to be willing to allow a relaxation to the new buyers in respect of total compliance with its regulations.
Knowledgeable sources point out that SBP handled the privatisation of Muslim Commercial Bank, which, under private management, has gone from strength to strength.
But ABL's privatisation was handled by PC and the decision to sell it to employees was said to have been taken on political considerations and not economic ones.
Fighting between the top bankers in ABL and seeking political backing to sort other colleagues out, has hurt the institution.
Despite the controversy on the methodology adopted by PC, in the final stages it was SBP, which had reservations about selling UBL to MCB.
The Central Bank insisted on free capital and reserve be used for the buy-out and that depositors' funds should not be touched for acquisition of UBL by MCB.