January 28, 2002	Monday	Ziqa’ad 13, 1422

Encouraged by changing policy environment, investors from the Gulf are focusing on the financial sector, although the Kuwaitis are believed to be keenly interested in acquiring the Pakistan State Oil that dominates the domestic market.

There are security concerns among foreign personnel particularly from the USA and the UK not because plants are under threat but because the employees are under threat. Their professionals do not feel safe.

With the Arabs, it is quite different.The investors from the Gulf feel comfortable living in Pakistan, says head of a multinational funded by financial institutions and banks with Kuwaiti and Saudi interests. And the easiest for foreign investors is to put their money in the restructured financial sector with strengthened balance sheet of banks.

Keeping the global trends in banking, the senior advisor to the State Bank and the Ministry of Finance Khalid Siraj feels the purchase of restructured banks by Gulf investors, appears to be more viable. He said giant Western banks are gradually switching over to the wholesale banking with focus on small number of large corporate accounts with few bank branches. In over a hundred years, they have reached this stage of maturity, with a lot of capital and global presence. This is how Mr. Khalid Siraj explains the exit of Bank of America and Chase Manhattan Bank and feels that the western banks would now like to protect what they have. Societe-Generale, a French bank, is about to cease operations.

In case of investors from the Gulf, says Khalid Siraj, also a former World Bank official, the situation is different. They are now passing through a phase, where they would go for retail banking with a large network. What they need is to establish a name in the international arena. And it may take a few decades for the Gulf banks to model their operations on the pattern set by their Western peers.

Kalid Siraj seems to be making the right assumption. There are strong indications that the investors from the Gulf are showing keen and abiding interest in acquiring the ABL, the UBL and the HBL. Of the three serious bidders for the UBL, two are from the Gulf and one is local. Both the Union Bank and the Al-Falah Bank, with majority Arab stakes, have been pre-qualified and are engaged in a due diligence of the UBL.

In fact, the Arabs are nervous about their investments in Europe and the United States in the wake of war against terror. They are now looking at the opportunities offered by privatization and the Islamic commercial banking offers. Besides,the DFIs are being phased out, forcing public sector joint ventures to seek new identity as financial super markets.

The first Islamic bank likely to receive licence under the regulations promulgated last month by the State Bank, is Al- Meezan Investment Bank. Sources said that the permission will be given by the State Bank after the Al-Meezan Investment has acquired the Societe-General. The two would be m