July 4, 2002	Thursday	Rabi-us-Sani 22,1423

ISLAMABAD, July 3: The State Bank of Pakistan has cleared all the three bidders to acquire 51 per cent shares of the United Bank Limited (UBL) but advised the Privatization Commission (PC) to make efforts for improving the bid price.

According to an official announcement made here on Wednesday, the PC has received the recommendations and now it is processing the case further in the light of the advice and the recommendations of SBP.

The PC had received a highest bid of Rs 8.5 billion for 51 % GoP shares in UBL in a bid opening ceremony held on June 10. It is the first major transaction in the financial sector being privatized by the present government.

UBL transaction is being handled by the Financial Advisor Societe Generale & AMZ Securities. The government intends to sell a minimum stake of 51 per cent of the government’s shareholding.

All the three pre-qualified bidders namely the Consortium of Abu Dhabi Group (UAE) & Bestway Holdings Limited (UK) c/o Bank Alfalah Limited, the Muslim Commercial Bank and the Consortium of Union Bank Limited & Associates dropped their sealed bids in the bid box, which were later opened by the representatives of print and electronic media. The bids are valid for 100 days.

The Muslim Commercial Bank was the highest bidder with their offer Rs8.5 billion followed by the Consortium of Abu Dhabi Group and Best Way Group and Consortium of Union Bank and Associates offering Rs4.8 billion and Rs4.5 billion respectively. The bidding results were sent to the State Bank of Pakistan for their inputs/recommendations.

The final authority to approve or reject any bid is the Cabinet Committee on Privatisation (CCoP). Once the CCoP approves the bid, LOA will be issued to the successful bidder and PC will facilitate and support the early closure of the transaction upon full payment of the approved price. UBL is the first privatization opportunity in the Pakistani banking sector in 5 years i.e. after the sale of Habib Credit and Exchange Bank, formerly known as BCCI.

Earlier, privatization efforts of UBL in 1996 had not succeeded. UBL transaction incorporated the broad policy objectives of the government, which says that the government regards the private sector as the engine of economic growth and employment.

In the context of privatisation of the banking sector, the objective is to develop a sound and efficient banking system with the capacity to mobilize savings effectively and allocate them to the most economically productive uses.

UBL’s importance within Pakistan’s financial landscape cannot be overemphasized, as it is the 4th largest Bank in Pakistan. It has a 9 per cent market with 1,101 branches across Pakistan as well as a valuable franchise of 16 international branches in the US and the Middle East, with a subsidiary in Switzerland, rep offices in Egypt and Iran and a 55 per cent stake and management control in a UK based joint venture with 7 branches and a 25 per cent stake in a joint venture in Oman.