24 July 2004	Saturday	06 Jamadi-us-Saani 1425

ISLAMABAD, July 23: The Ibrahim Leasing and Ibrahim Fibre Group of Faisalabad on Friday offered the highest bid of Rs14.2 billion to take over 75 per cent (325 million) additional shares and management of the Allied Bank Limited (ABL). The per share price comes to about Rs43.69.

The bidding was arranged by the State Bank of Pakistan (SBP) and supervised by its deputy governor Tawfiq Husain. A total of five parties namely Ibrahim Leasing, Askari Commercial Bank, Jehangir Siddiqui Investment Bank, NIB-Tomasic (Singapore) and Pak-Kuwait Investment Company took part in the bidding.

Under the restructuring plan approved by the SBP, this amount would be injected by the highest bidder in the bank besides merging Ibrahim Leasing with the ABL to convert its Net Asset Value from negative Rs5 billion to about positive Rs9 billion. As such, the sale of 325 million shares of ABL would contribute nothing to the government.

As of June 30, 2004, total assets of the ABL stand at Rs132.051 billion, total advances at Rs41.706 billion, total investments at Rs47.652 billion and total deposits at Rs126.427 billion. It's non-performing loans stand at Rs17.272bn or more than 41 per cent of the total advances. It has 750 branches across the country.

The central bank would now forward the bidding results to the federal government for formal approval by the Cabinet Committee on Privatization (CCoP) which is expected to meet on Saturday.

On approval by the CCoP, the successful bidder would be issued a letter of acceptance (LoA) and bid money would have to be deposited within 30 days, subject to settlement of court cases in SBP's favour.

All the five bidders were asked by the SBP deputy governor to submit sealed bids that were opened by the media persons. Ibrahim group offered the highest bid of Rs13.013 billion at the rate of Rs40.04 per share, followed by Rs9.6 billion by NIB-Tomasic at the rate of Rs29.5385 per share.

Askari Commercial Bank trailed with third position by offering a price of Rs9.1 billion at Rs28 per share. Pak-Kuwait Investment Company was the fourth and offered Rs8.287 billion at Rs25.5 per share while Jehangir Siddiqui offered Rs7 billion at Rs21.53 per share.

In the second round, the top three bidders were asked to improve their bids in the open bidding at the rate of Rs5 million and multiples. Askari Commercial Bank lost interest in the race after offering Rs13.735 billion.

However, serious competition was witnessed between NIB-Tomasic and Ibrahim group and at one stage it appeared the bank could settle for Rs15 billion. However, the NIB-Tomasic did not go beyond Rs14.1 billion and congratulated Ibrahim Leasing who had offered a highest bid of Rs14.2bn or Rs43.69 per share.

The Nawaz government had sold strategic 51 per cent stake of the ABL at the rate of Rs72 per share to the employees of the bank in the early 1990s but the top management problems eroded its major portion of the equity. Thus, the employees shareholding in the bank reduced to about 12 per cent as they sold their shares to three different individuals.

The transfer of these shares to these individuals has been blocked by the SBP and they have approached various courts against this decision. The State Bank of Pakistan had taken over the bank about three years back to improve its affairs.

The efforts by the Privatization Commission had failed to privatize the ABL and thus the federal government asked the central bank to fulfil the job as the banking sector regulator.

M. Naeem Mukhtar, the managing director of the Ibrahim group said the bank had top management problems that would have to be improved on first priority. He said the modern IT and latest technology would have to be introduced in the bank and thrust would be on increasing exports and launching of new products in coordination with top five Pakistani banks.