KARACHI, Sept 4: Pakistan Industrial Credit and Investment Corporation (PICIC) is preparing for a complete sell-out and ABN Amro has shown interest in the group, banking sources told Dawn on Monday.
The current wave of foreign investments in the financial sector of Pakistan could take a new turn if the PICIC like institutions are sold to an international bank.
“We have information that ABN Amro has shown interest and initiated a dialogue with the PICIC officials,” said a highly-placed banking source.
However, no official confirmation was available from both the entities involved in the initial talks for a possible deal.
Sources said that the PICIC as a development finance institute (DFI), PICIC bank and PICIC insurance company would be merged into one unit and then the whole group would be sold out.
Last month, the Standard Chartered Bank officially announced to buy Union Bank, which made it the largest foreign bank in the subcontinent. Financial experts said it was a vital deal for the banking industry in Pakistan, which also attracted more foreign banks to strengthen their roots in this sector.
The Standard Chartered Bank had acquired controlling stakes with 80.86 per cent interest in Union Bank with an investment of $413 million, which was the biggest-ever investment by a foreign bank in the financial sector.
The banking industry has been earning record profits for two and a half years and its share in GDP has unexpectedly gone up.
“The growth in the financial sector has changed the banking industry scenario and the foreign banks consider it the right time to invest for attractive results,” said a highly-placed government official.
Banking sources said that a number of banks from the western world were taking interest to sound ideas for investing in the financial sector of Pakistan.
The PICIC earned a profit (after tax) of Rs845 million in the first half of the current year 2006, which was higher than the corresponding period of last year when it earned Rs633 million.
However, the PICIC Commercial Bank posted a loss of 12 per cent during the same period. It earned an after-tax profit of Rs650 million compared to Rs733 million during the corresponding period of last year.
The bank is going to add 14 more branches during 2006, which will extend its network to 129 branches. Currently, it has 115 branches all over the country.
“If the deal is finalised, the investment could be bigger than the Standard Chartered Bank as the PICIC, as a group, is much larger than the Union Bank,” said a financial analyst.
ABN Amro was established in 1948 and was the first foreign bank to be granted a license by the Pakistan government. With total assets of over Rs66.5 billion, equity of Rs4.5 billion, and deposits of almost Rs52 billion, ABN Amro is placed well and positioned as one of the larger foreign banks in Pakistan.
The bank posted pre-tax profits of nearly Rs2.2 billion (December 31, 2005). Over the last four years, ABN Amro has significantly enhanced its profile in Pakistan, and is comfortably ranked amongst the top three foreign banks in the domestic market.
It has a network of nine online branches located in all the major cities.
---ABN Amro International is a prominent banking group--ranked eighth in Europe and seventeenth in the world on tier-1 capital-- with over 3,500 branches, a staff of 111,000 and total assets of 597.7 billion euro.
