KARACHI, Nov 17: A Saudi financial group will inject Rs6 billion into Crescent Commercial Bank (CCBL) to save it from de-listing of the scheduled banks’ list of the State Bank.

A notification has been issued by the CCBL on Friday to the Karachi Stock Exchange informing it that the board of directors of the bank has approved the said investment.

Banking sources said that the Saudi financial group is the well known-- Samba group--which was earlier functional as Saudi-American Bank.

“The board after deliberating over definitive investment propositions from a number of potential investors, has approved an investment of Rs6 billion into the bank from a premier financial institution of Saudi Arabia,” said the notification.

The investment is subject to the appropriate regulatory approvals and execution of definitive agreements, it added.

Bankers and analysts said the CCBL was in dire need of the equity and the market value of the bank was not enough to raise money by issuing right shares.

“This was the only way to get an outside help to save the bank as the bank’s equity position was in bad shape,” said an analyst.

This was the only bank of which the net interest income was negative during the last nine months of the current calendar year. In the wake of high rate of profits of the banking sector, the CCBL’s performance was alarming.

The bank was unable to meet the requirement of the State Bank, which had directed it to raise the paid-up capital to Rs3 billion by the end of December 2006. The bank’s paid-up capital was Rs2.67 billion. If a bank fails to meet the paid-up capital requirement, it would be excluded from the list of the scheduled banks.

Analysts said that the bank’s total assets were to the tune of Rs7.6 billion and the deposits were at Rs4.1 billion.

“The bank was facing a critical situation as both its advances and deposits decline during the nine months,” said Muhammad Imran, analyst at JS and Company. The bank’s advances stood at Rs3.7 billion.

“The Saudi group would not acquire the bank the way Standard Chartered Bank acquired Union Bank, instead, the number of shares of the bank would increase after the injection of Rs6 billion and the Saudi group would be the majority shareholder,” said Imran.

Investors from the Middle East have become big stakeholders in the banking sector of Pakistan. However, they prefer to invest money when get better return as was witnessed in the case of Union Bank where the majority shareholder was an Arab financial group.

Two more banks, of which the majority shareholders belong to the Middle East, are making efforts to sell their stakes for a better return.