March 06, 2007	Tuesday	Safar 16, 1428

KARACHI, March 5: Another foreign Bank, ABN Amro has expanded its operations by acquiring controlling stakes in the Prime Bank, making the ABN Amro second largest foreign bank in Pakistan.

The Prime Bank succeeded to receive four times price to book value just below the Union Bank which received five times price to book value when Standard Chartered acquired it last year.

A statement issued by the ABN Amro said on Monday that the bank has reached an agreement to acquire a 93.4 per cent interest in the Prime Bank from shareholders for a cash consideration of Rs13.8 billion, equivalent to Rs54 per share.

The offer price of Rs54 per share represents a premium of 41.8 per cent over Prime Bank’s average share price over the past 12 months.

The share of foreign banks in the banking sector has been rising and reached 11.4 per cent of the total banking sector assets. After the acquisition of the Prime Bank, the assets of foreign banks would reach 12.7 per cent of the total baking sector assets. Foreign banks’ share in profitability is around 11 per cent of the total banking sector profits.

ABN Amro will launch a tender offer for all remaining shares of the Prime Bank from minority shareholders. ABN Amro said the offer price is fair to minority shareholders as it is the same price that is being paid to majority shareholders selling the control.

ABN Amro was the third largest foreign bank operating with 12 braches in six cities of Pakistan, but the acquisition of the Prime Bank would enable ABN Amro to reach 25 major cities with 81 braches across the country.

The Prime Bank has Rs52 billion in assets, Rs41 billion in deposits and is the 19th largest bank in Pakistan.

The acquisition will add significant scale to ABN Amro’s franchise in Pakistan, making the combined entity the second largest foreign bank and one of the top 10 banks in the country with assets of Rs124 billion.

Banking sector boom in Pakistan attracted a significant interest of foreign banks and the market is full with news and rumours about sale and purchase of banks mainly small banks.

ABN Amro said the Prime Bank’s profile is an excellent strategic fit for its mid-market strategy. On the commercial side, over 50 per cent of Prime Bank’s current loan port folio is placed with small-to-medium enterprises (SMEs), enabling the ABN Amro to build critical mass and diversify its risk port folio in a high growth SME business banking market.

On the consumer side, Prime Bank’s concentration of branches in the major cities enables the ABN Amro to quickly access an under penetrated, fast-growing mass affluent client base in Pakistan, providing an opportunity to implement a differentiated service level and multi-product offering.

“Pakistan has one of the world’s fastest growing financial markets and is a key growth market for ABN Amro in Asia,” said Jeroen Drost, chief executive officer of ABN Amro Asia.

“This transaction presents tremendous opportunities to accelerate our activities in the Pakistan market as we bring together our global expertise and resources with Prime Bank’s local client base and extensive distribution network.”

Naved A Khan, country executive of ABN Amro Pakistan said: “The acquisition not only underscores our commitment to expanding further in Pakistan, it also enhances significantly our ability to serve a larger client base with more sophisticated product offerings and customer services.”

Saeed Chaudhry, President and CEO of Prime Bank, said: “We have achieved strong organic growth and market share increase in the past. This merger with a global bank, like ABN Amro, will further fast track the growth of the combined entity.”

ABN Amro intends to finance the acquisition and tender offer through internal resources. The tender offer is expected to commence on March 9 and to close on or about March 30.