April 12, 2007	Thursday	Rabi-ul-Awwal 23, 1428

KARACHI, April 11: United Bank (UBL) has decided to issue international bond to raise its capital and the officials expected to finalise the issue within 3 months. This international bond will be in addition to the Global Depository Receipts (GDR), which the government planned earlier.

“This will be a subordinated debt and it is separate from the GDR, which the government plans to issue,” Aameer Karachiwala, chief financial officer of UBL told Dawn on Wednesday.

The government has planned to issue GDR in the range of $200 to $300 million before the end of the current fiscal.

He said this will be an international bond while the amount could be in the range of $200 to $250 million.

“It may take up to three months to finalise the issue as we need a number of approvals from the regulatory authorities,” said Karachiwala.

The subordinated debt would strengthen capital of the UBL as the bank is needed to improve its capital adequacy ratio.

Some bankers said that being one of the largest banks, the UBL requires to improve its risk profile. Though the paid-up capital is more than what is required by the State Bank, the bankers said that the UBL can not move neck-to-neck regarding the requirement of the paid-up capital. The UBL’s paid up capital is Rs8.093 billion.

However, some experts believe that the UBL might face difficulty to raise the money from the international market. They said both the GDR and the subordinated debt bond would be sold during the same span of time, most likely within six months.

Bankers said that a new trend has been taking shape in the banking sector to raise money from abroad. This new trend was first set by the MCB Bank, which issued GDR last year. Few Pakistani companies have already entered into this kind of foreign investment.

Analysts said that the recent development in the banking sector, which came through the mergers of local banks into foreign banks, also encouraged the Pakistani banks that used to underestimate their banking value.

Merger of Union Bank, Prime Bank, PICIC Bank and Crescent Bank are the recent examples of new trend in the banking industry.