KARACHI, May 14: NIB Bank, a subsidiary of Singapore-based Temasek Holdings Pte, will buy a majority stake in Pakistan Industrial Credit and Investment Corporation (PICIC) after completing a review of the company’s finances.

This was announced by PICIC in a statement issued on Monday. According to the announcement the NIB Bank will pay Rs78 per share for the stake.

The deal for the PICIC had been in air for last couple of months and an agreement to acquire the PICIC stake had reached. The Monday’s announcement did not disclose the exact size of the holding.

Pakistani banking sector witnessed huge investment from the developed countries in a year. The Standard Chartered deal to acquire the Union Bank was the first breakthrough in this sector which created sudden interest for big international banks. ABN Amro is also in the process to acquire Prime Bank.

The acquiring of majority stakes in the PICIC would create more interest for the major international banks looking for opportunity to invest the surplus wealth created during the last five years after unexpected oil price hike.

Analysts believe banks attraction was the outcome of the continued economic growth and predictions that the country’s economy would grow at the rate of 8 per cent annually over the next five years.

“We have reached an agreement with certain shareholders of PICIC to acquire majority stakes after we complete all regulator approvals,” the statement said. Banks have been interested to earn through the untapped sectors of the Pakistani banking industry. In recent days leasing and consumer financing played a major role for earnings of the banks. Consumer banks have been paying much more than corporate sector which increased the net interest income of the banks.

Recently the State Bank governor said that the consumer banking has large potential to grow. Banks have refined their consumer products to create more attraction.

At the same time the demand for credit has grown significantly due to higher economic growth. However, still the overall credit demand compared to last year has declined. Some bankers considered the credit growth reasonably good as banks would make high profits through the interest income.

Bankers said if the economic growth remained high more mergers and acquiring would take place. They also said that some small banks were in queue to sell their services and assets if they fined better price.