KARACHI, Nov 3: The deal to sell Saudi Pak Commercial Bank has been renegotiated at a substantially lower price as the buyers found overvaluation of assets and under stated the volume of non performing loans (NPLs), said banking sources on Saturday.
The sale of Saudi Pak Bank looked in trouble after emergence of differences over the evaluation of assets and non-performing loans (NPLs), said the sources.
Saudi Pak Commercial Bank is on sale and a consortium led by a known Pakistani banker, Shaukat Tareen, was involved in the due diligence of the bank.
“The new price is about Rs27 per share while earlier the estimated price was Rs32 per share,” said the sources adding that the consortium concluded the due diligence in third week of October.
Other banker, who knew the development, said the selling price of the bank has been reduced significantly but he was not aware of any fresh deal signed by the two at the rate of Rs27 per share.
The State Bank has also not been informed about this development. No formal request has been submitted for further progress to acquire the bank.
However, the banking sources maintained that the formal request for acquiring of Saudi Pak Bank could be submitted on Monday with a new rate.
The expected buyer of the Saudi Pak Bank has raised serious questions about the NPLs as the bank has greater stocks of NPLs than were shown in its balance sheet, said the sources adding the two groups resolved the differences as the seller agreed to a lower price than demanded.
In the second week of August the State Bank allowed due diligence of Saudi Pak Commercial Bank to assess its accounts and conclude the negotiations to buy the majority stakes in the bank.
The consortium led by Shaukat Tareen comprises of Nomura (Japan) and an Omani banking entity Actis (UK). The bank is jointly owned by the governments of Pakistan and Saudi Arabia.
Despite booming banking business in Pakistan, the Saudi Pak Bank failed to make any headway; rather it registered loss last year.
According to bank’s balance sheet it posted a loss after-tax of Rs319 million in 2006. In the first quarter of 2007 the loss went higher and reached Rs104 million.
The bank’s assets in 2006 were Rs63.8 billion while it has been operating with 50 branches across the country. Saudi Pak Industrial and Agricultural Company Limited has 59 per cent shares in the bank. Saudi Pak Bank has been making efforts to sell its majority stakes for last couple of years but could not attract the ‘right buyer.’
Sources said that the consortium had decided to acquire slightly above 60 per cent shares in the bank while the rest of the shares would be acquired later through the market as well as from groups holding the shares.
The sale of bank will be the fourth major buyout in the banking sector after the sale of Union Bank, PICIC Commercial Bank and Prime Bank.
