KARACHI, April 25: Mergers and acquisitions have once again started in the banking industry as two more banks have decided to sell their operations.

The biggest sale could be the Askari Bank which announced that the Fauji Foundation has shown interest to acquire the bank.

“The State Bank of Pakistan has granted approval to Fauji Foundation to commence the due diligence of Askari Bank,” said a notification issued by the Askari Bank to inform its shareholders on Wednesday.

The bank has been facing tough times as its profitability was hurt during the last few years despite an improvement in 2011.

The bank earned a profit-after-tax of Rs1.628 billion in 2011 which was 73 per cent higher than last year’s profit of Rs943 million.

Askari Bank has a network of 245 branches and sub-branches, including 31 dedicated Islamic banking branches.

As on Dec 31, 2011, the bank had an equity of Rs17.8 billion and total assets of Rs343.8 billion.

Askari Investment Management Limited and Askari Securities Limited are subsidiaries of the Askari Bank, primarily engaged in managing mutual funds and share brokerage, respectively.

Moreover, the Bank Alfalah and IGI Investment Bank have announced that the negotiations are going on to acquire IGI Investment Bank by Bank Alfalah Bank.

The notification issued for the shareholders said negotiations were in progress to the sell The IGI Bank together with its wholly-owned subsidiaries.

“It is proposed that the takeover would be implemented by way of merger in terms of a scheme of amalgamation,” informed the notification.

It also said the Bank Alfalah is shortly starting due diligence of IGI Investment Bank and its subsidiaries.

In an other development, banking sources said Habib Bank and Bank Al-Falah have shown interest in buying Citibank’s consumer business portfolio.

The sources claimed that both the banks have submitted a request for due diligence. However, no official confirmation was available.

These activities in the banking sector have created interest for investors, reflecting their confidence in the banking sector which has been in profit despite global financial crisis that failed many big banks in US and Europe.

Pakistani banks remained out of the crisis, but many said only large banks earned profits while small banks lost businesses and are now trying to sell out or merge with other banks.

“The takeovers and mergers in banking sector are as a result of excellent profits posted by all most all banks. Investors think the banks that can meet the State Bank’s minimum capital requirement will be major gainers with erosion of risk factor and very low provisioning,” said Mohammad Suhail, Chief Executive of Topline Securities.

Earlier, the Hong Kong and Shanghai Bank informed the State Bank that the MCB Bank and KASB Bank were interested to acquire its Pakistan operations.

In the first half of the last decade, mergers and acquisitions were witnessed but at that time foreign investors had been looking for investing in Pakistan.

Currently the activities in banking sector are limited inside the country and no foreign investors are willing to enter the market.