KARACHI, Oct 27: The State Bank is considering applications from seven financial institutions that have qualified for the second stage in the sale of the country’s fifth largest bank, Allied Bank of Pakistan Ltd., banking sources said on Monday.

Initially 12 banks had sought to take part in the restructuring and sale of Allied Bank, but the list was narrowed down to nine in the first phase, a source told Dow Jones Newswires.

The final seven, who qualified for the second phase, are Askari Commercial Bank, Union Leasing, NDLC-IFIC Bank, Dawood Bank, Jahangir Siddiqui Investment Bank, Pak-Kuwait Investment Co. and Ibrahim Leasing.

“These seven have submitted the SoQs (statements of qualification), which the central bank is considering,” said another source.

Pakistan plans to merge Allied Bank with a financial institution as part of its restructuring and strategic sale.

The potential buyer would have to inject capital to raise ABL’s equity under a restructuring being pursued by the government. The injection would help the institution become the majority shareholder in the bank, in which the government has a 49pc stake.

The Privatization Commission has been overseeing the sale of other state assets, but in ABL’s case the State Bank of Pakistan is directly involved because of the sensitivity of the deal.

The bank, which was first privatized in 1991 when its employees bought the strategic stake from the government, ran into trouble in the late 1990s when it was plagued by bad loans.

The bank has a network of 825 branches and over 7,000 employees.—Dow Jones Newswires