KARACHI: Habib Bank Limited (HBL) disclosed on Wednesday that it had entered into an agreement with Diamond Trust Bank Kenya to sell the HBL’s business, assets and liabilities in Kenya for additional 4.18 per cent shares in DTB.

HBL already holds 11.97pc shares in DTB and the acquisition of further 13.3m shares would take its stake to 16.15pc. HBL avoided disclosing the value of the transaction and a senior official of the bank, who asked not to be named, admitted that it was being kept under wraps.

But a simultaneous ‘cautionary notice’ released by the DTB for its shareholders in Nairobi, put the figure at Kenyan shillings (KShs) 137.39 per share. At the conversion rate of one Kenyan shilling equal to Rs1.01825 on Wednesday, the value of the deal works out at Rs1.86 billion for 13.3m shares.

“Diamond Trust Bank Kenya is one of the largest banks in that country with subsidiaries in Burundi, Tanzania and Uganda,” HBL said in a filing with the PSX. The bank affirmed that the State Bank of Pakistan had accorded its approval to the transaction on March 13.

Stephen Kodumbe, company secretary DTB, said that the completion of the transaction was subject to closing conditions that included procurement of shareholders’ approvals as well as regulatory approvals from the Central Bank of Kenya, the Competition Authority of Kenya and the Capital Markets Authority, which DTB reckoned would be concluded in the first half of this calendar year.

“The satisfactory completion of the transaction will, among others, increase DTB’s market share, enhance its operational leverage and diversify its presence through correspondent relationships in addition to geographical areas that include some of the most promising growth frontier market in Asia within the markets where HBL has operations”, DTB told its shareholders.

According to the annual report and accounts of HBL for the year ended Dec 31, 2016, DTB is HBL’s one of the three offshore ‘affiliates’. The worth of HBL’s 11.97pc shareholding in DTB amounted to Rs5.71bn.

HBL’s other two ‘affiliates’ include Himalayan Bank Limited Nepal in which the bank holds 20pc stock and Kyrgyz Investment and Credit Bank, Kyrgyz Republic with HBL holding at 18pc. For FY16, DTB provided HBL profit of Rs5.4m and revenue of Rs30.1bn.

HBL, already the largest Pakistani bank with asset base of Rs2.5 trillion and deposit of Rs1.9tr is known to be in search of worthy acquisitions. Last year, the bank had bought over Pakistan branches of Barclays Bank plc.

Published in Dawn, March 23rd, 2017

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