KARACHI, June 20: Standard Chartered Bank (SCB) has completed the due-diligence for acquiring 66pc shares of Union Bank and is expected to sign share purchase agreement early next month.

Banking sources said that the due-diligence completed last week, however, the report had yet not been sent to the State Bank to get clearance for signing of the agreement.

Sources said that the public offering for the purchase of shares would be made after the agreement.

Highly-placed banking source said that the completion of due-diligence itself reflected that there was no hurdle in the way of the agreement.

“I believe the State Bank will not put any restriction as the two banks have successfully negotiated the deal,” said a banker.

He said after the SBP clearance the Standard Chartered may sign the deal in the first week of July. The report of due-diligence would be sent to SBP in next few days, he added.

In May this year the SCB initialed a dialogue with Dr Abdullah Basudaan, a Saudi stakeholder, for acquiring 66pc shares in Union Bank for $513.76m.

The SCB would buy 338m shares at Rs91 per share, the sources said.

After acquiring Union Bank’s stakes, the SCB will become the biggest foreign bank in the country having 100 branches in 24 cities.

Bankers said this would be first case in Pakistan that a well-established and rapidly growing local bank would merge in a foreign bank.

Mergers of big corporations and banks are now common in the developed countries which make them stronger to get bigger share in their respective sectors.

Earlier, 51pc shares of the Habib Bank were bought by the Aga Khan Fund for $400.9 million.

The deposit base of the combined SCB and Union entity would be around Rs175bn and advances at Rs119.1bn.

The assets of Union Bank soared by 51pc to Rs117bn in the year 2005. The share of bank’s earning assets in total assets has increased to 89pc as on Dec 31, 2005 as compared to 84pc a year earlier.

During 2005 the deposits of Union Bank grew by 45pc as compared to the industry deposits growth of 20pc.

After acquiring of Union Bank the SCB’s presence in Pakistan would be the largest in the subcontinent.

Bankers said that the acquiring of Union Bank would create great interest in the international market and more foreign banks, already present in the country, could approach for purchasing the local banks.

After five big banks -- NBP, HBL, MCB, UBL and ABL -- the Union Bank was the only bank which was aggressively coming close to the rank of big banks.Bankers said that if more foreign banks showed their interest a number of banks were ready to sell their major stakes as the business was extremely profitable. The Saudi stakeholder of Union Bank was expected to earn 25 times higher than what it had invested six years before.