KARACHI, Sept 26: Standard Chartered Bank has become the largest bank in Pakistan in terms of paid-up capital after the acquisition of Union Bank. Its paid-up capital is now higher than National Bank of Pakistan.

After the merger, the bank has been named Standard Chartered Bank Pakistan (SCBP). It has already become the largest foreign bank in Pakistan.

Standard Chartered PLC announced on September 5 this year that its subsidiary company, Standard Chartered Bank (Pakistan) Limited, had completed the acquisition of a 95.37 per cent interest in Union Bank Limited. The bank paid $487 million cash for the purchase of Union Bank.

On Monday, the bank announced to pay 2.5 shares of SCB to buy one share of Union Bank. The current free float of Union Bank is estimated at 16 million shares.

“By applying this swap ratio (2.5:1), the paid-up-capital of SCBP would reach Rs8.9 billion, ordinary shares of 892 million,” said Muhammad Imran, analyst at JS brokerage house.

The paid-up capital of SCBP is the highest among all banks operating in Pakistan. The second highest paid-up capital is of National Bank which stands at Rs7.09 billion, with the largest branch network and the biggest number of account holders.

As per the detailed amalgamation scheme, after excluding 323 million shares of Union Bank (which SCB has already bought), SCBP will issue 39 million ordinary shares at par value to the registered holders of the ordinary shares of Union Bank.

Mr Imran said his calculation showed that SCBP would earn a profit of Rs7.8 billion in 2006. Banking has been a high-profit sector for more than two years and it attracted a number of foreign banks to invest in Pakistan.

Banking sources said at least three top European banks were involved in searching for a suitable financial institution to buy. They said one of the largest banks from the Middle East was also making effort to attract a European buyer.

Meanwhile, PICIC Commercial Bank is also said to have been looking for a buyer and majority shareholders are in contact with foreign banks.

“The high growth of the financial sector during last couple of years in Pakistan has changed the mood of investors and the sector is under the current of new investment waves that could change the names and working of many banks operating in Pakistan,” said a well-placed banking industry source.

He said like Union Bank, which had a strong footing in the industry, many bank would receive attractive package to replace them with a foreign entity.