KARACHI, Aug 13: The State Bank on Monday allowed due diligence of Saudi Pak Commercial Bank to assess the accounts of the bank and conclude the ongoing negotiations to buy the majority stakes in the bank.

SBP chief spokesman Syed Wasimuddin said the central bank gave approval of due diligence on request of the concerned party.

A consortium led by Shaukat Tareen finalised its terms with the owners of the bank. The consortium comprised of Nomura (Japan) and an Omani banking entity Actis (UK).

Banking sources said the board of directors of the Saudi Pak Bank last week approved the sale of majority stakes to the consortium which officially requested for due diligence. The bank is jointly owned by the governments of Pakistan and Saudi Arabia.

Despite booming banking business in the country, Saudi Pak Bank failed to make any headway. According to bank’s balance sheet it posted a loss after tax of Rs319 million in 2006. In the first quarter of 2007 the loss went higher and reached Rs104 million.

The bank’s assets in 2006 were Rs63.8 billion while it has been operating with 50 branches across the country. Saudi Pak Industrial and Agricultural Company Limited has 59 per cent shares in the bank. Saudi Pak Bank has been making efforts to sell its majority shares for last couple of years but could not attract the ‘right buyer.’

Sources said that the consortium had decided to acquire slightly above 60 per cent shares in the bank while the rest of the shares would be acquired later through the market as well as from groups holding the shares.

The sale of bank will be the fourth major buyout in the banking sector after the sale of Union Bank, PICIC Commercial Bank and Prime Bank.The banking sector experts revealed said more banks mostly small ones were willing to sell their majority stakes.

Banking sector was the second biggest attraction for the foreign investors during the last fiscal and the sector remitted $116 million (Rs7 billion) abroad as profits and dividends.