KARACHI, May 5: MCB Bank on Monday announced that Maybank had signed agreement to buy 15 per cent stake in the bank now and another five per cent after a year. This was officially announced both in Karachi and Kuala Lumpur.

This deal will result into a transaction of $680 million (Rs44.3 billion) for 15 per cent stakes.

Maybank is buying the MCB Bank stake at 5.1 times book value and 15 times the Karachi-based bank’s earnings in 2008.

The agreement was unique as for the first time a Malaysian bank entered the banking industry of Pakistan, which attracted foreigners resulting in huge investments through acquisitions and mergers of banks over the last three years.

Maybank, the largest bank of Malaysia, is expanding its foreign operations to exploit the opportunities available in Pakistan.

The Malaysian bank in March offered $2.7 billion for PT Bank International Indonesia, the country’s sixth-biggest bank, as well as 15 per cent of Vietnam’s An Binh Bank for 430 million ringgit ($136 million).

Banking emerged as the most attractive sector in Pakistan during the last five years as the banks booked record profits, while the country witnessed an average 7 per cent economic growth.

Bankers believe that an economy of $146 billion with a population of 160 million and the expected growth of over six per cent is still attractive for the banking giants.

“The agreement underlines the MCB commitment to enter the next phase of growth by partnering with a leading financial services group, expanding its product offering and improving efficiency to better serve its customers,” said a statement issued by the bank.

Maybank is the ideal strategic partner given its emerging markets heritage and strong consumer and Islamic banking franchise, it added.

“The transaction represents the largest foreign direct investment into Pakistan in 2008 and the largest-ever private sector cross border transaction in Pakistan,” said the MCB statement.

Maybank will have the right over the time to appoint two directors to represent its interest on the board of MCB and will participate in some of the key management committees.

According to the details Maybank has signed SPAs (Share Purchase Agreements) with five separate parties namely 1) Mian Umer Mansha, Mian Hassan Mansha, Muhammad Saleem (collectively referred as individual sellers); 2) MCB Bank Employees’ Provident Fund; 3) MCB Bank Provident Fund; 4) Nishat Mills Limited (NML) Employees Provident Fund Trust; and 5) Adamjee Insurance (AICL) for the acquisition of 94.2m shares (15pc of issued share capital) of MCB Bank at a per share price of Rs470. This is 5.3 times its Dec 31, 2007 book value of Rs88 per share.

After completion of the SPAs, Maybank and MCB will also enter into a business cooperation agreement, which includes Islamic banking, retail banking, credit cards and small and medium enterprise banking as key partnership areas.