ISLAMABAD, Feb 26: Pakistan on Thursday handed over its second largest bank - Habib Bank Limited (HBL) - to Aga Khan Fund for Economic Development (AKFED) against a two-phased Rs22.409 billion highest bid for 51 per cent shares along with management control received in December last year.

Secretary Privatization Ahmed Waqar and Sultan Allana signed the transfer of management agreement on behalf of the Privatization Commission and AKFED respectively. Finance Minister, Shaukat Aziz and Privatization Minister Abdul Hafeez Shaikh witnessed the signing ceremony.

Finance Minister Shaukat Aziz said HBL was an icon of Pakistan's structural reforms and "we are handing over a jewel of our national assets with a bit of heavy heart."

He said the successful transaction of HBL was indicative of government's result-oriented economic policies. He said in today's world private sector was in the driving seat and the government of Pakistan was also following the same global trend.

The finance minister said Pakistan's economy was now back on the rail and had made unprecedented growth rate of over five per cent for 2003-04. He maintained that with the improved economic indicators, Pakistan would achieve six-plus growth rate during the next fiscal year.

He expressed the hope that the AKFED would build on the already well-run HBL so that it could continue to play a vibrant role in Pakistan's economic growth in the future. He said that microeconomic reforms programme had worked to the expectations of the government.

He said Securities and Exchange Commission of Pakistan (SECP) and the State Bank were now in a position to play pro-active role in regulating banking system.

Privatization Minister Abdul Hafeez Shaikh said the HBL handing over to AKFED was a big achievement of the Privatization Commission and expected a more active role for his commission in the future for economic development of the country.

Hafeez termed the current year as good for privatization programme and expressed the hope for continuity in the sell-off process with similar types of big transactions.

He claimed that the selling of public sector shares through the stock exchange was actually 'privatisation for the people'. The minister maintained that AKFED has more sense of commitment for the development of Pakistan and handing over of HBL was a good omen.

The representative of Aga Khan Fund said that AKFED created economic capacity and opportunities in specific regions of the developing world. Its financial service institutions, some of which date back nearly 70 years, include commercial banks, micro-finance banks, insurance companies and property development and management companies in nine countries, some of which are listed on local stock exchanges.

He said the fund was also active in the fields of industry, tourism development, infrastructure, media and aviation in 19 countries across South and Central Asia and sub-Saharan Africa.

AKFED operates as a network of affiliates with more than 90 separate project companies employing over 18,000 people and hitherto controlling assets in excess of $1.5 billion.

AKFED's investments in Pakistan include the Serena group of hotels and lodges, New Jubilee Insurance Company and New Jubilee Life Insurance Company and The First Microfinance Bank.

The State of Qatar Supreme Council for Economic Affairs Investment remained runner-up with an offer of Rs 21.99375 billion in the HBL bid. The third party, Central Insurance Company Limited, did not turn up for bidding.

After PC board's nod, the Cabinet Committee on Privatization (CCoP) gave approval to the bid. HBL is Pakistan's second largest commercial bank, having a countrywide and international branch network.

HBL has full service licence covering commercial, retail banking, consumer and investment banking activities in Pakistan and most of the other countries where it is present.

HBL has an extensive domestic network consisting of 1,425 branches with a market share of approximately 20 per cent. HBL operates a large international network of 48 branches in 25 offshore locations spread over Europe, the Middle East, Far East, Asia, Africa and the United States.

It operates three wholly owned subsidiaries namely Habib Bank Financial Services (Pvt) Limited, Karachi, Habib Finance International Ltd (Hong Kong) and Habib Finance Australia Ltd.

Sydney; two joint ventures, Habib Nigeria Bank Ltd (40 per cent) and Himalayan Bank Ltd (20 per cent). Furthermore, the Bank owns 90.5 per cent shares in Habib Allied International Bank Plc, a bank incorporated in the UK. HBL also has two representative offices in Iran and Egypt.