KARACHI, July 31: The chequered story of the Allied Bank of Pakistan took another turn on Monday when the State Bank Pakistan issued a Letter of Acceptance (LOA) to the consortium of Ibrahim Leasing Limited Group who had offered the highest bid of Rs14.2 billion for acquisition of 325 million additional shares.

Under the deal, the per share price of ABL comes to a little over Rs43. The bank was first offered to the Allied Management Group, representing 7,500 employees in September 1991, at a negotiated price of Rs70 a share. The employees had offered Rs30 a share as the Muslim Commercial Bank was earlier sold out in March 1991 at Rs56 a share. The employees were persuaded to buy 26 per cent of the shares for which an overwhelming majority was offered house building and motorcycle purchase loans.

The buying consortium is now committed to make full payment of Rs14.2 billion within 30 days after which it will be given management of the bank.

The ABL came into being in 1975 following the merger of a few banks after the midnight nationalization in 1974 on New Year's night. Its predecessor was Australasia Bank.

The history of the State Bank published in two volumes about a decade back gives an interesting account of many banks during the decade of the 50s and 60s, including that of Australasia Bank.

Things went well for ABL till 1977. But after the promulgation of martial law in 1977, it also received its share of crony loaning like all other nationalized banks to help create a constituency for the military dictator, General Ziaul Haq.

Mr Nawaz Sharif launched privatization with religious zeal in 1991. The Muslim Commercial Bank, a relatively small but a financially sound and well managed entity, was the first bank to be offered for privatization. The break up value of MCB shares was then determined at Rs26.84 and its reference price was put at Rs56 in the bidding. Five parties offered bids. The National Group of a dozen businessmen offered the third highest bid, and after evaluation MCB was given to it in March 1991.

At ABL, Khalid Latif, the chief executive, formed a management-employees group to seek ownership of the bank. In 1991 there were six bidders including General Habibullah Khattak, Fatehsons, Saeed Ahmad and the Ayesha group. Sartaj Aziz, the then finance minister, entered into negotiations with the employees-management group and decided to offer ABL under the Employees Stock Ownership Plan (ESOP) at Rs 70 a share.

Since there was considerable criticism of the Nawaz Sharif government for demanding Rs70 a share from the employees as against selling MCB at Rs56 a share, the prime minister offered a grant of Rs50 million to the Allied Management Group.

After privatization in September 1991, the senior executives kept the employees out of the board of management. The bank's condition deteriorated and the executives started accusing each other. In July 1993 when the Nawaz Sharif government was dismissed, the ABL head office in Karachi presented the scene of a battlefield.

Eventually in December 1993, Mr Khalid Latif was dismissed and served a term of imprisonment. He was replaced by Mr Shaukat Kazmi. But the latter too suffered the same fate. His name figured in the duty free shop scandal. He was reported to have left the country after November 1996 when Mr Farooq Leghari dismissed the Benazir Bhutto government.

Mr Rashid Chowdhry, one of the founding fathers of the Allied Management Group, took over as chief in 1997. About Rs2 billion were offered as export refinance to one of the businessmen's group that was interested in acquiring control of the bank in 1991. With this money, the group acquired shares from the senior executives. The employees were forced and cajoled into selling their shares to the business group. For years, the bank did not offer its employees bonuses and increments and there was very little choice for them except to retain their shares.

Simultaneously, two other groups also entered the scene. The State Bank found executives and business groups involved in objectionable business practices. Three executives were dismissed and declared ineligible for any bank job. The business group continues its business and borrows from the banks.

But the employees, now reduced to hardly 4,500, feel let down. They suffered for no fault of theirs because of the doings or others.

The resale of ABL should now complete the process of privatization of banks. The National Bank will continue to remain with the government.