ISLAMABAD, July 6: The Privatization Commission (PC) has formally sent a letter to Muslim Commercial Bank (MCB) group to improve its earlier offer of Rs8.5 billion for 51 per cent government’s shareholding in the United Bank Ltd (UBL).

Informed sources said here on Saturday that the authorities of the PC have asked the MCB group, as advised by the State Bank , to considerably improve its bid.

However, the sources said that the PC has not given any “target” to the highest bidder. If MCB improves the bid according to the expectations of the government, the PC board would recommend to the Cabinet Committee on Privatisation (CCoP) to approve the deal.

If not, the second highest bidder - Consortium of Abu Dhabi (UAE) & Bestway Holding of UK group - will be asked to improve its earlier bid of Rs4.8 billion. “And this group will be asked to give its improved price which should be beyond the highest bid given by the MCB group,” the source said.

He, nevertheless, said that so-called offer of Tessori Group might match the reference price of Rs12 billion if and when announced.

UBL transaction is being handled by the Financial Adviser Societe Generale & AMZ Securities. The government intends to sell a minimum stake of 51 per cent of the government’s shareholding.

After the Muslim Commercial Bank group and the Consortium of Abu Dhabi & the BestWay group, the Consortium of Union Bank and Associates was the third highest bidder with its offer of Rs4.5 billion. All the three bidders had been cleared by the State Bank to acquire majority shares of the UBL.

UBL is the first privatization opportunity in the Pakistani banking sector in 5 years after the sale of Habib Credit and Exchange Bank, formerly known as BCCI.

Earlier Privatization efforts of UBL in 1996 could not succeed. UBL transaction incorporated the broad policy objectives of the government, which included that the government envisaged the private sector as the engine of economic growth and employment. In the context of privatization of the banking sector, the objective is to develop a sound and efficient banking system with the capacity to mobilise savings effectively and allocate them to the most economically productive uses.

According to the PC, UBL’s importance within Pakistan’s financial landscape can not be overemphasised, as it is the 4th largest Bank in Pakistan. It has a 9 per cent market with 1,101 branches across Pakistan as well as a valuable franchise of 16 international branches in the US and the Middle East, with a subsidiary in Switzerland, rep offices in Egypt and Iran and a 55 per cent stake and management control in a UK-based joint venture with 7 branches and a 25 per cent stake in a joint venture in Oman.