ISLAMABAD, July 16: The Muslim Commercial Bank (MCB) Group has decided to raise its bid price for acquiring 51 per cent government shareholding in the United Bank Limited (UBL).

“The representatives of the MCB group had come to see us on Friday last and said that they need time till Wednesday to increase their bid,” said Minister for Privatization Altaf M. Saleem. The last date for increasing bid price was July 13.

He told Dawn here on Tuesday that he was expecting an adequate increase in the bid price by the MCB Group. “In fact we have asked for substantial raise in the bid price,” he added.

However, he did not indicate the reference price kept by the Privatization Commission which otherwise had been projected as Rs12 billion by some official and unofficial quarters.

The MCB Group had given the highest bid of Rs8.5 billion for UBL followed by Consortium of Abu Dhabi Group (UAE) and Bestway Holding of UK, which offered the bid of Rs4.8 billion. The Consortium of Union Bank and Associates was the third highest bidder to seek majority shares in the UBL by giving the bid of Rs4.5 billion. All the three bidders had been cleared by the State Bank of Pakistan to acquire majority shares of the UBL.

Responding to a question, the minister for privatization said that if MCB did not increase its bid price substantially, the second highest bidder will be asked to raise its bid.

He was asked how would the second highest or the third highest bidder match the desired bid in case MCB did not come up to the expectations. “The Abu Dhabi group is very much in the race and has shown interest to raise its bid,” Altaf Saleem said.

“We are seeking a quantum jump in the bid price by the MCB group and since they are still interested, my hope is to have a deal with them,” the minister for privatization said.

To another question he said that the Tessori group was never a serious buyer of the UBL as it did not even deposit the Statement of Qualification (SOQ).

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.

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, the privatization efforts made in 1996 did not bear fruits. UBL transaction incorporated the broad policy objectives of the government, which included that the government saw 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.

According to the PC, UBL’s importance within Pakistan’s financial landscape cannot 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.