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KARACHI The board of directors of MCB Bank on Monday approved the proposed acquisition of the Royal Bank of Scotland Limited, giving an indication that the bank was close to sign a deal.
The acquisition is subject to signing of a share purchase agreement, the State Bank approval and other customary regulatory approvals, said information provided by the MBC Bank to its shareholders.
The industry sources said the MCB Bank was close to sign the deal to buy RBS Pakistan operations in Pakistan. Since there is still no share purchase agreement, the MCB Bank or RBS did not approach the State Bank for approval till the filing of this report.
The RBS sale in Pakistan attracted large banks, like Habib Bank and MCB Bank, while a relatively small Bank JSCL was in the race to win the RBS. The HBL later withdrew itself.
Industry sources said that after the withdrawal of the HBL, the MCB Bank was the only one which could offer higher and attractive bids to acquire the RBS.
In its Asia Operations, RBS Pakistan has the largest branch network while on the basis of customers, it ranks number 5 in Pakistan.
The RBS has 79 outlet networks in the country.
Analysts said the RBS has a sound customer base of 226,000 (by Dec 2007) with quality infrastructure. This could earn much higher price than the deals signed before for the sale of different banks.
'If we take the average of historical merger and acquisition transactions between 2003 and 2007 as a benchmark, the acquisition price may vary between Rs11.7 per share or $251 million to Rs29.3 per share or $627 million,' said Mohammad Imran, head of research at First Capital Equities.
The RBS' 30 per cent advances are in consumer segment as compared to much lower penetration of the banks willing to buy RBS.
Moreover, RBS is also technologically sound with quality human resource that can add value in each of the interested banks.
However, RBS' asset quality is worst amongst the three banks which means the RBS would have to discount the price at the time of agreement.
Banking sources said the MCB Bank was making efforts to buy the RBS Pakistan operations to further strengthen its position in the industry.
Previous deals Foreign banks which bought Pakistani banks paid best price for Union Bank. The Union Bank was purchased at Rs93 per share by the Standard Chartered Bank.
The second best price winner was of PICIC DFI which was bought at Rs78 per share by NIB bank. The ABN Amro purchased the Prime Bank at Rs54 per share.
The lowest prices among the deals were given to Saudi Commercial Bank which was purchased by a consortium at Rs29.3 per share.
The only Pakistani bank which got the highest price was the MCB Bank as it sold its 20 per cent shares at a price of Rs470 per share to the Malaysian May Bank.
Analysts said if the deal is matured, it would send a positive signal to the market, and it would also improve banking industry's image in the global market.
They said the financial crisis still dominates the global market while the deal of a Pakistani Bank would be a sign of strength for local banking industry.
