KARACHI, Feb 21 At least three financial groups are eyeing the RBS in Pakistan, and are eagerly studying the balance-sheet of the Royal Bank of Scotland (RBS) to buy its operations in the country.

Although the bank did not officially show its intention, financial groups' efforts for due diligence tell a different story.

Sources in the banking industry said that due diligence by three groups was an indication that the RBS Pakistan had shown interest to sell its operations.

The sources said the RBS was in a trouble in England where the government again bought shares to increase its stakes to 68 per cent last month as bank's shares nosedived. The bank reported a record-breaking £28bn loss despite an earlier government bailout.

The RBS was the worst hit bank in Europe in the recent global financial meltdown. The acquiring of ABN Amro proved a worst deal for the RBS.

In Pakistan, the RBS acquired ABN Amro in August 2008.

A press release was issued expressing excitement that the RBS has entered Pakistan with a head start as one of the largest foreign banks in Pakistan enjoying 60 years of heritage and total assets of Rs117 billion across a network base of 79 branches spanning 24 cities.

Sources said recently the bank has laid off employees in a large number, but did not mention the exact number.

A senior banker said there was all possibility that the RBS might go back to its country of origin, England, where the government was making efforts for its survival.

The Guardian reported last month that there were expectations that the government's next move would be to fully nationalise the stricken Edinburgh-based bank.

The newspaper also quoted analyst who said the “Full-scale nationalisation” is the most likely step for RBS if the second banking bail-out fails to work. The Bank lost 66 per cent value since it came in trouble last year.

It further said the taxpayer is sitting on a £12.5bn loss on its 58 per cent stake which has now gone to 68 per cent.

Though, local banks have been showing good earnings for 2008, bankers said slowdown of economy would hurt their performance in 2009.

The year 2009 has been declared as worst for world economic growth by the IMF.

“It is difficult to survive in Pakistan, especially when the country of origin of the bank posed a threat to its survival and the government is maximising its stakes in the bank,” said a senior banker.

Pakistan has been an attraction for foreign banks and a number of mergers and acquisitions were noted during 2003-07 and giant banks, like Barclays, NIB Bank and RBS, entered the country to exploit the potential.

Banking sources said one of the financial institutions had already completed due diligence, but decided to back off possibly on issue of share prices.

Local banks' shares are being traded at much below the prices they tagged a year ago, reflecting a negative sentiment for banking in the country as situation is not an ideal to invest more.

“Pakistan offers 'wait' to get stability and the wait might be for one or two years,” said the banker.