KARACHI, July, 8: The central bank has invited proposals from local and foreign financial institutions to buy a majority stake and help in the restructuring of Allied Bank Pakistan (ABL).

Interested parties can submit their proposals by July 17, according to a copy of the State Bank of Pakistan’s letter sent out to banks obtained by Dow Jones Newswires on Tuesday. The government owns a 49-51 per cent stake in ABL.

According to the letter, the selected investor would have to inject capital to raise ABL’s equity under a restructuring being pursued by the government. The injection would help the investor become the majority shareholder in the bank.

“It is further contemplated that selected investor’s contribution towards the capital will result in acquisition of a majority shareholding in ABL,” the letter said.

The potential investor can take the form of a group of investors or a consortium, the letter said.

The Privatization Commission has been overseeing the sale of other state assets, but in ABL’s case the SBP is directly involved because of the sensitivity of the deal.

The bank, which was first privatized in 1991 when its employees bought the strategic stake from the government, plunged into trouble in the late 1990s when it was plagued by bad loans and mismanagement.

The bad loans has wiped off a large part of the bank’s equity, sources said. The bank, which has a network of 825 branches and over 7,000 employees, has not been able make public its balance sheet for the past three years, the sources said.

In October 2000, the central bank appointed Khalid Sherwani, a former executive at United Bank Limited, as ABL’s president to reform the bank. The move to privatize ABL comes after the government successfully sold a management stake in United Bank to a group of investors from the UK and the Middle East last year.—Dow Jones Newswires