KARACHI, Sept 29: Another surprising deal is awaiting the banking industry in the country as the majority shareholder of a large bank is negotiating to sell its stakes, banking sources told Dawn on Friday.

UK-based Barclays Bank is in advance stage of negotiations with a Pakistani bank mainly sponsored by the Arab investors.

“We term it surprising because the bank is on solid footing and it is hard to imagine for most of the banking concerns that a deal is under negotiation,” said the sources.

This will be the second deal after Union Bank, and incidentally in both the cases the majority shareholders were based in the Middle East. “Barclays Bank has already held meetings in Dubai with majority stakeholders,” said the sources.

Though there was no official confirmation either from Barclays Bank or from the bank under consideration for sale, high-ups in the banking industry were well aware of a Barclays Bank delegation that visited Pakistan and met officials of the bank.

Officials of the bank were tightlipped about any negotiations with any bank, but the sources said Barclays Bank made a good offer to the bank; however, it was yet to be finalised. They said Rs98 per share was offered by Barclays.

The sudden interest of top world banks in Pakistan’s banking industry has jolted the market and a number of banks were found willing to sell their operations before any slump in the industry.For the last couple of years, the banking industry has proved highly profitable in Pakistan which attracted foreign banks to invest and operate in the country. It is not the will of only small banks to make quick money but foreign banks also see great potential for making money.

Besides other avenues of profit making, banking spread is the crucial point as it is the biggest attraction for banks. The banking spread in Pakistan is still over seven per cent, while in the developed world it ranges between 1.5 and two per cent.

“Foreign banks see continuity of economic growth in the country that creates hopes for further expansion of the financial sector,” said a banker, adding that the financial sector constitutes 27 per cent of GDP.

“These foreign banks would make quick money and remit their profits as there is not restriction for it. I believe that the foreign banks can make good money within three to five years and that could be their targets,” said the banker.

He said a number of banks were in line for sale and the foreign banks felt comfortable to invest in the high-yield banking sector.

State Bank Governor Dr Shamshad Akhtar also confirmed in an interview that more acquisitions and mergers were expected in the banking sector of Pakistan. The State Bank has been pursuing a policy to replace small banks with large banks, arguing that the large banks pose less risk while the small banks are of high risk.

However, the current acquisitions are different from this argument of the SBP as fairly large and strongly footed banks are in negotiations to sell their operations.