KARACHI The MCB Bank on Wednesday signed a deal to acquire 99.37 per cent shares of the Royal Bank of Scotland operations in Pakistan for an amount of $87 million.
The MCB announced the signing of the agreement while the RBS said it had reached an agreement, in principle, for sale of its 99.37 per cent holding.
The shares of RBS got the lowest price as compared to previous deals made during the last six years in the country.
The MCB will acquire 1.707 billion (1,707,107,891) ordinary shares for a cash price of Rs4.22 per share. The MCB succeeded to strike the deal at the lowest price.
In the previous deals, the Union Bank was sold at a price of Rs93 per share while Prime Bank was acquired by ABN AMRO (Now RBS Pakistan) at the rate of Rs54 per share, PICIC DFI got Rs78 per share, Saudi Pak Bank got Rs29.3 per share and MCB Bank sold its shares at a price of Rs470 per share to May Bank, Malaysia.
The total consideration to be paid will be Rs7.2 billion (US$87 million). In addition, the MCB would make a tender offer for the remaining 0.63 per cent of ordinary shares not owned by the majority shareholder.
'We are delighted to confirm today that we have successfully entered into a sale agreement with the MCB for RBS Pakistan which comprises Retail, Commercial, Islamic and onshore GBM (Global Banking and Markets) and GTS (Global Transaction Services) businesses in Pakistan,' said Mohammad Aurangzeb, chairman of RBS Pakistan.
RBS Pakistan is a leading international bank in Pakistan with a branch network of over 75 in 24 cities, of which 30 serve the affluent retail customer segment and three are Islamic banking branches, and has over 90 ATMs. On Dec 31, 2008, RBS Pakistan had total assets of Rs108 billion.
As a result of the transaction, based on latest available pro forma numbers the total number of branches of combined MCB and acquired bank (RBS Pakistan) will increase to 1,139, the total consolidated deposits would increase to Rs413 billion and consolidated gross advances to Rs324 billion.
'The RBS acquisition will be crucial in providing access to important customers, in making available a strong human resource pool as well as an evolved product development and technology infrastructure. We are convinced that this transaction will be beneficial to all stakeholders,' said Atif Bajwa, President, MCB Bank.
He said that the MCB is looking to play an increasingly progressive role in economy by providing innovative and value-added products and services to a diverse customer base.
The MCB struck the deal at a time when banking in the country is not in good shape while the global banking system is facing complicated problems which forced giant European and American banks to either seek government help to come out from the continued heavy losses or closed down their operations.
This agreement with MCB follows the completion of the strategic review and the announcement on Feb 26, 2009, that the RBS was to dispose of its retail and commercial businesses across Asia along with the decision to exit its wholesale banking businesses in Vietnam, the Philippines, Taiwan (except the Securities business) and Pakistan in an effort to refocus the group's geographic reach across a smaller number of key markets.
In its Asia operations, RBS Pakistan has the largest branch network while on the basis of customers it ranks number fifth which is mainly due to lower penetration of banks in Pakistan.
In London, the RBS said on Wednesday it is to sell its Pakistan division to MCB Bank for $87 million (62 million euros), says AFP.
'The Royal Bank of Scotland Group plc has reached agreement in principle for the sale of its 99.37 per cent holding in The Royal Bank of Scotland Limited (RBS Pakistan) to MCB Bank Limited (MCB) for a total consideration of $87 million,' the group said in a statement.
The deal was expected to be completed in the final quarter of 2009 subject to regulatory approval, it added.
The announcement comes one week after RBS said it would sell a chunk of its Asian operations to Australia and New Zealand Banking Group for 418 million US dollars.
RBS is 70 per cent owned by the state after a massive bailout from the British government last year amid the global financial crisis.
