KARACHI, Sept 12: The National Bank of Pakistan has finally decided to buy back its floating shares, but the president of the bank said the process might take at least two months.

“We have decided to evaluate the price at which the bank will be buying back the floating shares,” NBP president Ali Raza told Dawn on Friday.

On Tuesday last, the bank had shown its intention to buy back its floating shares which are about 23.7 per cent of the total shares, and a notice was also issued to the Karachi Stock Exchange (KSE).

Shares of the banking sector received a serious dent during the recent fall of the Karachi stock market.

“The shares of NBP are quite attractive and just 0.72 per cent of the book value,” said Ali Raza, adding a consultant would be appointed to evaluate the price at which the shares would be bought back.

However, the Friday’s meeting, chaired by the NBP president Ali Raza, didn’t make a decision on how much shares would be bought back by the bank from the shares market.

After the evaluation of the price, approval of the shareholders would be required, and then the bank would seek approval of the Securities and Exchange Commission of Pakistan (SECP).

“I believe that all this process will take at least two months to buy back the shares,” said the NBP president.

He said the buyback of the floating shares would improve the EPS (earning per share) of the bank and would benefit the shareholders.

The government is the major shareholder, as it has over 76 per cent shares of the NBP.

Analysts believe that the government might have moved the NBP to buy back shares, a measure to support the falling shares market.

They said buybacks are generally carried out at times of crisis in equity markets.

They said that buyback of shares to support the stock market has been in practice in many countries. It is quite possible that after the NBP, other banks may follow the suit.

The Oil and Gas Development Company (OGDCL) had recently announced to buy back floating shares. However, the share of the OGDCL did not suffer as the banks suffered.

Selling by the foreign investors significantly reduced the holdings of NBP shares by the foreign investor. The selling was witnessed during recent weeks which reduced the foreign holdings of NBP shares to just two per cent from 7.1 per cent.

Analysts said under the prevailing stock market situation, buying of a substantial number of shares by the NBP would only work.

A small number, like 10 to 20 million, would impact the market as the market lost hope and there was a feeling of disappointment among small shareholders to largest brokerage houses.

Ali Raza said that buyback among banks is new in Pakistan, and it would be for the first time that the National Bank will get involved in this process. This may cause delay, “but we will do it as quickly as possible.”