KARACHI The Royal Bank of Scotland (RBS) Pakistan on Wednesday announced that it had reached an agreement for selling its local operations to Faysal Bank at far lower price what MCB Bank had offered early this year.
After failure of sale agreement with MCB Bank, the RBS Pakistan again put itself on sale and managed to attract Faysal Bank and EFG-Hermes of Egypt. The bank in its announcement stated that it had reached a deal to sell 99.37 per cent of RBS Pakistan to Faysal Bank for a total consideration of 41 million euros (Rs4.298 billion or $50.37m).
This equates to approximately Rs2.5 per ordinary share. RBS Pakistan has 1,717,981,391 ordinary shares listed on the country's three bourses Karachi, Lahore and Islamabad.
The bank maintains that the transaction is subject to regulatory approvals and expected to be completed by third quarter of 2010.
MCB Bank had offered a cash price of Rs4.22 per ordinary share to acquire RBS Pakistan for $87 million.
Faysal Bank, 68 per cent owned by Bahrain-based Ithmaar, said that after acquiring of RBS Pakistan, it would emerge among the top 10 banks in Pakistan with over 200 branches having an asset base of Rs250 billion.
Faysal Bank President and CEO Naved A. Khan said the acquisition would significantly contribute to the bank's development and would be a major catalyst for its growth strategy.
“While expanding our geographical footprint, touch points, customer base and product portfolio, this acquisition would boost our ability to raise the bar of our service levels.
Further, employees of the combined entity could have potentially greater career opportunities and development options.”
The agreement with Faysal Bank follows the completion of the strategic review and the announcement of February 26, 2009 that 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.
Bankers said the deal was a good sign for the local banking industry as it was still attracting foreign investment giving hope for growth in the future.
Most of the commercial banks especially large banks earned good amount of profit in 2009 despite a very low growth rate of the national economy which was just 1.2 per cent.
The private sector activities have increased substantially during 2009-10 giving hope of better earning for the banking industry.
