Many top bankers currently are in Pakistan looking into the possibilities of either acquiring wholly or entering into joint venture with Pakistani banks that might be willing to share their holdings. Some groups in Dubai are also active in brokering such arrangements and are discussing the possibilities with due diligence to meet their target, sources added.
The growth of the banking sector in Pakistan during past few years in their turnover profits and future prospects are among the main attractions for international banks to expand their operations, either by taking over Pakistani banks along with their network of branches, or open their own branches here, sources said.
Among the leading banks that are eyeing on Pakistani banks market are: Hong Kong and Shanghai Banking Corporation (HSBC), ABN Amro Bank, and Teramasik Group of Singapore which presently holds majority shares of NIB Bank. Dubai Islamic Bank and Faisal Bank are also keen to acquire interests in large banks here but the main impediment in their way is the Islamic mode of business.
The names of other banks that have no presence in Pakistan are also circulating among the banking circles here for acquiring Pakistani banks. Among these banks are some of the larger banks from Switzerland.
Some Pakistani banks who are facing liquidity problems or find difficulty in meeting the capital adequacy requirement of the State Bank of Pakistan or viability and other reasons are considering to sell whole operation of majority shares to international banking groups. Some Pakistani textile groups, who are not in banking sector, are also looking into the possibility of acquiring majority interests in banks.
Pakistani banks, which are interested to sell their entire operations, or part thereof are Soneri Bank, Picic DFI, Picic Commercial Bank, Rupali Bank (now Arif-Habib Rupali Bank), MyBank, and a few others. In this group, the largest operation is that of Picic DFI and Picic Commercial Bank which have a large network of 190 branches. Picic DFI and Picic Commercial Bank have shown tremendous growth in the last few years and have earned profits as per their last balance sheets published in June 2006.
Recently, Union Bank was taken over by Standard-Chartered Bank for $450 million, which is considered the highest amount paid in the banking sector in Pakistan. Standard-Chartered, sources said, is also trying to buy the remaining shares of Union Bank to acquire 100 percent shares, making Union Bank subsidiary of Standard-Chartered Bank.
Picic and Picic Commercial Bank have large deposit base and also have assets management company, having the management of funds of over Rs 22 billion. Picic also has investment of its own portfolio and had lucrative results.
Sources said that in case some international bank acquired Picic and Picic Commercial Bank, it would be the largest acquisition in Pakistan in the banking sector.
The Rupali Bank, which has only one branch and has now converted into Arif Habib Rupali Bank, is yet to start operations in a big way. It, however possesses licence to deal. Rupali Bank Bangladesh has also been taken over by one of the largest international banks.
Soneri Bank is one of the oldest banks in Pakistan, having 60 branches and 53 online connectivity. They have a plan to add a few more branches this year. It has shown EPS of Rs 5.57 in the accounts of December 31, 2005 and has paid up capital of Rs 2,057,147,000 and reserve of Rs 156,072,000 and had to add equity to meet the State Bank of Pakistan requirement this year.
Sources said that international banks, from both West and East, taking interest, have sound ideas of investment in financial sector in Pakistan.