KARACHI : The State Bank of Pakistan has given green signal to the country's two largest banks for commencing due diligence for the acquisition of Royal Bank of Scotland (RBS), sources told Business Recorder on Wednesday. The RBS recently put on sale its business in 36 countries, including Pakistan, after world-wide loss of some $38 billion in 2008 due to the global economic recession.
Three leading financial groups have expressed interest to acquire operation of RBS in Pakistan and, after sending first information to Karachi Stock Exchange (KSE), they submitted written application to the central bank to obtain permission to commence due diligence of RBS in Pakistan. Two banks--Habib Bank and MCB Bank--on April 14, 2009 expressed interest in acquiring domestic operations of RBS.
These banks, in separate notices issued to the KSE, said that they were applying to the SBP to start due diligence of RBS Pakistan. On April 15, after announcement by HBL and MCB, Jahangir Siddiqui and Co (JS) also announced that it was also interested in buying the operations of RBS in Pakistan. However, SBP granted permission for due diligence only to Habib Bank and MCB Bank, sources said.
"Yes, we have allowed HBL and MCB bank for commencing due diligence for the buying operation of RBS," said Wasimuddin, chief spokesman of SBP. He said that last week the two banks had approached SBP for permission to conduct due diligence, and on Wednesday, the central bank allowed both banks to conduct due diligence of RBS. He also confirmed that JS application had also been received, which was being considered.
Sources said after obtaining permission for the due diligence the first step of acquisition has been fulfilled and now the two banks would evaluate market value of RBS. In the final step they would bid for it, depending on the due diligence report. RBS currently operates 79 branches across the country and has a loan book of Rs 68 billion with deposits of $79 billion and assets of Rs 108 billion.
Copyright Business Recorder, 2009 |
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