KARACHI : Under its expansion plan, after successful acquisition deal with Mybank, Arif Habib Bank has now decided to purchase majority shares of Atlas Bank, sources in banking industry told Business Recorder on Friday. "Negotiations between the management of Arif Habib Bank and Atlas Bank Limited have been initiated for merger and deal is expected to finalise in the next three weeks," sources said.
They said that Arif Habib Bank is keenly interested to enhance its nation-wide operation by acquiring some small banks, beside launching of new branches in major cities and rural areas. Sources said that Arif Habib Bank is keen to purchase majority shares of Atlas Bank and formal negotiation between the two parties were in progress for last few days.
They said Atlas Bank is faced with serious liquidity problems for last one year and failed to raise fresh deposits despite several efforts. It has also been unable to meet the State Bank's Minimum Capital Requirement (MCR). "Yes, we are negotiating with Atlas Bank for acquisition of 58 percent shares, and it is expected that the deal would be finalised by the end of this month," said a high official of Arif Habib Bank.
He said that the bank management is planning to expand its operation across the country and under expansion plan it has decided to acquire majority shares of small or financially weak banks. "If our deal would be successful with Atlas Bank, the branches of Arif Habib Banks would reach 160 and on branches basis it would be seventh or eighth largest bank of the country," he added.
He said that Arif Habib Banks would not conduct due diligence for the acquisition of Atlas Bank as already it has been done in the past by three different parties, "and right now there is no more need of new due diligence". On the request of Atlas Bank the central bank has already granted eleven months' extension for MCR, they said, and added that at present sponsors of Atlas Bank are working on the best way forward to successfully meet the minimum capital requirement extension of November, 2009.
Atlas Bank is trying for a merger for last eight to nine months. However, it has been unable to finalise any deal with local banks and about three times deal has been rejected by buyers including Askari Bank and KASB Bank. Sources said that Atlas Bank paid up capital is at about Rs 5 billion and it has to meet MCR of Rs 6 billion by end of December 2009 set by the central bank.
However, it is a difficult task for the bank management due to slow deposit growth. Sources said that the merger of Atlas and Arif Habib Bank would be another major development in Pakistan's banking industry. Atlas Bank is a company of Atlas Group, with equity of Rs 3.41 billion and assets base of Rs 30.40 billion. It is partnered by a leading European financial group, DEG - Deutsche Investitions of Germany. As a scheduled commercial bank, Atlas Bank is engaged in commercial banking operations through its network of 40 online, real-time branches in 17 major cities of Pakistan.
Copyright Business Recorder, 2009
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