NBP man­age­ment revokes plan to ac­quire Burj Bank

The Pak Banker - - COMPANIES/BOSS - Muham­mad Yasir

The man­age­ment of gov­ern­men­towned Na­tional Bank of Pak­istan (NBP) re­voked its in­ter­est to ac­quire op­er­a­tions and as­sets of Burj Bank af­ter its deal was not suc­cess­ful with the man­age­ment of Burj Bank.

NBP com­pleted due dili­gence of the Is­lamic Bank in the mid of but its ne­go­ti­a­tion with the man­age­ment fell flat as sim­i­lar with MCB Bank which also did a same ex­er­cise in vain.

Of­fi­cial sources in NBP said the ne­go­ti­a­tion with Burj Bank was com­pli­cated be­cause of the at­ti­tude of its man­age­ment which is not flex­i­ble on the sales value and trans­fer of op­er­a­tions and as­sets.

NBP has planned to es­tab­lish 100 per­cent wholly-owned Is­lamic bank­ing sub­sidiary. It has also planned to en­hance its net­work of Is­lamic Bank­ing Divi­sion with 175 branches at dif­fer­ent lo­ca­tions across the coun­try in next one and half years.

An­a­lysts said that the ac­qui­si­tion of the bank could have been a fast-track mea­sure of the NBP to set up its sep­a­rate sub­sidiary of NBP which op­er­ates Is­lamic bank­ing in full-fledge style. How­ever, it is esay to build and ex­pand their own net­work in­stead of ac­quir­ing a loss-mak­ing bank is a hec­tic and crit­i­cal process.

Ear­lier, MCB Bank had also planned in the same lines to set up a sep­a­rate sub­sidiary of Is­lamic Bank­ing. It how­ever ex­pressed its in­ter­est in ac­quir­ing 55 per­cent share­hold­ing in Burj Bank in col­lab­o­ra­tion with by Is­lamic Cor­po­ra­tion for De­vel­op­ment of Pri­vate Sec­tor, the pri­vate sec­tor in­vest­ment De­vel­op­ment Bank.

Be­sides vul­ner­a­ble fi­nan­cial sta­bil­ity, the bank is also barely meet­ing reg­u­la­tory fi­nan­cial re­quire­ment of MCR at Rs 10 bil­lion and CAR of 18 per­cent. The cen­tral bank has given its re­lax­ation for meet­ing th­ese manda­tory re­quire­ment based on its plan, which will be in­ti­mated by bank in the next few weeks.

Re­cently, Bank of Khy­ber has shown its in­ter­est to con­duct due dili­gence of Burj Bank in or­der to ac­quire shares in the com­pany, ac­cord­ing to no­ti­fi­ca­tion is­sued to Pak­istan Stock Ex­change. The ex­er­cise of due dili­gence will be ap­proved by State Bank of Pak­istan.

The State Bank of Pak­istan (SBP) vide BSD Cir­cu­lar No. 7 of 2009 spec­i­fied that banks op­er­at­ing in Pak­istan are re­quired to raise their is­sued and paid up cap­i­tal (free of losses) to Rs 10 bil­lion in a phased man­ner by De­cem­ber 31, 2013. But the bank is run­ning short of Rs 4.564 bil­lion for meet­ing its paid-up cap­i­tal re­quire­ment. The cen­tral bank spec­i­fied that the Burj Bank should main­tain cap­i­tal ad­e­quacy ra­tio at 23% in­stead of the re­quired 10%. Its CAR as at Septem­ber 30, 2015 was 18.27%. At present, Burj Bank has en­gaged with mul­ti­ple in­vestors, in­ter­ested to in­vest in the cap­i­tal of the Bank.




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