x Abu Dhabi, UAESaturday 20 January 2018

Lenders show interest in Pakistan bank buyout

EFG-Hermes and Faysal mull majority stake in the Pakistan unit of Royal Bank of Scotland Group, according to the nation's central bank.

KARACHI // EFG-Hermes, the biggest publicly traded Arab investment bank, has expressed an interest in acquiring a majority stake in the Pakistan unit of Royal Bank of Scotland Group, according to the nation's central bank. "They have applied for permission from the central bank to conduct due diligence," said Syed Wasimuddin, a spokesman for the State Bank of Pakistan.

Faysal Bank, a Pakistani lender, said in a statement to the stock exchange last month that it would also seek to acquire a majority stake in RBS Pakistan. The central bank has yet to grant permission to both EFG-Hermes and Faysal Bank to start due diligence, Mr Wasimuddin said. RBS is renewing attempts to sell a stake in its local unit after MCB Bank, Pakistan's biggest lender by market value, cancelled a proposed takeover because of a dispute over depositing shares as security. MCB had agreed in August to acquire 99.4 per cent of RBS Pakistan for about US$87 million (Dh319.5m).

The Edinburgh-based company is in the process of identifying new bidders for selling its stake, RBS Pakistan said in a statement to the Karachi Stock Exchange on January 14. The parent company is selling or shutting businesses in two thirds of the 54 countries in which it operates, after posting the biggest loss in British corporate history. Industry sources familiar with the development said an EFG-Hermes team visited Pakistan recently to explore investment opportunities.

"They looked pretty interested in this acquisition and probably would be a serious contender to buy RBS Pakistan," said one industry source. Last month, EFG-Hermes sold its 28 per cent stake in Lebanon's Bank Audi for $913.4m. Yasser el Mallawany, the chief executive of EFG-Hermes, said in a recent interview that the bank had $1.2 billion to $1.3bn of spare capital after the stake sale that it would use for purchases and to venture into new banking businesses.

MCB does not plan to participate in the sale again, Ali Munir, the chief financial officer, said in January. Before MCB Bank agreed to the now-lapsed deal, Egypt's Orascom Telecom Holdings and Rojhan Capital were also among those that had expressed interest in acquiring RBS Pakistan. RBS Pakistan shares yesterday closed up 0.25 per cent at 19.21 rupees (Dh0.83). * with Bloomberg and Reuters