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Sep 24 - 30, 2001

Stock market support Banks to pour in Rs2bn

Five major banks are likely to inject Rs 2 billion out of the Rs 5 billion committed by more than a dozen banks and non-bank financial institutions to shore up the falling stocks market.

Bankers said top executives of these banks met the management of the Karachi Stock management at the National Bank head office on Thursday to finalize the nitty-gritty of the plan.

The banks are: (i) National Bank (ii) Habib Bank (iii) United Bank (iv) Muslim Commercial Bank and (v) Allied Bank. The chairman of Karachi Stock Exchange Yasin Lakhani said the KSE has framed rules to allow associate membership of bourses to the banks and Securities & Exchange Commission of Pakistan has approved the same. "Since the banks have now got this privilege there is no impediment left in the way of materializing their commitment to support the stock market," he said. But Lakhani would not comment on how much support would be coming in from the big five banks.

Five major banks and more than a dozen financial institutions had committed at a meeting held at the State Bank on Tuesday to provide Rs 5 billion support to the stock market by undertaking carry over transactions. Bankers said the meeting held at the NBP head office on Thursday discussed the modalities of the financing by the five major banks. They said these banks will hold another meeting on Friday with the chairman of SECP Khalid Mirza to give a final shape to their plan for supporting the stock market.

Bankers said the State Bank would monitor the COT financing by the banks into the stock market. All the three bourses in Pakistan were shut down on September 17 after suffering heavy losses due to growing threat of the US retaliatory attack on Afghanistan in the wake of the September 11 terrorist bombings on New York and Washington. The bourses are due to reopen from Monday.

The volumes of support committed separately by other financial institutions could not be ascertained immediately. Two notable financial institutions namely Pak Kuwait Investment Company and Pak Libya Holding Company have already been providing COT financing to the stock market.

Debt relief strategy being updated

Pakistan is updating its strategy focused on debt relief and long-term debt rescheduling at most concessional terms possible, given the past bilateral practices and options available in the guidelines set by IMF, World Bank and the Paris Club.

Sources said the strategy update has become inevitable to acquire fiscal space for carrying out responsibilities entrusted to Islamabad by the international community and to reduce the debt burden to a sustainable level. The new responsibilities and challenges emerge from the US strategy which has currently placed Pakistan at the centre of its campaign to fight international terrorism.

Tanvir Agha, economics minister at Pakistan embassy, told a foreign news agency on Tuesday: "What we are looking after is that imparts sustainability to the debt burden and ensures that Pakistan does not have to go in for repeated rescheduling."

Habib Bank ready for privatization

Habib Bank is "very much ready for privatization" as it has been restructured to a position of "sustained profitability."

The Privatization Commission and the HBL management have agreed to expedite the process for sale of 26 per cent stake of the bank to a strategic investor, says bank president Zakir Mahmood. Initially, some shares may also be unloaded in the stock exchanges at an appropriate time.

Habib Bank has 19 per cent shares in the domestic market and 1,450 branches.

It has 55 foreign branches in 26 countries, 40 per cent stakes in Habib Nigeria Bank, one of the largest in Nigeria and 95.5 per cent stakes in a subsidiary created by HBL and ABL branches in the United Kingdom.

CE briefs think tanks

President Gen Pervez Musharraf said on Tuesday that the decision to extend "unstinting support" to the United States had been taken under tremendous pressure.

Gen Musharraf said this during a briefing given to former foreign ministers, retired generals and think tanks.

Gen (retd) Mirza Aslam Baig quoted the president as having revealed that the US authorities had asked the latter to reply in definite terms whether Pakistan was a friend or foe of the United States. The president apprised the select gathering that the US authorities had conveyed in categorical terms that Islamabad's decision would determine its future relationship with Washington.

Japan may lift curbs

Japan said on Tuesday it may lift sanctions on Pakistan and India in support of the two countries' efforts to cooperate with the United States to track down Osama bin Laden.

Tokyo imposed the sanctions after the two countries carried out nuclear tests in 1998.

"If Pakistan's cooperation is real, we think we should give them a helping hand," a foreign ministry official said. He added that Japan was also looking at the response from India.

Insurance cos hint at raising premium rates

A few insurance companies have hinted at charging 'war risk' cover by enhancing their premium rates on daily basis from Wednesday, insurance circles said.

These companies have sent advice to their branches suggesting them not to quote existing rates, which are not sufficient to cover 'war and strike, riots, and civil commotion' after last Tuesday's terrorist attacks on New York and Washington.

IT Ordinance 2001

The government has allowed initial allowance at a rate of 40 per cent on eligible depreciable assets for the first time in a tax year (financial year). This facility has been given to those people, under the Income Tax Ordinance 2001, who place an eligible depreciable asset into service in Pakistan for the first time in a tax year.