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Feb 05 - 11, 2001

15m govt shares in MCB disinvested

The Privatization Commission has disinvested 15 million government shares in Muslim Commercial Bank (MCB) and earned Rs550 million.

The Cabinet Committee on Privatization (CCOP) gave approval for the sale. Signing of the Share Purchase Agreement and payment/delivery of jumbo certificates of one million shares each for the divestment of the government-owned shares of MCB at Rs37.55 per share took place on Tuesday.

This is the first capital market transaction included in the short-term privatization plan, completed successfully and according to the schedule.

Through this transaction, eight million GoP owned shares in MCB have been sold to MCB Employees Pension Fund, four million to MCB provident fund (Pak Staff) and one million each to Global Securities Ltd, Ibrahim Agencies Ltd and Nishat Mills Employees Provident Fund Trust. These investors submitted their EoIs for these shares in MCB in minimum sized lot of 1,000,000 shares.

The government of Pakistan through PC offered its remaining stakes in MCB. The GoP's minimum base price per share for the sale of its shares in MCB was fixed as Rs37.55 with the stipulation that the shares will be sold at the said base price or the market price per share, whichever was higher. The lead managers to the said divestment was the consortium of AMZ Securities, Al Meezan Investment Bank Limited and M. Yousaf Adil Saleem and Associates.

Senior officials of ministry of privatization and the representatives of the respective bidder were present during the meeting.

Meanwhile, it was also learnt that the PC was directed by the higher authorities to accelerate the process of disinvestment specially by completing some of the already delayed transactions including Pakistan Telecommunication (PTCL), Habib Bank, United Bank, Allied Bank and couple of development finance institutions (DFIs).

World Bank seeks speedy privatization

The World Bank Managing Director Shengman Zhang said on Thursday that Pakistan should contain its population growth rate and take long-term measures for a sustained growth of its economy.

Speaking at a meeting of top bankers and industrialists at the State Bank he said a lower population growth rate might help Pakistan move faster toward economic development.

The participants of the meeting told that Mr Zhang was of the opinion that Pakistan had recently showed some signs of improvement but it had to go a long way in exploiting its potential for a sustainable economic growth.

Mr Zhang said that Pakistan should speed up its privatization programme to fill in the gaps in its foreign exchange earnings and expenses. They said the World Bank official observed that under present circumstances Pakistan could find it difficult to fill in external financing gaps.

FCY deposits at 50% of reserves

Fresh foreign currency deposits of banks rose by 35 per cent to about $570 million in January 2001 exposing Pakistan once again to the perils of dollarization of economy.

Bankers told that their fresh foreign currency deposits placed with the State Bank rose to about $570 million on January 31, 2001 from about $423 million on December 30, 2000 an increase of 35 per cent or $147 million.

Now these deposits account for more than 50 per cent of total liquid foreign exchange reserves of around $1.132 billion as on January 31. If these deposits are subtracted from total reserves net liquid foreign exchange reserves stand around $563 million only barely enough to foot two-week import bill.

OMO sucks in Rs12bn

The State Bank on Thursday mopped up Rs12.35 billion from the inter-bank money market by selling treasury bills of two weeks and six weeks to maturity. SBP said it sold Rs9.35 billion worth of T-bills in two week repo at 9 per cent and Rs3.0 billion worth of T-bills in six week repo at 9.5 per cent.

State Bank raises paid-up capital

The State Bank has raised the minimum paid-up capital for investment banks from Rs 200 million to Rs 500 million. But it has given the investment banks two years to meet this limit.

An SBP circular said on Wednesday that "no investment bank shall commence or carry on business unless it has a minimum paid-up capital of Rs 500 million." But it gave them time to make up for shortfalls.

Rupee down

The rupee lost 10 paisa to a US dollar in the inter-bank market on Tuesday as banks transferred abroad foreign currency funds of their corporate clients.

Bankers said the rupee closed at 59.25/59.30 to a dollar against the previous close of 59.15/59.20 as the State Bank allowed outward remittance of dividends and profits of some multinationals.

In the kerb market the rupee closed 62.15/62.20 to a dollar down five paisa overnight as people leaving for Saudi Arabia continued to buy dollars from private money changers.

Banks offer low returns

Depositors got low returns on both saving and fixed deposits in July-December 2000, as banks took more time to make out the signals dropped by the State Bank by tightening its monetary policy.

Five major banks with roughly two thirds of all bank deposits offered as low as four per cent return on saving deposits and 7.5- 8.0 per cent on one-year fixed deposits for July-December 2000.

MoU signed for $446m ADB loan

The Asian Development Bank (ADB) and Pakistan have signed a memorandum of understanding (MoU) for $446.5 million loan for six development projects to reduce poverty, encourage structural reforms and decentralisation of powers.

As much as 80 per cent of ADB loan amount will be spent on the projects related to core poverty and poverty elimination intervention.

In addition to funding these six projects, the ADB has also committed to provide $240 million for three standby development projects.