From SHAMIM AHMED
17 - 23, 2002
The consortium of Muslim Commercial Bank and its
associates offered the highest price of Rs. 8.5 billion to buy 51 per
cent shares of the United Bank Ltd. Fifty one per cent of the total UBL
518 million shares of Rs. 10 each comes to slightly over 264 million and
the offered price comes to Rs. 32.81 per share as against MCB shares
sold at Rs. 58 each and Allied Bank at over Rs. 61 per share almost ten
UBL privatization in the second tenure of Benazir
Government at the rate of about Rs. 19 per share was cancelled amid
charges of massive kickbacks and commissions. It may not be out of place
to mention here that only recently the federal government injected about
Rs 8 billion to improve its financial health and make UBL worthwhile for
investors. Taking this amount into consideration, simple calculation
leads to the conclusion that perhaps offer of Rs. 19 per share in 1996
was much better than Rs. 32.81 in 2002.
Three qualified bidders submitted their bids which
were opened in Islamabad on Monday in the presence of the Minister for
Privatization Mr. Altaf Saleem.
The other two bidders — Consortium of Abu Dhabi
Group (UAE) & Bestway Holdings Limited (UK) through Bank Alfalah
Limited, and the Consortium of Union Bank Limited & Associates —
offered Rs. 4.8 billion and Rs. 4.5 billion, respectively. The highest
offer will be forwarded to the State Bank of Pakistan for evaluation and
recommendation, Privatization Minister Altaf Saleem said.
The Board of Privatization Commission, which will
give its own recommendation to the Central Committee on Privatization
for final approval, will consider the SBP recommendation. Final decision
would take about a month, the minister said. The Financial Adviser
Societe Generale & AMZ Securities are handling UBL transaction.
The Minister said he was satisfied with the
transaction process but refused to comment whether the highest offer
matched government's reference price. He said that at this stage he did
not want to compromise commission's negotiation position. He said this
transaction would pave the way for sell-off of HBL and NBP.
In reply to a question he said that if UBL went to
MCB it would not create monopoly of a group as it would hold only 19 per
cent share of the banking industry. He said the government wants to get
out of the banking industry as it had 42 per cent share in the industry.
He disclosed Pakistan State Oil was the other major transaction expected
to be taken up in the last quarter of this year. Meanwhile, the
government will keep selling shares in other companies such as ICP
mutual funds and cement industry.
Earlier, Ahmad Waqar, Secretary, Privatization
Commission said, that UBL was the first privatization opportunity in
Pakistan's banking sector in five years i.e. after the sale of HCEBL.
Earlier privatization efforts of UBL in 1996 did not succeed.
He said that UBL transaction incorporated the broad
policy objectives of the Government which included that the government
envisaged the private sector as the engine of economic growth and
employment. The government was firmly committed to carrying out
privatization in an open, fair and transparent manner, he added.
UBL is the fourth largest bank in Pakistan with a 9
per cent market with 1,101 branches across Pakistan as well as a
valuable franchise of 16 international branches in the USA and Middle
East, with a subsidiary in Switzerland, representative officers in Egypt
and Iran and a 55 per cent stake and management control in a UK-based
joint venture with seven branches and a 25 per cent stake in a joint
venture in Oman.
In case the Commission considered the highest bid
received unacceptable, the highest bidder would be asked to increase the
bid price to an acceptable level. In case the highest bidder is not able
to increase the bid price, the second highest bidder will be given the
opportunity to increase the bid price and, failing that, the third
highest bidder may be so requested, the statement said.
The MCB has no overseas branch and it has become more
difficult after September 11 especially for any Pakistani bank to open a
branch anywhere in the world. The MCB will emerge as the biggest
domestic bank in Pakistan after acquiring major share-holdings of the
UBL, said analysts.
Analysts expect that the UBL would not be run as a
separate entity and would be merged into MCB. They also see downsizing
in UBL and closure of many branches as MCB has branches where UBL
branches exist they pointed out that if money comes from the MCB to buy
UBL, it would create negative impact on MCB's business.