Keeping its words to implement privatization
programme through the dis-investment of public sector entities, the
government is offering 18,652 more shares of the National Bank of
Pakistan to the public for the second time in a year on October 7-9.
Earlier the government had offered the similar size
of its share holdings in the National Bank, which however were doubled
due to over subscription by the public. The difference between the two
transactions is however the price of the shares which were offered at
the par value of Rs10 per share in the first transaction. Encouraged by
the impressive results of the first transactions the managers of the
proceedings have recommended a price value of Rs21 per share this time.
Another difference between the two transactions,
according to market experts, is the determination of the timings for the
public offer i.e. October 7-9 falling on the eve of a big national event
i.e. National and Provincial elections scheduled on October 10. As far
as the small investors are concerned, a large number of them may not be
able to keep aloof of the mounting electioneering campaigns, which would
naturally be on the peak at that time. Hence the response of the
investors may not repeat the performance of the first transaction. In
accordance to yet another expert opinion, the timings of the offer may
not affect the proceedings noticeably as the major chunk of the shares
is likely to be lifted by syndicated buyers.
IP Securities however while commenting on the offer,
has strongly recommended the investors take advantage of the
opportunity. Enthused by the success of their earlier off-load of Rs18.6
million shares to the general public in November 2001, National Bank of
Pakistan has once again entered into the stock market, says IP. It also
indicated strong possibilities for an additional 5 per cent of green
shoe option this time too. This means that if the offer of 18.6 million
shares gets over subscribed the government would exercise the green shoe
option and will keep up to 37.2 million shares out of the total
applications for subscription. The shares are offered at Rs21, which is
at a discount of 7.4 per cent compared to its current market of Rs22.55.
Ever since the shares of National Bank have started
trading formally on the bourses, the stock price has appreciated by 34
per cent, while the average trading price had been Rs20.57. As regard to
the financial performance of the bank there is no doubt over the fact
that the bank for last three years has moved towards the road of
Recently released excellent half-yearly results for
the financial year 2002 clearly speak of the growth in earnings that
have witnessed an increase of 283 per cent as compared to the same
period last year.
With the largest deposit base in the country the bank
carries every reason for a better performance in the years to come.
The amalgamation of Mehran Bank and NDFC into
national Bank was based on an agreement withh no profit and loss between
government of Pakistan and National Bank. Though the union has had added
to the amount of non-performing loans of the bank, however the bank is
hopeful of recovery and expects that these mergers would result in
bringing gains to the bank rather than any negative implications.
The subscription would remain open from October 7 to
October 9, 2002.
As a result of making public, the smaller
shareholders of the National Bank would get the voting rights under the
Bank Nationalization Act as soon as 26 per cent shares in the bank were
divested. In this respect, either the Act would need to be amended or
additional shares would have to be offered. The government would
consider the options in due course. The government intended to privatize
The representatives of Elixir Securities and Taseer
Hadi Khalid, the lead manager for this transaction in their detailed
presentation in the road show recommended Rs21 as the sale price of the
share which they feel would be an attractive offer price and it would
enhance the value for all shareholders. National Bank has the cheapest
multiple in the market as compared to other listed banks.
It may be noted that during the restructuring
process, over 3000 employees of the National Bank had opted for
Voluntary Hand Shake Scheme while 200 branches were closed down. The
closure of the branches as well as the voluntary retirement of the
employees saved about a billion rupees per month for the bank, while was
a cost restructuring exercise. The branch network had been rationalized
and currently the bank was operating with 1200 branches all over the
country. The bank plans to have corporate branches next year. The bank
has successfully increased its deposit base during the first half of the
current financial year holding 22 per cent of the market shares with 9
million customers, 32 per cent in terms of transaction and 38 per cent
in respect of bill payments.
The credit rating of the bank had been upgraded from
AA+ to A1+ due to its improving profitability and continued improvement
in the performance. For the second consecutive year National Bank has
been recognized as the best bank of the "Banker" UK 2002.