Aug 17 - 23, 2009

The much talked about transaction of Royal Bank of Scotland (RBS) finally materialized as MCB Bank succeeded to enter into agreement with RBS for acquiring 99.37 percent share capital of the foreign bank.

As a result of this transaction, the total number of branches of MCB and acquired bank (RBS Pakistan) will increase to 1,139 and consolidated gross advances to Rs 324 billion.

Under this deal, MCB Bank Limited will acquire 99.37% of the ordinary share capital in The Royal Bank of Scotland Limited (formerly, ABN Amro (Pakistan) Limited) from its major shareholder and sponsor ABN Amro Bank N.V., which is a subsidiary of The Royal Bank of Scotland Group plc.

The acquisition is in-line with MCB's strategy of expanding its service platform, strengthening its product offering and building on its expertise in transactional services.

The Royal Bank of Scotland Limited was the first foreign bank to open branches in Pakistan post independence in 1948. In 2007, RBS Pakistan acquired Prime Commercial Bank, which it subsequently merged into its operations.

Over time, the bank has become the 2nd largest international bank in Pakistan. It has built up a loyal customer base in the retail banking business, with a market-leading platform serving the affluent segment and a strong consumer finance franchise. In addition, RBS Pakistan has a robust presence in the corporate segment offering its customers a broad range of products and services, including cash management, treasury products, and advisory services.

MCB will initially acquire from ABN Amro Bank N.V 1,707,107,891 of ordinary shares in RBS Pakistan, representing a 99.37% stake, for a cash price of PKR 4.22 per share. The total consideration to be paid will be PKR 7,200 million (approximately US$ 87 million). In addition, MCB will make a tender offer for the remaining 0.63% of ordinary shares not owned by the majority shareholder under the "Listed Companies (Substantial Acquisitions of Voting Shares and Takeovers) Regulations, 2008. The tender offer will also be subject to the necessary Regulatory and other approvals.

Based on RBS Pakistan's December 31, 2008 audited book value, the purchase price represents an implied price to book value multiple of 0.87x. MCB will fund the Transaction entirely through internally generated cash resources and the Transaction is not contingent on any external fund rising.

RBS Pakistan is a leading international bank in Pakistan with a branch network of over 75 branches in 24 cities, of which 30 serve the affluent retail customer segment and 3 are Islamic banking branches, and has over 90 ATMs. At December 31, 2008 RBS Pakistan had total assets of PKR 108 billion.

Commenting on the transaction MCB's Chairman, Mian Muhammad Mansha, said, "This is an important transaction for us as it strengthens our franchise in the key urban centers and broadens our product offering to our retail as well as corporate customers. We have also managed to add a large number of experienced professionals to our existing strong team. As a result of this transaction, I am confident that MCB's position has been strengthened to deliver on our growth plans."

MCB President, Mr. Atif Bajwa said that, "MCB is very pleased to enter into this agreement to acquire RBS Pakistan as it allows the bank to significantly progress in its strategy of building a stronger share in key segments of the market. MCB is looking to play an increasingly progressive role in the economy by providing innovative and value added products and services to a diverse customer base. The RBS acquisition will be crucial in providing access to important customers, in making available a strong human resource pool as well as an evolved product development and technology infrastructure. We are convinced that this transaction will be beneficial to all stakeholders."

Commenting on the sale, Muhammad Aurangzeb, Chairman of RBS Pakistan said, "We are delighted to confirm today that we have successfully entered into a sale agreement with MCB for RBS Pakistan which comprises of Retail, Commercial, Islamic, and onshore GBM and GTS businesses in Pakistan. MCB will be an excellent owner of the strong customer franchise we have established here in Pakistan. I am particularly pleased that our staff and customers will become part of one of the leading banks in Pakistan with a long standing banking history of over sixty years and which has such clear ambitions to grow further in its home market as well as internationally."

Bank of America Merrill Lynch and KASB Securities have advised MCB while Morgan Stanley has advised The Royal Bank of Scotland Group plc on the transaction.

MCB is one of the leading banks of Pakistan incorporated in 1947. MCB was nationalized in 1974 along with all other private sector banks. MCB was privatized in 1991 when Nishat Group bought a majority stake in the bank. MCB's shares are traded on all three exchanges of Pakistan and its global depositary receipts are listed on the London Stock Exchange. Malayan Banking Berhad ("Maybank"), the largest bank in Malaysia by total assets, has a 20% equity interest in MCB.

During the last fifteen years, the Bank has concentrated on growth through improving service quality, investment in technology and people, utilizing its extensive branch network, developing a large and stable deposit base and managing its loan book through improved risk management processes.

MCB is Pakistan's fourth largest bank by assets having an asset base of PKR 445 billion at December 31, 2008 on a consolidated basis and the largest bank by market capitalization. The Bank has a nationwide distribution network of over 1,050 branches. In 2008, MCB reported an after tax profit of PKR 15.3 billion on a consolidated basis.