Bank Muscat said it expects to agree this year on taking over Saudi Pak Bank with partners including Nomura Holdings and is not put off by the country's political turmoil.
Bank Muscat, Oman's largest lender, is in talks to buy 35 percent of the Karachi-based bank as part of a strategy to expand in the Gulf and South Asia as competition in its home market intensifies, Chief Executive Officer AbdulRazak Ali Issa told Reuters on Thursday.
"Pakistan is a growing economy," Issa said. "We have been looking at it for a long time." Issa said he expects agreement "before the end of the year." Bankers familiar with the transaction told Reuters on Wednesday the parties were considering a sale price of Rs 27 to Rs 28 per share, valuing Saudi Pak Bank at about Rs 13.75 billion ($225 million).
That is about 38 percent more than its market value at Wednesday's closing share price. Issa declined to comment on an indicative price. A 35 percent stake would be worth about $79 million. A purchase would mark Bank Muscat's entry into banking in the world's sixth most populous country. Saudi Pak is Pakistan's 18th largest lender by market value, out of 25. President Pervez Musharraf, who is struggling to secure another term, imposed emergency rule on November 3, suspending the constitution, firing hostile judges, rounding up opponents and imposing curbs on the media.
NOT WORRIED: Asked if the turmoil was a concern for Bank Muscat, Issa said: "No, Pakistan makes good business sense ... we have not seen any impact so far."
Pakistani financier Shaukat Tarin is leading the group in looking to take over Saudi Pak. The group also includes the private sector unit of the World Bank, the International Finance Corp (IFC). The suitors are looking to buy as much as 95 percent of the lender, bankers have said.
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