The due diligence exercise by ABN AMRO Bank for acquisition of Prime Bank Limited is said to be nearly complete. The acquiring foreign bank had reportedly indicated a price range of Rs 50 to 60 per share for the 65-branch network, which will provide ready access to small and medium enterprises (SME) business in the country.
It will supplement the existing strong corporate and consumer franchise of the Bank. It is not certain at this stage whether ABN AMRO will conclude the deal after completion of due diligence. In case it does so, the acquisition cost will be in the range of $225 to $275 million.
Saudi Pak Commercial Bank is another bank that is the focus of interest for buyers. Business Recorder understands that Arif Habib Rupali Bank has made an offer in the range of Rs 25 to Rs 30 per share. Earlier, Faysal Bank and Noor Group of Kuwait had shown interest in the 50-branch network of Saudi Pak Commercial.
According to informed sources, investment of Rs 5 billion in PIBs held until maturity has been a drag, besides Rs 4.5 to 5 billion of non-performing loans with provisioning of around Rs 1.9 billion leaving a gaping hole of a billion rupees.
The amalgamation of Union Bank with Standard Chartered is expected to be completed by December 4, 2006. Reports of Barclay''s Bank on the prowl for acquisition in Pakistan appear to be premature. However, HSBC is said to be on the lookout, along with NIB.
Picic Commercial Bank, with 134 branches, is said be the most sought after institution.
With seven to eight percent banking spread in Pakistan, compared to 2.5 to 3 percent in comparable countries, Pakistani banks are attractive entities. But due to intense competition, banks without large networks, even with a capital base of Rs 6 billion, will face difficulties unless they can create a market niche for themselves, say experts.
Mergers have yet to become a norm in this country. The only reason Habib AG Zurich merged with Metropolitan Bank was common ownership.