PAKISTAN: Bank privatisation goes ahead

18 July 1997
NEWS

The Privatisation Commission signed an agreement on 7 July with the UAE's Al-Nahyan Group, led by Sheikh Nahyan Bin Mubarak, for the sale of a 70 per cent stake in Habib Credit & Exchange Bank (HCEB). The group paid $40.54 million for the 42 million shares. Privatisation Commission chairman

Khawaja Mohammed Asif said that the entire proceeds of the sale, which were paid to the State Bank of Pakistan in June, have been used to retire government debt, in accordance with previous policy announcements (MEED 27:6:97).

The commission has also confirmed that the US' Citibank has been appointed financial adviser for the sale of a stake in Habib Bank (HB). Citibank was understood to be the low bidder for the contract. Other bidders were Lehman Brothers and ABN AMRO (MEED 20:6:97).

Asif, in an interview with MEED, confirmed that the commission plans to privatise all banks and financial institutions by the end of March. The small state-owned First Women Bank will be the first, followed by United Bank, HB and National Bank of Pakistan. Asif said that restructuring operations at United Bank, prior to the sale of a strategic stake, have already started. 'During this month, the management will undergo radical change,' he said. Non-profitable branches will also be closed. It is hoped that concessions to loan defaulters, granted by the State Bank of Pakistan, will reduce the bank's bad debt portfolio. Asif said the privatisation of the bank should be completed within three months.

Bank workers in Karachi went on strike during the first week of July in protest against the anticipated down-sizing. Independent observers say that the government is likely to face more opposition to its policy.

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