The Privatisation Commission has confirmed that it plans to privatise Habib Credit & Exchange Bank (HCEB), a wholly-owned subsidiary of state- owned Habib Bank, in early 1997. Habib Bank and United Bank (UBL) are also scheduled for privatisation, but will undergo restructuring first. The commission has also confirmed its intention to sell the government’s remaining stakes in Muslim Commercial Bank (MCB) and Allied Bank of Pakistan (ABL).

Expressions of interest in the sale of HCEB are due to be submitted by 15 January and a bidding date is expected to be set for February. The bank comprises the former local operations of Bank of Credit & Commerce International. It currently has paid in capital of Rs 600 million ($14.97 million). The government plans to sell 90 per cent of its stake, reserving 10 per cent for employees. The bank’s assets stood at Rs 12,700 million ($316.9 million) on 30 June 1996. Union National Bank of the UAE and Hong Kong & Shanghai Banking Corporation have already expressed interest in the sale, the Privatisation Commission says.

The commission says that 26 per cent stakes with management control in UBL and Habib Bank will not be sold before a restructuring plan for both banks has been implemented. Restructuring is likely to include the transfer of bad debts to a new government entity, the reduction of the number of employees by 20-25 per cent and a rationalisation of the branch networks of both banks, the commission says. Advisors are to be appointed by the commission for the restructuring of both banks. The commission says that it hopes to select an adviser in January or February for Habib Bank. The four shortlisted companies are Lehman Brothers, CS First Boston, ABN AMRO and Citibank.

The commission is also seeking offers to underwrite the sale of its remaining 24 per cent stake in the listed MCB. The government will sell about 44 million shares, currently valued at about Rs 1,496 million ($37 million), through the local stock market. MCB has paid up capital of Rs 1,820.5 million ($45.4 million) and the stock is currently trading at about Rs 34 ($0.85). Details of the sale of the government’s 49 per cent stake in ABL are yet to be finalised. The commission expects to appoint an adviser in early 1997 to evaluate the bank and advise on how best to divest the government stake. A 51 per cent stake in the bank was sold to an employee group in the early 1990s.