(Adds price, price/earnings ratio, comments by banker and
background.)
MCB Bank Ltd. (MCB.KA) has agreed to buy Royal Bank of Scotland
Group PLC's (RBS) operations in Pakistan for PKR7.2 billion (US$87
million), people familiar with the situation said Monday, in the
latest sale of Asian assets by the Scotland-based bank.
Earlier in the day, MCB Bank said in a statement to the Karachi
Stock Exchange that its board had approved a proposal to acquire
the assets, but didn't give any details other than to say the deal
is subject to the signing of a share-purchase agreement and
approvals from the State Bank of Pakistan and other regulators.
MCB, Pakistan's largest privately-owned bank by assets, is
paying 0.73 times the book value of about PKR9.89 billion at the
end of March of RBS's Pakistan assets, one person said.
Dutch bank ABN Amro, whose institutional and Asian assets RBS
acquired in 2007, paid PKR13.8 billion or a four times
price-to-book multiple for the bulk of the assets being sold to MCB
in March 2007.
Besides MCB Bank, Habib Bank Ltd. (HBL.KA), Egypt's Orascom
Telecom Holdings (ORTE.CI) and local JS Group had professed
interested in buying the assets earlier. In April, Royal Bank of
Scotland said Pakistan's central bank had allowed MCB and local
bank Habib Bank to begin due diligence on its operations in the
country.
"There are non-price considerations for RBS to choose MCB over
others. MCB is perceived as the one which has the ability to close
the transaction efficiently. The fact that it has no funding issue
and that the assets are a strategic fit are a plus," said Soofian
Zuberi, Bank of America Merrill Lynch's head of global markets
sales for Asia excluding Japan.
Bank of America Merrill Lynch and KASB Bank advised MCB on the
deal.
MCB, which will see its extensive network expanded with RBS's
assets, will finance the acquisition with its own internal capital,
another person familiar with the situation said. He said an
official announcement of the deal is due within 24 hours. "The
buyout is beneficial for MCB Bank as RBS has an extensive consumer
base," said Mohammed Imran, head of research of First Capital
Securities Ltd.
Royal Bank of Scotland currently operates 79 branches in
Pakistan, including three Islamic banking branches. It has a loan
book of PKR67 billion, deposits of PKR75 billion and assets of
PKR104 billion.
MCB has a loan book of PKR257 billion, deposits of PKR338
billion and assets of PKR458 billion as at the end of the first
quarter.
"The deal shows that there is still appetite for Pakistan banks
and their fast growing customer base," Bank of America Merrill
Lynch's Zuberi said.
"But this is probably the last of a slew of sizeable bank
acquisitions in Pakistan. There isn't much left if banks are
looking to acquire assets that are of scale."
The sale of its Pakistan assets is a part of a three- to
five-year plan in unwinding RBS's partial acquisition of ABN AMRO.
The US$101 billion, peak-of-the-market purchase of the Dutch bank
spearheaded by RBS and is widely seen as the strategic misstep that
led to RBS's downfall and the ouster of former chief executive Fred
Goodwin.
Early this year, RBS, which is 70%-owned by the U.K. government,
said that it planned to sell its Asian retail banking assets as
part of moves to shed its non-core assets.
Last week, Australia & New Zealand Banking Group Ltd.
(ANZ.AU) announced it was buying the bulk of RBS's Asian banking
operations for US$550 million leaving just the Scottish bank's
Indian, Chinese and Malaysian assets still on the sale block.
-By Amy Or and Haris Zamir, Dow Jones Newswires; 852-2832 2335;
amy.or@dowjones.com
