Saudi Pak Bank takeover to go ahead

by Richard Kilner

Story link: Saudi Pak Bank takeover to go ahead

The political crisis and economic slowdown in Pakistan has not been enough to put off Bank Muscat of Oman and Nomura Holdings of Japan from going ahead with the $200m takeover of the Saudi Pak Bank.

The deal has been in the pipeline for the last six months.

Pakistan’s banking sector has undergone serious reform in the last few years and has emerged as one of the world’s most profitable.

A total of 85% of the Saudi Pak Bank’s shares are being purchased at a price of $0.47 each. The consortium is led by Pakistani financier Shaukat Tarin, and includes not just Nomura Holdings and Bank Muscat but the World Bank’s International Finance Corporation as well.

In addition to the 85% being bought now, a tender offer will be issued for the remaining 15%.

Insiders have stated they believe the deal will come to fruition in the middle of February.

It is speculated that Bank Muscat would acquire 35% of the bank, the IFC 20% and Nomura Holdings 13%.

Pakistan had already been in political turmoil caused by President Musharraf’s emergency rule. However, Benazir Bhutto’s recent assassination has heightened tensions still further, and hundreds of bank branches were destroyed or damaged by raging rioters in the wake of her killing.

The worsening political situation is coupled with an economic outlook that is somewhat troubled, but neither factor was enough to put off the consortium.