Aga Khan Fund, a foreign entity, offered the highest bid of 22.41 billion rupees (411 million dollars) for Pakistan's largest bank, Habib Bank Limited(HBL), officials said.
Qatar Investment Fund was second with 21.99 billion rupees.
Pakistan offered to privatize HBL, which has the largest chain of branches inside and outside the country.
The commission would review the bids in its meeting on Tuesday and subsequently send its recommendation to the cabinet for final approval, spokesman for the Privatisation Commission Tahir Parvaz told AFP.
"The highest bid is ostensibly acceptable but the final decision lies on the cabinet committee on privatisation," Parvaz said.
HBL, which opened in 1947, has 1,425 branches in the country. Its foreign network is spread over 26 countries.
Aga Khan Foundation gives highest bidding of Rs 22.409 billion For 51% shares of HBL
ISLAMABAD, Dec 29 (APP): Aga Khan Foundation for Development on Monday gave highest bid of Rs 22.409 billion for 51% strategic stake for acquiring the management control of the Habib Bank Limited.
Qatar Supreme Council for Economic Affairs and Investment remained second with an offer of Rs 21.99375 billion for the biggest commercial unit of Pakistan.
According to prescribed procedures, the representatives of The two bidding parties deposited their offer letters in a glass box which was placed in front of participants and media persons. Dr. Hafeez Shaikh, Federal Minister for Privatization and Investment who was presiding over the proceedings asked two journalists to open and read out the offers.
The minister congratulated the successful bidder and thanked the others for taking part in the process. He said the offer letters will be presented before the Cabinet Committee on Privatization (CCOP) for the final decision.
December 29 2003
Even before the bidding for Habib Bank Limited scheduled Monday (today) the Federal Finance Minister Shaukat Aziz has expressed hope that foreign investment this year may cross $800 million, as two of the three bidders for HBL are foreigners. Apparently the lone local bidder stands meagre chance of out-bidding the foreign aspirants aiming to takeover the bank.
The investors who had expressed interest for HBL included parties from Canada, Europe, UK, USA, Saudi Arabia, UAE, Qatar, and Yemen along with domestic interest. The pre-qualification committee, which included Dr Hafeez Sheikh and representatives of various ministries including Finance and the State Bank of Pakistan had pre-qualified three parties for the bidding.
These parties include Aga Khan Fund for Development, Central Insurance Company Limited and State of Qatar Supreme Council for Economic Affairs and Investment.
If the banks were privatised to a foreign investor the exposure of local banks in the international markets would be greatly reduced. HBL operates a large international network of 48 branches in 26 countries spread over Europe, the Middle East, Far East, Asia, Africa, and the United States.
It operates three wholly owned subsidiaries namely Habib Bank Financial Services (PVT) LTD. Karachi, Habib Finance International LTD (Hong Kong) and Habib Finance Australia Ltd. - Sydney; two Joint Ventures namely Habib Nigeria Bank Ltd. (40%) and Himalayan Bank Ltd. (20%). In addition, the Bank owns 90.5% shares in Habib Allied International Bank Plc, a bank incorporated in the UK. HBL also has two representative offices in Iran and Egypt. The other bank with similar international exposure was UBL that has already been taken over by a foreign group.
With a domestic network of 1,408 retail branches and 17 corporate branches which are strategically located in all cities and towns of the country, the bank provides all banking services including consumer and corporate finances, leasing, investment and money market transactions etc. The bank commands more than 20 per cent of domestic banking market. It serves more than five million local depositors.
The bank has become attractive for the investors after almost seven years of restructuring. The number of branches during this period was reduced from 1996 to 1425. The staff was systematically pruned from 31099 to 19000. Its non-performing loans were transferred to CIRC.
The government injected over Rs10 billion in the bank to keep it running. Moreover, the bank benefited from reduction in corporate tax on banks from 58 per cent to 47 per cent. Despite these measures the intermediation cost of bank still remained above 3.5 per cent against international average of below two per cent for efficient banks.
Though total core income of the bank increased from $126 million in 1997 to $312 million in 2002. The recurring expenses increased from $177 million to $230 million during the same period. The intermediary cost has reduced from almost 10 per cent in 1997 to below 4 per cent due to substantial increase in core income. However, intermediary cost is still very high, as the recurring expenses have also increased despite retrenchment of over 11000 employees and closure of 500 branches. Privatisation of HBL would be a challenge to domestic banks as they have low presence in foreign countries. Former president of HBL Shaukat Tareen who started the restructuring process of the bank in 1997 had declared a year later that the bank was worth $ 1 billion. The govt would be lucky if it succeeds in fetching that value in today’s bidding.
Updated on 2003-12-28 11:24:19
ISLAMABAD, Pakistan: Dec 28 (PNS) - All arrangements have been finalised to hold bidding for the privatisation of Habib Bank Limited (HBL) on MONDAY to be supervised by Dr. Abdul Hafeez Shaikh, Federal Minister for Privatisation & Investment who is also Chairman of the Privatisation Commission.
The CCOP on Friday approved the transaction structure and procedure for the privatisation of Habib Bank Limited (“HBL”), for the intended sale of a minimum stake of 26% (going up to 51 % of GoP shareholding) for acquiring the management control of the Bank by the prospective pre-qualified bidders.
The open bidding for HBL is being held at Islamabad in PC auditorium at 3 p.m., which will be witnessed by the representatives of the print and electronic media.
The pre-qualification committee, which included representatives of various ministries including Finance and the State Bank of Pakistan has pre-qualified three parties for the bidding. These parties include Agha Khan Fund for Development, Central Insurance Company Limited and State of Qatar Supreme Council for Economic Affairs and Investment.
All the key issues have been resolved and the bidding process had been made known to the potential pre-qualified bidders.
Pakistan’s Privatisation Commission (“PC”) had received unprecedented interest from around the world by receiving 19 _Expression of Interest (EOI) for the privatisation of Habib Bank Limited (“HBL”), by the intended sale of a minimum stake of 26% up to 51 % of its shareholding from reputed International and Pakistani parties (participating solely, or as part of a consortium) for entering the process towards acquiring the indicated shareholding in HBL for a better competition. The terms of a sale include the transfer of management control of HBL.
The remarkable and encouraging response resulted due to the personal interest and hectic efforts by Dr. Abdul Hafeez Shaikh, Federal Minister for Privatisation & Investment and his team, which had attracted an unprecedented number of EOIs for such a potentially large transaction. The investors who had expressed interest for HBL include parties from Canada, Europe, UK, USA, Saudi Arabia, UAE, Qatar and Yemen along with domestic interest.
PC together with its appointed Advisors A.F. Ferguson & Co. and Legal Advisors Haidermota & Co. is in the process of the competitive bid, negotiation and sale process in accordance with the privatisation laws of Pakistan. An extensive streamlining and restructuring programme has been implemented by HBL’s management towards the preparation for the privatisation of thebank. HBL’s privatisation represents an attractive investment opportunity for investors interested in leveraging HBL’s extensive presence and market share.