MCB exploring merger with NIB

Muslim Commercial Bank (MCB), the third largest private bank of the country, is in talks to acquire NIB Bank Ltd of Pakistan, notices released by MCB Ltd and NIB Bank to Pakistan Stock Exchange (PSX) said on Tuesday.

NIB’s major shareholder, Fullerton Holdings and MCB authorities have discussed the matter involving the merger of NIB Bank Ltd into MCB, the notices said. Both the banks have consulted with the State Bank of Pakistan for due diligence of each other banks, receipt of all requisite regulatory authorisation, consents and approvals and receipt of all requisite corporate and other international approvals of NIB, MCB and /or their respective shareholders, the notices said.

A spokesman of the State Bank of Pakistan (SBP) said that the decision to allow MCB and NIB to undertake due diligence would be taken after approval from regulators.

Fullerton Financial Holdings (FFH) is a 100 per cent subsidiary of Temasek Holdings. FFH has intensive investment in Asia, including strategic investment in China Construction Bank and Bank of China.

“MCB and major shareholder of NIB Bank Limited, FFH through its wholly-owned subsidiary Bugis Investments (Mauritius) Pte Ltd are in preliminary non-binding discussions for possible merger of NIB Bank with and into MCB under the provisions of section 48 of the Banking Companies Ordinance 1962,” MCB Secretary Fida Ali Mirza informed PSX through a letter.

“There is no assurance that any discussions will result in any definitive agreement or transaction, or that any offer for NIB by MCB will be made or as to the terms on which any such offer might be made.

“MCB Bank remains committed to providing top quality financial and wealth solutions to its customers. MCB and NIB will make an appropriate announcement in the event there are any material developments,” the statement said.

Insiders say that NIB’s assets amount roughly to Rs 25 billion in light of current share value of Rs 2.50 per share, however its book value is Rs 1.70 per share.

Both the banks are listed in the PSX therefore they are bound to inform their shareholders about any prospective deal in accordance with Section 15D of the Securities and Exchange Ordinance 1969 and Clause 5.19.13 of code of corporate governance in the Rule Book of the Exchange.

The NIB Bank acquired 63.36 per cent outstanding shares of Pakistan Industrial Credit and Investment Corporation Ltd (PICIC) valuing at Rs 20.5 billion in December 2007.

Out of the total stake, 56 per cent of the shares had been acquired from certain shareholders while 7.36 per cent from a tender offer to the general public. The total transaction was valued at $342 million (Rs 20.5 billion).

Through this acquisition, NIB Bank had gained control of PICIC Commercial Bank, PICIC Asset Management Company, PICIC Insurance Ltd and PICIC Exchange Company in 2007.

NIB Bank is one of the largest foreign banks in Pakistan. It was formed in 2003 after the merger of National Development Leasing Corporation (NDLC) and IFIC Bank. The bank has presence in 52 cities in Pakistan, and has over 170 branches which are connected online. NIB Bank has about 3,000 employees and its head-office is in Karachi.

NIB Bank’s main business units include Retail Banking, Commercial Banking, Corporate and Investment Banking and Treasury Services. The Bank competes with all other major banks operating in Pakistan.