KARACHI (November 16 2006): The pioneer of consumer banking in Pakistan, Shaukat Tarin, has offered to acquire 50 percent shareholding in Crescent Commercial Bank Limited (CCBL) for Rs 2.8 billion, it is reliably learnt. The Board of Directors of CCBL is scheduled to meet on Friday to consider Tarin's offer to pay Rs 10 per share (at par), ie Rs 3 premium on the break-up value of Rs 7 per share.

In case of acceptance of the offer - CCBL's paid-up capital would be doubled to Rs 4 billion, and Rs 800 million would fill the provisioning gap. After issuance of 50 percent shares to Tarin - the family holding of Crescent family will decline from 38 to 17.5 percent. Mashriq Bank and Doha Bank's shareholding of five percent each will remain intact. Besides some other institutional holdings, the rest of the shares are in public hands.

Shaukat Tarin, former Citigroup banker, came back to the mother country from Dubai in the early nineties to launch credit cards; housing mortgage and margin financing for Citibank which hitherto had confined itself to corporate and commercial banking activity.

He was subsequently elevated and sent to Thailand by the Citibank. However, upon winning the second term for premiership, Nawaz Sharif called upon him to become President of Habib Bank - the ailing giant - and clean the institution to prepare it for privatisation.

Tarin not only pioneered right sizing of HBL but also showed the way to other government owned banks how to do so without lockouts and strikes. He reduced the HBL workforce from 32,000 to under 20,000 and changed the culture of the institution based on committees and no one accountable for bad risk to cash flow financing, with relationship managers accountable for decisions. Good decisions were rewarded with bonuses and on bad decisions the bankers were docked.

Tarin's singular contribution was to create a structure with minimal political or bureaucratic interference from Islamabad. His refusal to head the Privatisation Commission and to accept political interference for postings, transfers and promotions and insistence on instituting a merit based culture soon earned the displeasure of Prime Minister Nawaz Sharif and his henchmen - Saifur Rahman and the then Finance Minister Ishaq Dar.

Realising that he will not get a second term as HBL President, he accepted the offer from a Saudi Group to head a much smaller bank - Union Bank. In six years at Union, the $12 million acquisition became a consumer banking power house and was acquired by Standard Chartered Bank for around $500 million.

Tarin has been on the lookout ever since the Saudi owners decided to sell Union at a fat profit. Earlier, he had held discussions with Jahangir Siddiqui Group for collaboration on their purchase of American Express Bank's Pakistan operations, but without success.

In case, the CCBL deal goes through it will be good not only for the bank itself alone but also for the whole banking sector. Tarin has been President of Pakistan Banks' Association more than once. And, his advice has been frequently sought by both the government and the State Bank of Pakistan. Even the Securities and Exchange Commission of Pakistan had asked him to evolve a funding mechanism to replace 'Badla' financing.

He also headed the committee comprising bankers, brokers and Mutual Funds to evolve the Continuous Funding System (CFS) for the bourses. And, presently he is busy giving financial touches to the CFS Mark II mechanism for the SECP.

Copyright Business Recorder, 2006