These days there is a lot of noise in the market about the delay in the finalisation of RBSs acquisition by MCB Bank Limited. The whispers suggest that a rigid stance has been taken by the State Bank of Pakistan - requiring the sponsor-director shares of MCB to be lodged in a vault.
Moreover, MCBs recent refusal to be a part of the 19-bank consortium for the issuance of Rs 85 billion worth of Term Finance Certificates to settle the circular debt has also added a negative connotation to the story. There are talks that the lenders relationship with the authorities is in troubled waters. The regulation to lock the sponsors shares of banks were enforced after it came to light that the sponsors of former Union Bank had leveraged its stake in Bank of Punjab and eight other banks to borrow for other business ventures.
Since then, all major bank owners including the luminaries like Aga Khan represented by Aga Khan Foundation - an agency of the Aga Khan Development Network, Shaikh Nahayan Mabarak Al Nahayan, Sir Anwar Parvez, Sheikh Mukhtar as well as foreign institutions holding stake in Pakistani banks have been obliged to lodge their holdings with central bank.
Being the first bank to be privatised in 1991, MCB argues that SBPs requirement to lodge sponsor shares cannot be retroactive. If forced to adhere to SBP diktat, the move will adversely affect Nishat Groups holding, through various listed companies, in MCB.
It is said that time is clicking away and the acquisition of RBS is required to be completed in a structured timeframe. In case this deal does not materialise, MCB would lose a golden opportunity of buying a bank with excellent consumer portfolio at 0.7 times the book value. This deal can be of great benefit MCB, whether it keeps the bank or offloads it, within the stipulated time (18-24 months), to fetch an attractive price.
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