MCB, one of the largest banks in Pakistan is eyeing to acquire the Afghanistan’s New Kabul Bank. The bank was the country’s largest lender before it was defrauded back in 2010.
According to Bloomberg, "The Pakistani bank is one of two preferred bidders," Mohammad Aqa Kohistani, said treasury director in Afghanistan’s Finance Ministry. He further added, "Within four months, the bank will be privatized and sold to one of them."
The other bidder is a local Afghan corporation, which if win the deal would invest $1 billion into the new Kabul Bank, said Kohistani.
On the other hand MCB Bank has been deemed eligible as it has enough funds to purchase the New Kabul Bank and has also placed a $20 million guarantee, which matches the minimum needed under Afghan law, whereas, the Afghan company has provided $168 million, Kohistani said.
Analysts are of the opinion that the strained relations between both countries, would create hurdles for a Pakistani lender to gain confidence.
“Given the two nations’ troubled relations, it seems hardly likely that a Pakistani firm will be awarded the contract,” says Sayed Massoud, who teaches economics at Kabul University. “I don’t think Pakistanis will be welcomed here by our depositors.”
The New Kabul Bank which was nationalized by the Afghan government after, its owners embezzled $825 million in 2010. The bank has a network of 114 branches and $330 million in deposits, and don’t pay interest under Islamic banking rules.
MCB Bank’s head of corporate finance and international banking Muhtashim Ashai declined to comment.
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