In a surprising move, MCB Bank has entered into talks with the management of NIB Bank with the goal of acquiring assets and taking over operations in order to secure an advantage in the competitive banking industry of Pakistan.
According to the official disclosure to Pakistan Stock Exchange shareholders, MCB Bank and the major shareholders of NIB Bank, Fullerton Financial Holdings through its wholly subsidiary Bugis Investment, are in preliminary non-binding discussions for the possible merger of NIB Bank into or with MCB Bank under the provision of section 48 of the bank companies.
The discussions will lead to due diligence of operations and share prices of both banks with the permission of State Bank of Pakistan (SBP), and permission of different regulatory bodies such as Security Exchange Commission of Pakistan (SECP), Competitive Commission of Pakistan (CCP).
NIB Bank official said that the deal is being commenced by a sponsor of the bank for merger of the two banks, which means stakeholders of NIB Bank will remain part of the MCB Bank as investors instead of selling out complete operations to MCB Bank.
Since the discussions are non-binding between the managements of two banks, it could amount to nothing more than talk.
It seems that NIB Bank, a mid-tier banking company, decided to curtail its operations in Pakistan as it recently sold out its 100 percent subsidiary of PICIC AMC to Habib Bank’s Asset Management Company (HBL AMC) at the cost of Rs 4.1 billion.
The development coincided with the arrival of new CEO Atif Bokhari who quit United Bank Ltd to join NIB Bank in December 2015.
Surprisingly, NIB Bank’s performance improved in the outgoing year as it managed to post a profit of Rs 2.617 billion in 2015 as compared to a loss of Rs 508 million in 2014.
On the other hand, MCB Bank seems aggressive in its expansion plan for setting up a subsidiary of MCB Islamic Bank.