The boards of directors of NIB Bank and MCB Bank have decided to merge the two banks by way of shares swap agreement between the owners and shareholders of the two banks. This was stated by the official communiqué of the two banks.
This development means that operations, business including assets, clients of NIB Bank will dissolve into MCB Bank to form a merged bank, which will be MCB Bank.
However, NIB Bank’s shareholders will have stakes in the merged bank along with representation in the board, similar to the recent merger deal between Mobilink and Warid.
In other words, MCB will not acquire NIB Bank through a sale-purchase deal. Rather it will merge NIB Bank’s operations, having a definite share in profits and losses as per agreement.
According to the proposed banks amalgamation deal, 73.569 million shares will be issued in aggregate for the merged bank (MCB Bank) in favor of NIB Bank’s shareholders on the basis of swap ratio, which translates into 1 share of merged bank (MCB Bank) as equal to 140 shares of NIB Bank.
The amalgamation deal is subject to the approval of shareholders of the two banks and State Bank of Pakistan (SBP), which means the merger of the two banks will take few more weeks if it happens.
In March 2016, the management of MCB Bank announced to see a merger with NIB Bank. Subsequently, the management of the two banks held series of negotiations and meetings, conducting due diligence of each other’s banking companies.
MCB Bank and Fullerton Financial Holdings Ltd (“FFH”) (being the majority shareholder of NIB Bank through its wholly-owned subsidiary Bugis Investments (Mauritius) Pte. Ltd.) have been engaged in discussions for the merger of NIB with and into MCB under the provisions of Section 48 of the Banking Companies Ordinance, 1962.
MCB Bank is considered as No.1 in the banking industry currently, operating 1,213 branches throughout the country along with its subsidiary of MCB Islamic Bank. NIB Bank is a mid-sized bank operating with 171 branches mainly in big cities.