One of the leading local companies in Pakistan, Fatima Fertilizer Limited, has shown interest in the acquisition of majority stakes in the Saudi-based Samba Bank Limited.
According to stock filing, the company’s board has accorded in-principle approval to the company to evaluate and pursue (including as part of a consortium of parties) the potential acquisition of the majority shareholding (i.e., approximately 84.51 percent) of Samba Bank Limited proposed to be sold by Saudi National Bank.
The fertilizer giant will go for the initial exercise of conducting due diligence of the bank with the permission of the State Bank of Pakistan. In parallel, the company will hire advisors and consultants, carry out necessary disclosures and regulatory steps/procedures, obtain regulatory approvals, and carry out negotiations.
Considering the strength of the fertilizer producers backed by a group of companies, investment in the banking sector is a good idea, mainly in the bank, which is profitable, having affiliation with a foreign bank.
On the other hand, it is not necessary that the company will definitely go for the acquisition of major shares in the bank after due diligence. The permission of banking regulatory and different authorities also matters in this possible deal of shares’ sale purchase deal.
Saudi National Bank Divestment Plan in Samba Bank
Saudi National Bank is the immediate parent company of Samba Bank Limited and its management had decided in principle to divest its stakes in Samba Bank Limited Pakistan’s subsidiary.
In November 2021, the State Bank of Pakistan (SBP) granted approval to Saudi National Bank (SNB) and its advisors, due diligence team, to undertake due diligence of Samba Bank Limited. SNB will evaluate the value of the stakes after due diligence and offer to a potential buyer which could be a local or foreign bank or a financial entity.
Samba Bank is a profitable entity that recorded its highest ever profit of over Rs. 1 billion in 2020. The bank continued its profitable spree in the outgoing year with limited operations and a handsome number of foreign and multinational retainer clients.
The number of branches has surged to 43, whereas its assets and deposits stood around Rs. 160 billion and Rs. 80 billion
will it change the name of the bank?