Abu Dhabi Group buys United Bank

The Abu Dhabi Group & Best-way Holdings acquired a 51 per cent stake in Pakistan's state-run United Bank Ltd (UBL) for Rs12.35 billion ($208 million) yesterday. The group was the only bidder in the final stage of an auction organised by the government's Privatisation Commission.

Two other parties, the Muslim Commercial Bank (MCB) and Union Bank, did not make new offers at a bidding ceremony attended by journalists, although they had previously participated in the process.

The Abu Dhabi Group had earlier offered Rs12.30 billion for UBL, which was rejected by the government as too low.

Privatisation Minister Altaf Saleem said the Abu Dhabi Group would have to pay 50 per cent of the offer amount within seven days after receiving a Letter of Intent to be issued today. The rest would have to be paid in 45 days, he said.

The Privatisation Commission first invited sealed bids for the bank in June, but all offers were rejected as too low.

The privatisation of UBL, Pakistan's fourth-largest bank, is the first major sell-off in the financial sector for five years.

UBL has 1,101 branches and a nine per cent market share, according to government figures. On December 31, 2001, it was carrying non-performing loans of around 13 to 14 per cent of total loans of Rs88 billion.

However, bankers say its financial health is adequate after government injections of Rs29 billion over the past three years.

The private sector controls 58 per cent of banking in Pakistan, with the rest in public hands. Asked why Abu Dhabi Group wanted to buy Union Bank, Pervez Shahid, its executive in charge, said: "We believe it's a profitable business."

The group also owns a small commercial bank in Pakistan, the Alfalah Bank.

MCB representative Ali Munir questioned why there needed to have been a fresh round of bidding. His bank at one point had been the highest bidder, offering Rs12 billion last month.

"We have already given our views in writing to the Commission," he said. "We have expre-ssed major reservations on the change of the bidding process."

But Saleem said the process had been transparent and every party was given an equal opportunity to participate. "We received Rs350 million more because of this process. They (MCB) wanted the deal at Rs12 billion, whereas we have Rs12.35 billion," he said.