JS and Orascom may offer between $150 million and $200 million for RBS

Posted on May 29, 2009

By Mushfiq Ahmad and Arshad Hussain

KARACHI: Bidders are likely to offer between $150 million (Rs 12 billion) and $200 million (Rs 16 billion) for the acquisition of businesses of Royal Bank of Scotland (RBS), banking sources and market players told Daily Times here on Friday.

Sources further said that MCB Bank and Habib Bank are likely to withdraw from the race for acquiring the foreign bank. Spokesman for MCB Bank said his bank was very much in the race for the acquisition and that there had been no intention of withdrawing. Calls made at the Habib Bank were not answered.

“Bids were to be presented to the seller on June 5,” a banking source said. Due diligence by the prospective buyers was to continue till May 29, but more time was obtained by the bidders for due diligence.

Orascom group, who is running leading companies in Pakistan including Mobilink, has also entered into the race.

However, the spokesman for State Bank of Pakistan, Syed Wasimuddin, said the central bank had given on Friday the approval to Orascom to conduct due diligence of RBS.

After the approval granted to Orascom for due diligence it is likely that the date for bidding would be extended further because it might not be possible for Orascom to complete due diligence in only six to seven days. It is pertinent to mention here that the other three bidders spent about one month in due diligence.

“Jahangir Siddiqui group and Orascom are the major contenders for RBS,” a market source said. “These groups may offer between $150 million and $200 million,” he added.

RBS is being eyed by bidders as “a medium-sized bank with a decent branch network, an excellent depositors’ base, and a highly skilled workforce”.

RBS Pakistan had announced in February that it was exploring new ownership for the retail, commercial, GBM and GTS businesses in Pakistan. It said there had been several reasons why this decision had been made.

The annual report of RBS Pakistan for 2008 said it had been decided by the new management of RBS plc to revisit its global footprints in various countries to decide about the future world wide strategic presence to ensure optimum capital rationing. Based on the results of a strategic review conducted for all the locations, RBS Plc had announced its intention to explore new ownership for its businesses in fifteen countries including Pakistan.

MCB Bank and HBL had expressed their interest in RBS on April 13 while JS Bank joined the race on April 14.

Tags: Jahangir Siddiqui group and Orascom biding for RBS, MCB & HABIB acquiring foreign bank, RBS acquisition, RBS Pakistan seeking local ownership, Royal bank of Scotland