ABN Amro to buy Pak's Prime Bank for $ 227 mn

Karachi, Mar 5: Dutch bank ABN Amro agreed to buy a 93.4 percent stake in Pakistan's Prime Bank for 13.8 billion rupees (7 million), the latest in a series of acquisition by foreign banks in Pakistan.

Foreign banks have been attracted to Pakistan's financial sector by reforms that have laid the platform for rapid growth and rising incomes, analysts say.

Major banking reforms pushed through by Prime Minister Shaukat Aziz, the finance minister President Pervez Musharraf poached from Citibank and then promoted to premier, have helped the economy's rehabilitation.

ABN Amro, which started a due diligence review of the mid-sized Pakistani lender in October last year, will also launch a tender offer for all remaining shares of Prime Bank, it said in a statement.

With 52 billion rupees worth of assets and 41 billion rupees in deposits, Prime Bank is Pakistan's 19th largest bank.

It has a network of 69 branches in 25 Pakistani cities, ABN Amro said.

The price represents over four times the net asset value of Prime Bank, as of the end of September 2006, and values the bank at about 3.66 million.

The price of 54 rupees per share of Prime bank is about 2 percent higher than its last closing of 53.00 rupees.

Shares in Prime Bank were up 0.3 percent at 53.65 rupees at 0610 GMT in a broader market, which was down 1.36 percent

'Great Opportubity'

The deal will make the combined entity the second largest foreign bank in Pakistan, and one of the top 10 banks in the country with assets of 124 billion rupees, ABN Amro said.

''It is a great opportunity, and it shows our confidence in terms of the financial sector in Pakistan,'' Naved. A. Khan, ABN Amro's country executive in Pakistan, told Reuters.

''The strategy is very simple, grow the market, bring in more customers, and introduce new products,'' he said.

In September, Asia-focused Standard Chartered completed the 7 million purchase of a 95.37 percent stake in Union Bank Ltd. -- the biggest buy yet by a foreign bank in Pakistan.

Samba Financial Group, Saudi Arabia's second-largest bank by market capitalisation, said in November it would take control of 68 percent of Pakistan's Crescent Commercial Bank Ltd through the issuance of 600 million new shares valued at .75 million.

And in December, NIB Bank, a subsidiary of Singapore state investor Temasek Holdings, said it would buy a controlling stake in Pakistan Industrial Credit and Investment Corp.

Market sources expect the transaction to be worth about 0 million.

Banks' profits grew 32 percent in 2006 after recording a growth of 87 percent in 2005, according to analysts.

Reuters