ABN Amro targets Pakistan's middle market segment

By Staff
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Google Oneindia News

KARACHI, Mar 14 (Reuters) ABN Amro's planned acquisition of Pakistan's Prime Bank will help it make inroads in the South Asian country's growing mid-sized businesses, an area previously untapped by the Dutch lender, a top official said on Wednesday.

ABN Amro announced earlier this month that it had agreed to buy a 93.4 percent stake in the country's 19th largest Prime Bank for 13.8 billion rupees (7 million), the latest in a series of acquisitions by foreign banks in Pakistan.

It has already floated a tender offer to buy the remaining shares of Prime Bank from the stock market and hopes to close the deal by the end of March.

''When we look at our strategy, we've got the large corporates, and we've got consumer business, but what we lack is the middle market segment,'' said Naved. A. Khan, ABN Amro's country executive in Pakistan.

The middle market includes private firms, smaller listed companies as well as new and expanding businesses.

''And when we looked at the landscape, this (Prime Bank) came to us as a reasonable-sized middle market bank, purely focused on middle market,'' Khan told Reuters in an interview.

NO OVERLAPPING Prime Bank, with 52 billion rupees worth of assets and 41 billion rupees in deposits, has a network of 69 branches in 25 Pakistani cities.

Khan said Prime was a good buy as its target market did not overlap with that of ABN Amro.

On the consumer side, Prime Bank was focusing only on auto loans and mortgages, while at ABN Amro, mortgage were not too big, and auto loans non-existing, he said.

''Within the commercial segment, they didn't have the real big numbers. So they were always in the low middle,'' he said.

''There are probably only eight or 10 customers that overlap, therefore they became a very logical fit into our structure,'' he added.

ABN Amro will become the second-largest foreign bank in Pakistan post-merger with 81 branches.

But analysts say it will face a tough competition from other bigger playes, attracted by financial sector reforms that have laid the platform for rapid growth and rising incomes.

Asia-focused Standard Chartered is currently the largest foreign bank in Pakistan, and it has already completed a 7 million purchase of a 95.37 percent stake in Union Bank Ltd. -- the biggest buy yet by a foreign bank in Pakistan.

NIB Bank, a subsidiary of Singapore state investor Temasek Holdings, has also agreed buy a controlling stake in Pakistan Industrial Credit and Investment Corp. in a deal expected to be worth around 0 million.

But Khan was hopeful that ABN Amro will deliver well.

''We have got a very strong and robust product pipeline. We need a conduit to deliver these products into the market, and through the Prime conduit we will be able to do that,'' he said.

''We have got global products and global technologies to support a middle market strategy which is more cost efficient and far more scientific, and we can expand it and broaden it to a much larger extent then Prime is today,'' he said.

REUTERS PV HS1530

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