MCB Bank Buys RBS Pakistan Ops At PKR7.2B-Sources: WSJ

MCB Bank Ltd. (MCB.KA) has agreed to buy Royal Bank of Scotland Group PLC's (RBS) operations in Pakistan for PKR7.2 billion (US$87 million), people familiar with the situation said Monday, in the latest sale of Asian assets by the Scotland-based bank.

Earlier in the day, MCB Bank said in a statement to the Karachi Stock Exchange that its board had approved a proposal to acquire the assets, but didn't give any details other than to say the deal is subject to the signing of a share-purchase agreement and approvals from the State Bank of Pakistan and other regulators.

MCB, Pakistan's largest privately-owned bank by assets, is paying 0.73 times the book value of about PKR9.89 billion at the end of March of RBS's Pakistan assets, one person said.

Dutch bank ABN Amro, whose institutional and Asian assets RBS acquired in 2007, paid PKR13.8 billion or a four times price-to-book multiple for the bulk of the assets being sold to MCB in March 2007.

Besides MCB Bank, Habib Bank Ltd. (HBL.KA), Egypt's Orascom Telecom Holdings (ORTE.CI) and local JS Group had professed interested in buying the assets earlier. In April, Royal Bank of Scotland said Pakistan's central bank had allowed MCB and local bank Habib Bank to begin due diligence on its operations in the country.

"There are non-price considerations for RBS to choose MCB over others. MCB is perceived as the one which has the ability to close the transaction efficiently. The fact that it has no funding issue and that the assets are a strategic fit are a plus," said Soofian Zuberi, Bank of America Merrill Lynch's head of global markets sales for Asia excluding Japan.

Bank of America Merrill Lynch and KASB Bank advised MCB on the deal.

MCB, which will see its extensive network expanded with RBS's assets, will finance the acquisition with its own internal capital, another person familiar with the situation said. He said an official announcement of the deal is due within 24 hours. "The buyout is beneficial for MCB Bank as RBS has an extensive consumer base," said Mohammed Imran, head of research of First Capital Securities Ltd.

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