Punjab Government Mulling Privatising BoP
Friday, February 25, 2011
The Punjab government is contemplating to privatise the Bank of Punjab (BoP) with the aim that proceeds of the privatisation of bank will help bailout the provincial government from current financial crunch and Mian Muhammad Mansha, a prominent banker is the potential buyer, Business Recorder has learnt.
Sources told this scribe that Punjab government officials and BoP senior management has given a detailed briefing to the PML-N Quaid Nawaz Sharif and Mian Mohammad Mansha owner of Muslim Commercial Bank (MCB) limited regarding the equity, assets, manpower and infrastructure of BoP.
It may be added that during first tenure of Nawaz Sharif as Prime Minister (1991-93) Mian Mansha purchased the state owned Muslim Commercial Bank (MCB) which is now one of the leading banks of Pakistan with a deposit base of Rs 368 billion and total assets over Rs 500 billion.
It may be added that Punjab government has been living on over-drafts of nearly billions of rupees from the State Bank. In order to improve its financial position it has already identified and put 1410 properties including commercial, residential and agriculture lands for sale to fetch more than Rs 12.5 billion from market since November 2009.
Till the end of January 2011, out of total properties on sale, the Punjab Privatisation Board sold out 325 properties of all kinds in open auctions and earned Rs 3.29 billion to meet its expenses said an official. In January this year, the government also announced rightsizing in public sector to save Rs 6.1 billion from current expenditures, he added.
It is pertinent to mention here that Punjab government established BoP in 1989, in pursuance of The Bank of Punjab Act 1989 and was given the status of scheduled bank in 1994. The Bank of Punjab is working as a scheduled commercial bank with its network of 284 branches at all major business centres in the country. The Bank provides all types of banking services such as Deposit in Local Currency, Client Deposit in Foreign Currency, Remittances, and advances to Business, Trade, Industry and Agriculture. A wholly owned subsidiary of BOP, First Punjab Modaraba, was established in 1992 and is being managed by Punjab Modaraba Services (Pvt) Ltd.
The Punjab government has owned 51 percent shares of the bank whereas 49 percent shares were owned by various individual, companies and foreigners. According to official record, the deposits of BoP is calculated Rs 225 billion till December 2010. Whereas, its assets were calculated Rs 173.6 billion according to Annual General Meeting 2008. The manpower is above 6,000 employees.
The bank remained under tremendous financial pressure during 2009 and 2010 owing to bad loaning particularly to Haris Steel Mill by the former president Hamesh Khan. The Punjab government provided Rs 10 billion finances to bank as equity injection to come out from the crises. Now BoP is doing business at breakeven level (no profit no loss basis), said an official requesting anonymity.
A senior finance department official said banking was a corporate activity and should be done by the private sector. If the government was interested to privatise BoP, fair market value should be carried out first to assess the total outlay (equity+loan+assets) of the bank to attract most appropriate price from the market. Privatisation should be done in open auction. It was in the interest of the government to privatise bank because it was passing through constant financial crises to deal government business and financial issues. The privatisation would help the government to avoid future loss and generate handsome funds to be diverted into development projects, he added.
Another senior Punjab government official requesting anonymity said discussions were being made at high level and political elite would decide about the privatisation of the bank. The privatisation would be done under "The Punjab Privatisation Board Act, 2010, he added.
The Punjab government can sell only 51 percent shares owned by her and the new management would purchase the remaining shares in hostile take-over from stock markets. If 51 percent shares would be sold then the purchaser would take-over the management control of the bank, he added. When contacted, Tariq Bajawa secretary finance Punjab said "it is not in my knowledge."
When asked, Ameer Mumtaz media manager BoP said it was news for me that bank was going to be privatised. When contacted, Mubashir Bashir head of corporate communication MCB on the behalf of Mansha said "we have no such intentions yet," adding that it was routine that Mansha holds meetings on various issues.
He said Mansha purchased MCB during first tenure of Nawaz Sharif as Prime Minister (1991-93) Mian Mansha purchased the state owned Muslim Commercial Bank (MCB) which is now one of the leading banks of Pakistan with a deposit base of Rs 368 billion and total assets over Rs 500 billion. Incorporated in 1947, MCB soon earned the reputation of a solid and conservative financial institution managed by expatriate executives.
Labels: BOP, Commercial Banks, MCB, SBP
posted @ 5:29 PM,
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