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ABN Amro could buy Prime Bank, deal in few days

By Arshad Hussain

KARACHI: ABN Amro Bank is likely to finalize a purchase deal with Prime Commercial Bank in the next few days, and ABN Amro Bank is selling its US mortgage group and the servicing business to the Citigroup in America, sources said.

The sources in the banking circles claimed that the ABN Amro Bank has almost completed its due diligence of the Prime Commercial Bank “The ABN Amro Bank has set the offer price of Rs 54 per share,” it is learnt.

This would be the second biggest banking deal in Pakistan’s history after a direction of the central bank to enhance paid-up capital for the commercial banks from Rs 2 billion to Rs 8 billion by the end of 2008. Earlier, Standard Chartered Bank acquired Union Bank for the sum of $487 million, which is the biggest deal in the Pakistani banking sector so far.

Daily Times contacted the country manager of the ABN Amro and president of the Prime Commercial Bank, but they were not available on phone despite several calls.

ABN Amro (in America) has signed an agreement with Citigroup to sell ABN Amro Mortgage Group, Inc., its US-based residential mortgage broker origination platform and servicing business. The transaction is expected to close by the end of the first quarter of 2007, said a press release of Standard & Poor's Ratings Services. Standard & Poor's Ratings Services said affirmed its 'AA-/A-1+' counterparty credit ratings on ABN Amro Bank.

“The affirmation of the ratings takes into account that the impact of the sale on the group's strong business, financial, and risk profile is marginal, as it will result in a small book gain and only modest capital relief for the ABN Amro group,” said Standard & Poor's credit analyst Bernd Ackermann.

Pakistani analysts, however, are of the view that this deal would not hurt the local business of the ABN Amro Bank.

The analysts said after acquiring Prime Bank, ABN Amro would also be able to enlarge its network with 63 branches.

A number of foreign banks are exploring possibilities to acquire Pakistani banks owing to the bright investment future.

During the last two fiscal years, the profitability of the Pakistani banking sector remained at third position in the world banking sector.

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