NIB Bank, PICIC merger by year end

Staff Report KARACHI: The legal merger of PICIC, PICIC Commercial Bank and NIB Bank will be completed by the end of current year, banking sources said here Tuesday. They said the name of the merged entity would be decided later after a market research. It may be noted that NIB Bank, a subsidiary of Singapore-based Temasek Holdings, had acquired PICIC Group on July 1, 2007, for Rs 20.5 billion equivalent to $342 million. Meanwhile, Khawaja Iqbal Hassan, President of NIB Bank, which acquired 63.36 percent shares of Pakistan Industrial Credit and Investment Corporation (PICIC), has finalised the team for effectively running the proposed bank. According to sources, this team drawn from senior executives of PICIC and NIB Bank will be responsible for making the merged institution a dominant bank, with a focus on efficiency, and becoming a customer centric organisation, differentiating itself from competition. The resultant organisation structure has led to four customer focused business areas and 10 business enabling functions, each headed by members from the new leadership team. Each member has been selected after a detailed review of his individual skills and ability to propel the new merged organisation forward. They said this merger will be one step forward, in consolidating the banking sector as envisioned by State Bank of Pakistan and enhancing FDI as per governments objectives.

KARACHI, May 25 (Reuters) - Pakistan's NIB Bank (NDIF.KA), a subsidiary of Singapore state investor Temasek Holdings [TEM.UL], said on Friday it had agreed to buy 56 percent of Pakistan's PICIC PICI.KA for about $300 million. NIB Bank agreed in December to buy a controlling stake in Pakistan Industrial Credit and Investment Corp., or PICIC, which controls PICIC Commercial Bank PICC.KA, a lender with 129 branches across the country. NIB Bank said in a statement to the Karachi Stock Exchange (KSE) it had signed agreements with different shareholders of PICIC to buy 56 percent of the total outstanding shares at 78 rupees a share. That makes the deal worth about $300 million.

Under Pakistani law, any company that buys more than 25 percent of another company has to issue a tender for remaining shares. NIB Bank is expected to announce a tender offer in the stock market soon. It can decide how many of the shares it will buy. The deal is one of several involving foreign banks in Pakistan, where the economy has grown strongly thanks to economic reforms over the past few years. NIB Bank President Khawaja Iqbal Hassan told Reuters in an interview in March that after the merger of NIB Bank, PICIC and PICIC Commercial Bank, the combined entity would have about 200 branches. The bank would pursue aggressive expansion plans once the acquisition was complete, which could see another 300 branches in the next three years, he said. Competition in the Pakistani sector is expected to rise as foreign players push to increase their presence to benefit from the financial reforms that have laid a platform for rapid growth and rising incomes. Asia-focused Standard Chartered (STAN.L), whose Standard Chartered Bank Pakistan Ltd. (SCBP.KA) is listed on the Karachi Stock Exchange, became the largest foreign bank in Pakistan after the $487 million purchase of Union Bank last year. Dutch bank ABN Amro AAH.AS is the second biggest foreign bank with 83 branches after the acquisition of Prime Bank PRCB.KA this year. ($1 = 60.74 Pakistani rupees) ((Reporting by Faisal Aziz, editing by Alan Raybould; Reuters Messaging: faisal.aziz.reuters.com@reuters.net; tel: +92-21 568 5192)) Keywords: TEMASEK PAKISTAN/NIB (C) Reuters 2007. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nISL199914]

* SBP revises swap ratio for shareholders of PICIC and PCBL By Mushfiq Ahmed KARACHI: The State Bank of Pakistan (SBP) has approved the scheme of amalgamation and consequently the merger of PICIC and PICIC Commercial Bank with and into NIB

Bank following the acquisition of PICIC by NIB on June 28, 2007, said a press release issued by NIB Bank here on Tuesday. It did so after revising the swap ratio from 2.64 shares of NIB for each share of PICIC to 3.18 shares and from 2 shares of NIB for each share of PCBL to 2.27 shares. Some shareholders of PICIC had objected to the swap ratio determined for the merger of PICIC and PCBL into NIB. One of them had moved an application in the Sindh High Court, which had directed the State Bank to hear the viewpoint of all parties and then decide the swap ratio. Advocate Abid S. Zuberi, counsel for the plaintiff, told Daily Times that his client would be getting 3.22 shares of NIB for each share of PICIC or Rs 69 for a share. Another minority shareholder told Daily Times that he was now satisfied with the swap ratio decided by the central bank. He said this revision had vindicated the position of the minority shareholders that the swap ratio previously fixed was not a just one. The three institutions were merged on December 31, 2007. On Monday, the company secretaries of NIB Bank, PICIC, and PICIC Commercial Bank notified the three stock exchanges of the country that the State Bank of Pakistan has sanctioned the amalgamation of PICIC and PICIC Commercial Bank with and into NIB Bank. The communication sent to the stock exchanges said: In so far as the dissenting shareholders who voted against the resolution for amalgamation are concerned, the State Bank of Pakistan in accordance with Section 48 (3) of the Banking Companies Ordinance, 1962, has also determined the share value as Rs 67.94, Rs 39.72 and Rs 20.47 per share of PICIC, PCBL and NIB Bank Limited respectively. The dissenting shareholders may therefore (i) claim from the respective institution such value in respect of the shares held by them in such institution, or (ii) swap their respective shares in accordance with the swap ration given below. The State Bank of Pakistan has also determined the swap ratio for all eligible shareholders of PICIC and PCBL (other than NIB and PICIC) as follows: 3.18 shares of NIB will be issued for each share of PICIC 2.27 shares of NIB will be issued for each share of PCBL. A SBP letter to these three institutions enclosed by them with their communication to the stock exchanges said: ... State Bank of Pakistan, in pursuance of the sanction order dated December 31, 2007 wherein sanctioning the schemes of amalgamation of PICIC and PCBL with and into NIB Bank Limited (the Schemes) under Section 48 of Banking Companies Ordinance (BCO), 1962, is pleased to announce the effective date of the schemes as close of business on December 31, 2007.

This merger has resulted in NIB Bank becoming the seventh largest bank in the country in terms of distribution network with 240 branches and total assets exceeding Rs 185 billion. NIB is now the second most capitalized bank in the country with paid up capital exceeding Rs 27.5 billion. Temasek Holding remains the single largest investor in NIB Bank. Temasek is the investment arm of the Government of Singapore and manages an investment portfolio in excess of $100 billion. Meanwhile, the SBP notified cancellation of banking license of PCBL with effect from the close of business on December 31, 2007 in pursuance to scheme of amalgamation of PICIC Commercial Bank Limited (PCBL) with and into NIB Bank Limited. It has also directed the de-scheduling of PICIC Commercial Bank Limited with effect from the close of business on December 31, 2007, on account of its merger with and into NIB Bank Limited.

Entitie s Ratio P.A.T Net Profit Margin EPS ROE ROA Debt Ratio

PICIC Commercial Bank 2005

36.05%

NIB Bank 2005

Rs.(m)104 0.325%

Surviving Company NIB Bank 2007

Rs.(490)m -7%

2006
16.70%

2006
Rs.(m)118 0.25%

2008
Rs.(7,475)m -203.37%

Rs.1,504,039 Rs.968,841

5.5 14.6%

5.34 11.3%

0.45 2.47%

0.21 2.724%

(0.44)

(2.63)

1.47%

1.21%

0.325%

0.2542%

93%

94%

86.84%

90.67%

79.39%

77.812 %

10000 8000 6000 4000 2000 0 7 2003 73 2004 121 2005 270 1,495 2007 2008 8,834

2006