Royal Bank of Scotland's Pakistan Unit Bought by Faysal for $50.5 Million

Royal Bank of Scotland Group Plc, Britain’s biggest government-owned bank, is selling its Pakistan unit for 41 million euros ($50.5 million,) as part of its strategy to offload overseas divisions.

The transaction gives the acquirer, Faysal Bank Ltd., a 99.37 percent stake in RBS Pakistan Ltd., according to a statement today. The transaction values RBS Pakistan at 2.5 rupees a share, it said. That’s a 77 percent discount to yesterday’s closing price, according to Bloomberg data.

It’s the second sale of an RBS international unit this week after the Edinburgh-based lender agreed to sell its Argentine unit to Banco Comafi SA for an undisclosed sum on June 14. RBS Chief Executive Officer Stephen Hester is selling assets after his predecessor, Fred Goodwin, left the bank with a presence in more than 54 countries following more than $100 billion of acquisitions.

It’s now withdrawing from 36 countries after posting the biggest loss in British corporate history in 2008.

“It’s a cheap deal and a very good opportunity for Faysal Bank,” said Khurrum Schehzad, head of research at Invest Capital & Securities Ltd. in Karachi.

This was RBS’s second attempt to sell a stake in its local unit after MCB Bank Ltd., Pakistan’s biggest lender by market value, canceled a proposed takeover following a dispute over depositing shares as security. MCB had agreed in August to acquire 99.4 percent of RBS Pakistan for about $87 million.

Branch Network

The purchase would add 79 branches to Faysal’s network of 133 outlets, according to First Capital Equities Ltd. in Karachi. The transaction is expected to be completed in the third quarter of this year, Faysal Bank said in the statement to the stock exchange today.

“It’s a perfect fit considering we were trying to increase our footprint,” said Naved A. Khan, chief executive officer of Faysal Bank.

Shares of RBS Pakistan rose 9.3 percent to 11.73 rupees at 9:42 a.m. in Karachi, on course for its steepest increase in almost 15 months.

Faysal, majority owned by Ithmaar Bank BSC of Bahrain, rose 7 percent to 15.36 rupees and is headed for its sharpest climb in more than three months.

To contact the reporter on this story: Farhan Sharif in Karachi at fsharif2@bloomberg.net; Khurrum Anis in Karachi at Kkhan14@bloomberg.net.

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