The government of Pakistan has announced plans to sell its shares in Habib Bank, the country's oldest bank, hoping to raise up to $1bn.
The government owns 42.5% share in Habib Bank, while the other 51% is owned by the Agha Khan Fund for Economic Development.
Remaining 7.5% of shares are said to be traded on the open market at present.
Reuters quoted Privatisation Commission chairman Mohammad Zubair as saying that at least 250 million shares will be sold by the government, which may sell all its 609 million shares if the offers are good.
"It is one of the most critical transactions in Pakistan’s privatisation programme."
According to Pakistan Finance Ministry, based on the 250 million share minimum target, the government gave its consent for a floor price of PKR166 per share.
Based on a book building exercise, which would be held for international and domestic institutional investors as well as high-net worth individuals, the government plans to set the strike price.
Habib Bank 2014 annual report highlights that its overall balance sheet increased by 9% to $19bn and profits after tax rose $318m, representing a 38% increase.
The bank announced in March the signing of an agreement with Barclays Bank to purchase the latter’s banking business in Pakistan.
With a network of over 1500 branches and over 1000 ATMs in Pakistan and 55 branches worldwide, Habib Bank has a domestic market share of over 40%.
The bank has a major market share in inward foreign remittances (55%) and loans to small industries, traders and farmers.
Image: The Habib Bank Plaza, located in Karachi, Pakistan. Photo: courtesy of Fast track