PTI govt asks State Bank to sell entire stake in HBFC
SBP has 90% shares in HBFC; their sale will pave way for company’s privatisation
The Privatisation Commission has drawn up a plan for selling up to 100% shares in HBFC along with management control to a strategic investor. PHOTO: FILE
ISLAMABAD:
The federal government has directed the State Bank of Pakistan (SBP) to divest its entire shareholding in House Building Finance Company (HBFC), which will pave the way for the housing finance company’s privatisation, officials say.
At present, the SBP has 90.31% shareholding in HBFC - a major state-owned housing finance institution in the country.
Last week, the Privatisation Commission board approved MCB Bank, EY Ford Rhodes, Elixir Securities Pakistan (Private) Limited and Haidermota & Co (sub-contractor) as financial advisers for the privatisation of HBFC. The consortium will charge a minimum fee of Rs80.3 million.
According to the Finance Division, HBFC is a public limited company in which the government held 62.50% shares while the remaining 37.50% stake was held by the SBP as of December 31, 2016.
In a meeting held on November 7, 2017, under the chairmanship of then finance minister that discussed the long outstanding issue of credit lines extended by the State Bank to HBFC and Zarai Taraqiati Bank Limited (ZTBL), it was decided to convert the credit lines of the central bank into equity in HBFC and ZTBL.
The federal cabinet, in its meeting in November 2017 chaired by then prime minister Shahid Khaqan Abbasi, allowed the SBP to acquire shares in HBFC and ZTBL. The permission was given in a bid to settle the loans owed to the central bank, according to a statement issued by the PM’s media office at that time.
As the SBP’s debt amounting to Rs11.24 billion and mark-up of Rs5.12 billion was converted into equity in HBFC, the shareholding of the government of Pakistan in the housing finance company changed from 62.50% to 9.69% and the central bank became a major shareholder with 90.31% stake.
According to officials, the Cabinet Committee on Privatisation, in a meeting held on August 8, 2019, directed the Privatisation Commission to include HBFC in the active list of privatisation programme. The Finance Division also gave its nod for putting HBFC on the active privatisation list.
Subsequently, the Privatisation Commission drew up a plan for selling up to 100% shares in HBFC along with management control to a strategic investor.
However, the SBP, with 90.31% shares, required directives from the federal government for divesting its stake in HBFC in order to clear the way for its privatisation. Consequently, the Finance Division proposed in a high-level meeting that the government may direct the SBP to sell its entire shareholding in HBFC.
Sources said the issue was taken up in a meeting, chaired by Prime Minister Imran Khan, which discussed whether the matter should be placed before the Economic Coordination Committee (ECC) - the most appropriate forum to deliberate on the matter before finalising the proposal.
According to sources, the government made the decision to divest shares in the housing finance company subject to clearance from the ECC.
Published in The Express Tribune, January 3rd, 2020.
The federal government has directed the State Bank of Pakistan (SBP) to divest its entire shareholding in House Building Finance Company (HBFC), which will pave the way for the housing finance company’s privatisation, officials say.
At present, the SBP has 90.31% shareholding in HBFC - a major state-owned housing finance institution in the country.
Last week, the Privatisation Commission board approved MCB Bank, EY Ford Rhodes, Elixir Securities Pakistan (Private) Limited and Haidermota & Co (sub-contractor) as financial advisers for the privatisation of HBFC. The consortium will charge a minimum fee of Rs80.3 million.
According to the Finance Division, HBFC is a public limited company in which the government held 62.50% shares while the remaining 37.50% stake was held by the SBP as of December 31, 2016.
In a meeting held on November 7, 2017, under the chairmanship of then finance minister that discussed the long outstanding issue of credit lines extended by the State Bank to HBFC and Zarai Taraqiati Bank Limited (ZTBL), it was decided to convert the credit lines of the central bank into equity in HBFC and ZTBL.
The federal cabinet, in its meeting in November 2017 chaired by then prime minister Shahid Khaqan Abbasi, allowed the SBP to acquire shares in HBFC and ZTBL. The permission was given in a bid to settle the loans owed to the central bank, according to a statement issued by the PM’s media office at that time.
As the SBP’s debt amounting to Rs11.24 billion and mark-up of Rs5.12 billion was converted into equity in HBFC, the shareholding of the government of Pakistan in the housing finance company changed from 62.50% to 9.69% and the central bank became a major shareholder with 90.31% stake.
According to officials, the Cabinet Committee on Privatisation, in a meeting held on August 8, 2019, directed the Privatisation Commission to include HBFC in the active list of privatisation programme. The Finance Division also gave its nod for putting HBFC on the active privatisation list.
Subsequently, the Privatisation Commission drew up a plan for selling up to 100% shares in HBFC along with management control to a strategic investor.
However, the SBP, with 90.31% shares, required directives from the federal government for divesting its stake in HBFC in order to clear the way for its privatisation. Consequently, the Finance Division proposed in a high-level meeting that the government may direct the SBP to sell its entire shareholding in HBFC.
Sources said the issue was taken up in a meeting, chaired by Prime Minister Imran Khan, which discussed whether the matter should be placed before the Economic Coordination Committee (ECC) - the most appropriate forum to deliberate on the matter before finalising the proposal.
According to sources, the government made the decision to divest shares in the housing finance company subject to clearance from the ECC.
Published in The Express Tribune, January 3rd, 2020.