Cabinet body raises questions on FWBL sale
Faizan Majeed, a Lahore-based exporter, said “The UAE offers unmatched access to African, Middle Eastern, and European markets. Pakistan’s exporters can use Dubai’s ports and free zones to expand their footprint. But for that, we need business-friendly policies and less red tape.” photo: file
A cabinet committee has raised questions over the proposed sale of First Women Bank Limited (FWBL) to an entity of the United Arab Emirates (UAE).
During a briefing given by the Ministry of Privatisation, the Cabinet Committee on Inter-Governmental Commercial Transactions (CCoIGCT) asked about the Inter-Governmental Framework Agreement, mandated by the Inter-Governmental Commercial Transactions Act, 2022, under which FWBL transaction was taking place.
The Ministry of Privatisation informed the cabinet body that the requisite Inter-Governmental Framework Agreement had been duly signed and it had shared a copy of the agreement prior to the meeting, which was made part of the record.
On a query about the clause to facilitate the buyer in acquiring the remaining shares from private banks, the Ministry of Privatisation told the committee that the clause meant "only on a best-effort basis" and did not denote a commitment or entail any obligation on the part of the seller to ensure the sale of remaining shares held by private banks to the buyer.
Responding to another question about the commitment by the purchaser to meet the minimum capital requirement, the capital adequacy ratio and the leverage ratio, the Ministry of Privatisation shared the relevant clause from the commercial agreement, highlighting the schedule of staggered payments agreed with the State Bank of Pakistan (SBP).
The CCoIGCT discussed the proposal in detail and, while approving the terms of the commercial agreement, directed that FWBL would follow up with the Federal Board of Revenue (FBR) to make an effort to procure, at the earliest, the final tax assessment and submit revised income tax returns based on audited accounts.
The Ministry of Privatisation briefed the committee that FWBL had been placed on the active privatisation list, which was ratified by the cabinet on November 1, 2018. Accordingly, the Privatisation Commission (PC), with the approval of the PC board, appointed a financial advisory consortium, led by M Bridge Factor and the National Bank of Pakistan, on December 27, 2019. Subsequently, the financial advisory services agreement was signed on January 27, 2020.
The privatisation ministry further said that the consortium conducted the initial due diligence and finalised its report in June 2020. Resultantly, the Cabinet Committee on Privatisation approved the initial transaction structure on August 21, 2020, which was ratified by the cabinet on September 1, 2020.
The ministry shared that in the meantime the UAE government, through the International Holding Company, conveyed its interest in finalising the terms of the commercial agreement during a series of meetings. The final version of the commercial agreement, agreed upon by the stakeholders, including the Instructions to Purchaser (ITP), was presented to the cabinet body. The main terms of the deal were also tabled before the committee.
In compliance with Section 4(2)(c) of the Inter-Governmental Commercial Transactions Act, 2022 and following the necessary instructions/directions given in the CCoIGCT decision, dated February 14, 2024, the Ministry of Privatisation solicited approval of the CCoIGCT for the terms of the commercial agreement, negotiated and finalised by the negotiation committee with the UAE-nominated entity EVE Holding RSC. It was informed that the Ministry of Law and Justice had also vetted the commercial agreement.
The CCoIGCT considered a summary titled "Privatisation of the First Women Bank Ltd (FWBL) under IGCT Act, 2022 – Approval of Terms and Conditions of Commercial Agreement" and approved the proposal.