BankIslami buys Citibank’s unit

Citibank accepts BankIslami’s offer for the acquisition of its housing and finance business portfolio.

KARACHI: Citibank has accepted BankIslami’s offer for the acquisition of the former’s housing and finance business portfolio worth approximately Rs1.1 billion, according to a BankIslami letter to the Karachi Stock Exchange on Monday. The acquisition is subject to approvals from relevant regulatory authorities, it said. It added that the acquisition structure is in accordance with guidelines provided by the Shariah adviser.

Mustafa Bilwani, an analyst at JS Global Capital Limited, said that the acquisition is a win-win situation for both banks. Citibank has been holding back while BankIslami wanted to acquire more businesses for which it had been looking at different options, he said.

For small banks, the situation is going to get tougher as the economy has become negative in general.

The minimum capital requirements (MCR) this year have also been increased to Rs7 billion from Rs6 billion by the State Bank which suggests mergers and acquisitions of small banks in coming months, he added.

Published in The Express Tribune, October 12th, 2010.