yazdi
November 23, 2012, 6:14am
54
Re: Bilawal to step into electoral politics on Dec 27
**Here is dubious sale of UBL, which was running in profit before privatization. Yet another untrue and misguiding statement by you. The bank was fornicated and made it purposely bankrupt during N$ and BB tenure before privatized. It was very much running in profit till 90’s, yet proving your statement regarding nationalization as a big lie.
**G: UBL Privatization Bid for 21465659 Who Owns Pakistan
In September 91, Chairman, Privatization Commission, Saeed Qadir hasspeculated in an interview with Sabih uddin Ghausi of Daily DAWN that UBLcould fetch a price of Rs150 per share, against Rs 70 of ABL and Rs 54 of MCBbut in 1996 it was sold to a dubious group for Rs 15 per share. Such a big fall insuch a short time could happen only through a determined effort by thecontrollers of the bank to bankrupt it before its privatization. That a sustainedeffort was made by the govt. to bankrupt the bank before its privatization is alsoevident from the annual balance sheets of the bank.
UBL earned Rs 236 million profit in 1991, Rs 258 million in 1992 and Rs 275 in1993 which went down to Rs 59 million in 1994 and gave a loss of Rs 720 millionin 1995. During three years of Benazir govt. overdue advances jumped from Rs12 billion to Rs 18 billion and 30 loans worth Rs 2 billion were rescheduled,scores of loans were written off.
In 1996 UBL had 3,000 ghost workers, Rs 700 million per annum was beingspent on the union whose office bearers were in possession of 190 bankvehicles. The employees of the bank had extracted unrecoverable loans worthRs 800 million. The bad loans amounted to Rs 17 billion (25% of all advances)and the bank was working with a net negative worth of Rs 12 billion. It was forthis reason that Consultant Credit Lyonnais, Deloitte Touche Tohmatsu andKhalid Majid Hussan Shah Rehman had recommended " that the bank can notbe sold without the govt. first pumping in at least Rs 15 billion to make it a viableoperation."
**Without taking into consideration the recommendation of Credit Lyonnais, thePrivatization Commission decided to dispose of UBL on "
As is, where is basis
",and invited bids on Oct 6,1995. Eight bids were received. Six were rejected onthe ground that the bidders did not have the required capital worth of Rs 1,500million or were defaulting on loans. Surprisingly those who were disqualifiedincluded Saigols, Atlas-Bank of Tokyo and a consortium of Crescent and Dewangroups. The Crescent-Deewan joint bid was rejected on the ground that theywere defaulting in the payment of a loan obligation.
After a charade of negotiations during which Chairman of the PrivatizationCommission made a pilgrimage to Saudi Arabia, the bid of dubious Basharahillwas accepted at Rs 15.30 per share. However the deal had to be called off whenit was found out that even the earnest money of Rs 300 million was madeavailable by Muslim Commercial Bank and was deposited by Sikandar Jatoi.
**
Your post already clarifies why some of the bids were rejected. The financial statements which showed nominal profit for UBL did not account for huge Non performing infected portfolios of UBL. This was the reason the government of Pakistan had to inject 22 billion rupees as further equity before privatization of UBL. The new sponsors also promised to inject another 22 billion after the privatization which was subsequently done. No other bidder was in a position to inject such a hefty amount to consolidate the health of the bank after paying 15/16 billion for 25% management shares of UBL. UBL was handed over to the most deserving and reputed management consortium of Sir Anwer Pervaiz and Al Nahiyan group of Abu Dhabi.
Post privatization performance of UBL fully justified the decision to hand over the bank to the present management..