Bank Alfalah Bangladesh receives acquisition proposal from Sri Lanka’s HNB

Business Desk :

Bank Alfalah has received a non-binding offer from Hatton National Bank (HNB) of Sri Lanka to acquire its Bangladesh operations.
Earlier, the Pakistani bank received the same non-binding offer from Bank Asia Ltd.
The board of directors of the bank accorded its in-principle acceptance of the offer received from HNB to acquire its operations, assets and liabilities, subject to compliance with all applicable laws and regulations and obtaining necessary and regulatory approvals.
“We will now seek approvals from the central banks of Pakistan and Bangladesh for HNB to commence due diligence on Bank Alfalah, Bangladesh Operations,” Bank Alfalah informed further in its latest filing on PSX on Monday.
A senior official of Bank Alfalah said that “The offer does not mean that the sale will be made here. The management will review the offers coming to them and take the final decision.”
A policy making officer of Bank Asia said, “Bank Alfalah signed a non-binding MOU with us. We have already received an approval from the Bangladesh Bank to associate with the bank. Now that another bank has made an offer, it does not mean that we have deviated from our plan. We will have talks with Bank Alfalah and take further steps accordingly.”
In April this year, Bank Asia made a move to acquire the Bangladesh operations of Bank Alfalah. If the deal goes through, it will be Bank Asia’s third acquisition of foreign bank assets in Bangladesh.
Bank Alfalah’s board of directors approved, in principle, the non-binding indicative offer received from Bank Asia to acquire its operations and asset liabilities, according to a Bank Alfalah notice issued on the Pakistan Stock Exchange on 17 April.
The deal is subject to compliance with all applicable laws and regulations and obtaining necessary regulatory approvals, Alfalah informed its shareholders.
The notice mentioned that Bank Alfalah will now seek approval from the State Bank of Pakistan for Bank Asia to initiate due diligence on Bank Alfalah Bangladesh.
Bank Alfalah started its operations in Bangladesh in 2005 by acquiring the Dhaka branch of Shamil Bank of Bahrain. It now has a balance sheet of over Tk3,100 crore and seven branches in Bangladesh – five in Dhaka, one in Chattogram and the other one in Sylhet.
In 2023, the foreign bank’s Bangladesh operations made an operating profit of over Tk68 crore and after all provisions and taxes, the net profit stood at over Tk43 crore.
As per its audited financial statement, Bank Alfalah’s shareholders’ equity stood at over Tk618 crore by the end of December 2023, surpassing the operational unit value of Tk505.56 crore received from the head office.
Bank Alfalah is one of the largest banks in Pakistan, with a network of over 1,024 branches across more than 200 cities in the country, and an international presence in Afghanistan, Bangladesh, Bahrain, and the UAE.
Bank Asia, starting in 1999, acquired Nova Scotia in Dhaka in a pioneering move by local banks to acquire a foreign bank’s Bangladesh assets. Later, it acquired the Bangladesh operations of Muslim Commercial Bank Ltd (MCB), another Pakistani bank.
According to investment bankers, the anticipated acquisition, to be succeeded by a merger, hinges on obtaining the requisite approvals from boards, shareholders, and regulators. Meanwhile, thorough due diligence and negotiations regarding the deal value would constitute integral aspects of the process.
Bank Asia, having a total asset of over Tk47,780 crore, disclosed shareholders’ equity of Tk3,061 crore at the end of September last year. For the first nine months of 2023, it posted a net profit of Tk382 crore after all taxes and provisions.
As a major facilitator of financial inclusion in Bangladesh, Bank Asia pioneered agent banking services a decade ago and that helped the bank see over 5,000 outlets and more than 50 lakh customers across the country.
Alongside 136 full-fledged branches, Bank Asia has 15 sub-branches, several SME and agricultural branches and 219 ATM booths, according to its website.