Final PR
The Pakistan Credit Rating Agency Limited

Jhangeer Hanif

Muneeb Rashid

Applicable Criteria

  • Rating Modifiers | Outlook and Rating Watch (Jun 16) [View]

Related Research

  • Sector Study | Commercial Bank (Jun 17) [View]
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PACRA Maintains Rating Watch on NIB Bank Limited
 Rating Type Entity Debt Instrument
 Action Maintain 
 Long Term AA- 
 Short Term A1+
 Outlook Stable 
 Rating Watch RatingWatch - ✔

PACRA placed entity ratings of NIB Bank on Rating Watch on 13-Dec-16. This was done subsequent to the decision of BoDs of MCB bank and NIB bank regarding merger of NIB with and into MCB. In the recent development, at the extraordinary general meeting of the shareholders of NIB Bank on 11-May-17, the requisite majority of the shareholders of the bank have approved the scheme of amalgamation for the merger of the bank with an into MCB Bank in accordance with the provisions of section 48 of the Banking Companies Ordinance, 1962.

As per the notice of NIB Bank given on Pakistan Stock Exchange dated 14-Jun-17, State Bank of Pakistan has approved the amalgamation of NIB with and into MCB and that it will be effective as of effective date, to be announced separately.

Cognizant of this, PACRA is affirming the ratings of NIB as being on Rating Watch. Entity ratings of NIB would be withdrawn when NIB would seize to exist as an entity. While, TFC rating will be reviewed in line with profile of MCB.
About the Entity
About NIB:
NIB is a small sized bank, holding ~1% share in the total banking customer deposits as at end-Dec16. It operates a network of 171 branches. The Bank, incorporated in 2003 after a series of mergers, is currently majority (88%) owned by Temasek Holdings through its subsidiaries. In case of successful amalgamation, Temasek would have ~5.5% ownership in MCB.

About MCB:
MCB is the fourth largest bank in terms of its share in total customer deposits of the country (7% at end-Dec16). The bank is operating with 1,227 branches. MCB is majority owned by Nishat group (~38%), a prominent business conglomerate, having diversified interests in textile, cement, power, financial services, and insurance sectors. Malayan Banking Berhad (Maybank) of Malaysia, has 20% stake in MCB since May08. A set of prominent domestic industrial groups also own a sizeable stake in the bank.
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.