Maybank buys into Pakistan
After asking last month whether the media should be more positive about Pakistan — the comments on the whole seemed to suggest we should be, while not being blind to the risks– it was interesting to see that Malaysia’s top lender, Malayan Banking, had no such doubts.
Maybank said it had bought a 15 percent stake in Pakistan’s largest listed lender MCB Bank for $680 million, the largest banking acquisition into Pakistan, as it bet on a bright economic future despite the recent political turbulence. It said the acquisition would give it access to “a high-growth and under-penetrated banking market with a large population”, and that it was confident about Pakistan’s political outlook.
Part of this is clearly due to the booming business in Islamic banking. Reuters Bahrain correspondent Mohammed Abbas, who covered a Reuters summit on Islamic banking and finance in February, tells me it is no surprise that a Malaysian bank would invest in Pakistan. Pakistani bankers basically run the Islamic finance industry in the Gulf and say Pakistan has done a lot to encourage Islamic finance. Since Malaysia’s Islamic banking industry is one of the deepest and most developed, and since Malaysian banks have been trying to build bridges with other Islamic lenders, Pakistan is an obvious place to go. “Given how active Pakistanis are in the industry, the fact that Malaysia is finding Pakistan fertile for expansion is logical,” he says.
So what is to be made of this Maybank deal? Was it born simply out of the growth in Islamic finance, fuelled by the oil money washing into the Gulf, and a South Asian approach to banking?
I noticed that Merrill Lynch’s Soofian Zuberi, who advised on the deal, said that Maybank and MCD are likely to seek future deals together and look for opportunities in Central Asia and the Middle East. “These are markets where there is a geographic and cultural proximity that both parties can work together on,” said Zuberi.