Bank Alfalah Withdraws Stake Acquisition Intent for Samba Bank

In a significant turn of events in the banking sector of Pakistan, Bank Alfalah Limited (BAFL) has officially withdrawn its public announcement of intention (PAI) to acquire a majority stake in Samba Bank Limited. This decision comes on the heels of the Saudi National Bank (SNB) halting its plans to divest its stake in Samba Bank, a move that has sent ripples through the financial community.

The State Bank of Pakistan (SBP) had previously granted BAFL in-principle approval to conduct due diligence on Samba Bank, which involved examining the bank's financial health and operations. This was in relation to BAFL's proposal to acquire approximately 84.51% of ordinary shares held by SNB in Samba. However, the situation took a sharp turn when SNB decided to terminate the sale process of its equity stake in Samba Pakistan.

In a notice to the Pakistan Stock Exchange (PSX), BAFL confirmed that it has submitted the withdrawal of its earlier PAI. The notice stated, "The withdrawal of BAFL’s PAI has been published in Business Recorder and Nawa-i-Waqt on November 14th, 2024." This indicates that the banking giant is now stepping back from its pursuit of Samba Bank.

On Tuesday, SNB made it clear that it would not proceed with the sale of its shares in Samba Bank. The bank stated, "We have been notified that after completion of due diligence and an exploration for the sale of its shares in Samba Bank Limited, the Saudi National Bank, as the majority shareholder of Samba Pakistan, is terminating the process for the sale of SNB’s equity stake in Samba Pakistan." This announcement has raised questions about the future of Samba Bank and its operations in Pakistan.

Earlier this year, in April, BAFL had expressed its interest in acquiring a majority stake in Samba Bank. Following this, the SBP granted approval in May for BAFL to conduct due diligence. It is worth noting that back in 2021, Samba Bank had received a firm intention from a consortium that included members of its management, Fatima Fertilizer Company Limited, and Gulf Islamic Investment LLC to acquire control of 852.040 million voting shares, which represented a significant portion of the bank's paid-up capital.

This recent development highlights the complexities and challenges involved in banking acquisitions, especially in a market as dynamic as Pakistan's. The withdrawal of BAFL's intention to acquire Samba Bank not only reflects the cautious approach of financial institutions in the face of changing market conditions but also underscores the importance of strategic decision-making in the banking sector. As the landscape continues to evolve, stakeholders will be keenly observing how these developments will impact the future of banking in Pakistan.