United Bank Limited (UBL) has expressed interest in acquiring Telenor Microfinance Bank by purchasing a majority stake in the company.
According to a notification released by the Pakistan Stock Exchange, the State Bank of Pakistan (SBP) has granted permission for the major commercial bank to perform an exercise of due diligence on Telenor Microfinance Bank in order to acquire 55 percent sponsorship shares owned by Telenor Group.
UBL is now conducting due diligence on two banks, Samba Bank Limited and now Telenor Microfinance Bank, as part of its aggressive approach to business expansion through the acquisition of shares in the two banks. However, the bank is up against competition from other banks, such as MCB Bank and Askari Bank, who are planning to acquire shares in the same institutions and are conducting due diligence procedures with the banking regulator’s consent.
Aside from the ongoing war for high profitability and network development, the bank appears to be engaged in another conflict with rival institutions. UBL, on the other hand, has prior expertise in the microfinance business. It also holds 29.7% of Khushhali Microfinance Bank, the country’s largest microfinance institution.
With a profit of Rs. 21 billion in the first three quarters of 2021, the bank has maintained remarkable profitability, up 41% over the previous year. Inside Pakistan, the bank has 1,344 branches, including 114 Islamic Banking branches and two banks in Export Processing Zones. It also has 11 locations outside of Pakistan.
Telenor Microfinance Bank began as Tameer Microfinance Bank in 2005. In 2009, the bank launched Pakistan’s first mobile banking platform, Easypaisa, which revolutionized the country’s digital payments. Ant Financial purchased a 45 percent stake in Telenor Microfinance Bank late last year.
The Telenor Microfinance bank had assets worth Rs. 50 billion, according to the balance sheet, but losses remained uninterrupted at Rs. 7.5 billion until the end of September 2021.
Telenor Microfinance Bank developed branchless banking under the Easypaisa brand and has extended its business across the country with innovative offerings, but the microfinance bank’s financial performance has continued to deteriorate.
