United Bank Limited (UBL) has successfully completed the sale of its 55 percent stake in United National Bank Limited UK (UNBL UK) to Bestway Group, having secured all requisite regulatory approvals.
“We are pleased to convey that the transaction for the sale of UBL’s shareholding in UNBL, after obtaining all the regulatory approvals, has been concluded,” stated the material information sent to the Pakistan Stock Exchange on Friday.
The decision follows UBL’s board meeting on September 11, 2023, where the board approved the “Indicative Offer” from Bestway Group (BG) to acquire UBL’s entire 55 percent shareholding in UNBL UK, a subsidiary. This transaction required regulatory clearances from both Pakistan and the UK.
Sana Tawfik from Arif Habib Limited highlighted that the divestment of up to 55 percent of UBL’s shares in UNBL UK represents a significant strategic move. As of June 30, 2023, the Risk Weighted Assets (RWA) of UNBL UK stood at Rs 339.2 billion, leading to a 200 basis points reduction in UBL’s consolidated Capital Adequacy Ratio (CAR).
“This divestment is expected to positively impact UBL’s CAR by removing UNBL UK’s risk-weighted assets, totaling Rs 339 billion, from UBL’s balance sheet. Additionally, with UBL’s anticipated higher profitability, it is projected that the bank will maintain a CAR exceeding 16 percent, compared to 14.8 percent recorded in the first half of CY23,” Tawfik noted.
The improved CAR provides UBL with the capacity to sustain its recent dividend payouts. UBL distributed Rs 44 per share in CY23 and Rs 11 per share in the first quarter of CY24, suggesting that the bank is likely to continue offering higher dividends to its shareholders following the sale of UNBL UK.
This strategic divestment allows UBL to streamline its operations and strengthen its financial position, reinforcing its commitment to delivering value to its shareholders while navigating the evolving financial landscape.
