MCB Bank aims to boost Islamic banking operations by acquiring 55% stake in Burj Bank

MCB Bank aims to boost Islamic banking operations by acquiring 55% stake in Burj Bank

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PAKISTAN: Following the country’s ambition to create stronger presence in the global Islamic finance industry, MCB Bank has announced several plans in line with the republic’s aims. In a recent notice to the Karachi Stock Exchange, MCB revealed plans to acquire a 55% stake in Shariah compliant Burj Bank. According to the bourse filing MCB has successfully reached an understanding with the majority shareholders of Burj Bank to invest in the latter’s new and existing shares. It will be carried out together with an additional investment by the Islamic Corporation for the Development of the Private Sector (ICD). Having struggled with requirements to meet the central bank’s minimum capital requirement (MCR), the investment scheme is structured in such a manner that will enable Burj Bank to meet the MCR of PKR10 billion (US$94.34 million). Apart from its acquisition plans, earlier this month MCB gained approval from the Central Bank of the UAE and the State Bank of Pakistan (SBP) to launch a wholesale banking branch in Dubai. MCB seeks to expand its foreign branch network to meet the increasing banking needs of global clients in the UAE. MCB currently operates in Sri Lanka and has presence in Dubai, Bahrain, Azerbaijan and Hong Kong. Industry reports have also revealed that MCB is looking to enter the African financial market by acquiring a bank in Kenya. As part of its expansion strategy, the bank also announced the establishment of an Islamic banking subsidiary. This has also been approved by the SBP and the present 27 Islamic banking branches of MCB will be merged into a new entity. The bank posted its 2013 results recording a 4% annual increase of PKR21.5 billion (US$202.83 million) in post-tax profit. MCB reportedly has a deposit base of approximately PKR545 billion (US$5.14 billion) with total assets of PKR766 billion (US$7.22 billion).