Forex-PK

20 May 2009

KARACHI: An Islamic bank is said to have started an evaluation process to buy housing finance portfolio of beleaguered Citibank in Pakistan, which has been in search of a prospective buyer for some time now.

BankIslami Pakistan Limited has started due diligence of Citibank consumer housing finance portfolio, said its notification issued to the stock exchange on Tuesday. This acquisition is subject to necessary due diligence, mutual agreement between BankIslami and Citibank and approvals from the Board of Directors and relevant regulatory authorities, it said. BankIslami did not say how conventional housing finance products will be merged into the Islamic mode of banking.

Citibank, which has pioneered consumer financing in Pakistan, had been having a hard time convincing its bosses in the US about the reasonability of keeping the housing portfolio, an official close to the matter said.

International head office wants immediate returns on financing products, the official said. This is the reason Citibank does not want to keep that portfolio anymore. It even tried to convince Barclays to buy it but that did not work.

Citibank Pakistan has been tightening noose around its consumer products in tandem with the international operations. Citibank had around 150,000 credit card customers but bad book cards have been closed. Now it manages portfolio of 80,000 to 100,000 credits. Soon after Citibank started announcing losses in US during the international financial meltdown, rumours made rounds that the bank might offload its credit card portfolio. However, that never happened. BankIslami has a network of over 100 branches across the country and analysts say acquiring Citibank portfolio will give it edge over other banks.