KARACHI - The race is on by the foreign and local investors to acquire business operations of the Royal Bank of Scotland (RBS Pakistan). Soneri Bank Limited, another financial institution from the domestic banking sector after Faysal Bank, has also expressed its intention to buy major stakes in RBS Pakistan. It may be mentioned that a leading Egyptian Investment Bank, EFG-Hermes, has also showed its interest to acquire RBS Pakistan that is according to a media report, is a subsidiary of Egypt-based Orascom Telecom Company. According to a communique of the bank dispatched to KSE here on Monday, the BoD of Soneri Bank Ltd (SBL) in the meeting held on February 08, 2010, authorized President/Chief Executive of the Bank to convey expression of interest on behalf of the bank for acquisition of controlling shares of operations in RBS-Pakistan and fulfil the regulatory/statutory requirements in this regard. The SBL further said it would be seeking the approval of the SBP to proceed with the due diligence of RBS once it has submitted the requisite application to the SBP for that purpose. The capital (MCR) of the Soneri Bank is around at Rs5.7-5.9 billion will increase to Rs6 billion in the annual financial accounts of calendar year 2009 after 20 per cent right shares issued by the bank last month. The 2009 financial statements of SBL are yet to be announced by its BoD in the upcoming annual meeting that is scheduled to be taken place soon. Kamran Rehmani, banking sector analyst at FECL, while talking to The Nation said that the capital position of the Soneri Bank would improve in the quarters to come as SBL has sufficient reserves to issue bonus payout to their shareholders. Therefore, its MCR is expected to surge to Rs7 billion by the year 2010. It may be recalled that Soneri Bank on Dec 24, 2009 had announced that it would issue 20pc of its right shares at par to enhance its paid up capital. It also said the letter of rights to the physical shareholders would be issued on Jan 4, 2010, while the allotment would be done on March 19, 2010. It is pertinent to mention here that since the beginning of calendar year 2009 the balance sheet of SBL has been facing some losses as its profit plunged to just Rs116 million in Jan-Sept 2009 from Rs716m in the same period of last year. The analyst was of the view that SBPs requirement of increasing capital (net of losses) by Rs 1.0 billion during the year (as part of MCR) is likely to create further room for absorbing potential losses. The MCR may also pave the way for more mergers and acquisitions. On the one hand, domestic banking sectors financial stability and its capacity to get quick resilience from the capital, operational, credit and liquidity setbacks and high spreads are forced leading foreign financial players to invest into the banking industry of Pakistan, on the other hand, some medium-to- small- sized local banks on account of strengthening their capital base, are also planning to take one of the following available options: 1) To be merged with into financially strong banks 2) To acquire on-sale banks, and to issue right shares in order to mobilize funds with an intention to compliance with the paid -up capital requirement set by SBP for the banks operating in Pakistan., analyst added. It is important to note that a total of 13 out of 36 commercial banks, working in Pakistan, found non-compliant with the SBP Minimum Capital requirement (MCR) of Rs 6 billion that was to be achieved by the banks in CY09. Bank-wise summary revealed that 6 local commercial banks in private sector and 4 Islamic banks were also proved unable to meet the MCR within the given period of time. As per the statistics available with The Nation, two private banks have already brought in money from sponsors in the form of advance against Right Share Issue. Besides, 6 private banks including Islamic Banks are in the various stages of the process of merger/acquisition to improve their capital position. Moreover, 2 private banks are in the process of completing formalities of Right Shares Issuance.