KARACHI - The bidding price for the acquisition of 99.37 per cent shareholding in Royal Bank of Scotland Pakistan is estimated to be valued at $225-250 million, which shows $163 million increase from the earlier price of $87 million set to be paid by the acquirer (MCB) last year. Talking to The Nation, Bilal Asif, a Banking Sector Analyst from Metropolitan Securities said the RBS, Pakistan could earn a meager level of premium over its book value compared to the previous calendar year despite the fact that the profitability of the banking sector declined by 21 per cent in 2009. Therefore, keeping in view the current value of RBS share being traded at Rs15.94 at the local equity market, the transaction price may materialize at Rs14.5/share. The bidding for the purchase of RBS, Pakistan is reportedly to be scheduled at the end of this month. It may be mentioned here that along with Faysal and EFG-Hermes Banks, Soneri Bank had also expressed interest in buying the stakes of RBS. It had applied to State bank to commence the due diligence on RBS, Pakistan. However, Soneri Bank, according to some sources, could not obtain the due diligence permission from the State Bank due to its financial and operational incapability to buy and run such an entity like RBS, Pakistan. After disqualified Soneri Bank from the due diligence, the bidding competition will be happened between the two interested investors, Faysal Bank Limited ,a medium-sized local commercial bank and EFG-Herms, Egypts premier investment banking firm and brokerage services provider. According to market intelligence and estimation, Faysal Bank is in better position to successfully win the bidding of RBS on asked price as compared to its Egyptian-based competitor on account of having some existing and potential market edges against the EFG-Herms Bank. Both parties can offer different offer price at the bidding, which will be much dependent on the security and balance sheet positions including loss/profit, asset and liabilities and deposits size of the interested investors. It is important to note that the present CEO of the Faysal Bank, Naveed A Khan has been associated with ABN AMRO Bank as a head of its core banking operations department. It is also worth noting that when he joined Faysal Bank he took the entire core management team of ABN AMRO to FABL. In this background, he can productively utilize and cash his past working relationships with the senior management of the RBS based in Asia Pacific in turning this deal in his favour. However, EFG-Hermes can offer heavy price for the RBS bid as it has ability to generate additional liquidity for the deal that would be in foreign currency (dollars) and if the estimated bidding and share price ($250m) multiplies with Pak rupee it would be valued at $21. Nonetheless, FABL will have very short rooms available for raising extra funds unless it announces issuance of right shares to be injected into the finical system of the bank after taking over the operational control of RBS, Pakistan. Moreover, EFG-Hermes can succeed in bidding by offering hefty amount for the bidding but being a new entrant (foreign) into the Pakistans financial market, it will have to get the banking license from the SBP which currently SBP has stopped to issue to the foreign investors.