Mian Mansha: patriarch and perfectionist
Mian Mansha: building a business empire amid social and political turmoil
Nishat’s plans to list in London
Nishat: investing in Pakistan’s infrastructure
MCB gets a foreign stakeholder
Mansha’s company’s fortune has been built slowly, and with the strategic and financial support of an array of wealthy Chinioti families. MCB Bank – founded in 1947, nationalized in 1974 and reprivatized in 1991 – is no flash-in-the-pan lender. MCB’s asset base has been steadily accumulating capital over the past 17 years, turning it into the country’s leading private lender. This steady-as-she-goes attitude toward expansion is likely to appeal to investors in today’s climate. Mansha is no fan of the flighty financial system that wrought the current credit crunch, or of the expansion-at-all-costs attitude of the banks that got us in this mess. “We need to get back to the good old days,” he says. “The way that banks used to work – the likes of [the UK’s] Barclays or NatWest – was much better. [Troubled US lender] Citi isn’t a bank any more – it’s just a hedge fund.”
The focal point of Nishat Group is MCB, the best financial service provider in the country and Pakistan’s largest private bank. With cash of Rs60.7 billion ($780 million) at the end of June 2008 – a year-on-year increase of more than 50% – MCB has also managed to outperform the Karachi Stock Exchange, not bad going in a year in which financial services companies have been pummelled around the globe. It also posted small annualized gains in non-interest income and post-tax earnings in the first half of 2008.
But the big news for MCB this May was the sale of a 15% stake, for $680 million, to Maybank. The Malaysian lender in August bought a further 5% stake in its new partner, for $213 million. Overnight, the deal turned MCB into a big player in the fast-growing Islamic banking and Islamic finance markets – key areas of growth for Mansha and his flagship lender.
But that is just the start. With the backing of Maybank’s extra capital and Islamic finance skills – and with many lenders under the cosh because of the credit squeeze – Mansha and MCB are aggressively pursuing undervalued foreign banking assets. “Alongside Maybank we are putting together a business strategy that will expand our customer base in many countries – Russia, central Asia, the Middle East and Africa,” says Mansha. “We are even looking at acquiring a bank in either of Europe or the US.
“Maybank has more capital and better technology but we have 7.5 million Pakistani expatriates living all over the world, and we have already applied for a banking licence in Toronto. We have a budget of around $1 billion to buy a bank as far afield as Brazil, and we are looking at potential banking acquisition possibilities in the likes of Kazakhstan.” That latter bid is for the country’s seventh-largest bank by assets, Temirbank, say sources close to the Kazakh lender.
“Maybank is a great deal for us,” says MCB’s president and chief executive, Atif Bajwa. “It brings us together with a very credible banking player in Asia, and a major player in the Islamic banking sector. We are interested in pursuing acquisitions alongside them and we would also like to be more present in the Gulf – in the UAE, Saudi Arabia and Kuwait – as well as French-speaking Africa and Egypt. In the longer term, we are looking at China too.”
Bajwa says MCB is looking at foreign acquisitions worth “perhaps $1 billion to $2 billion. Capital is not a hurdle for us – we’re actually overcapitalized at the moment so we can either buy something or return cash to shareholders.”
Mansha adds: “With all of the changes in the banking sector happening right now, there will be lots of opportunities coming up as the world grapples with the credit crunch. There will be lots of opportunities out there for us.” There is certainly huge scope for growth in Islamic banking – and with Maybank’s experience of operating in Malaysia’s strongly Muslim market, MCB hopes to be able to compete directly with Meezan Bank, Pakistan’s largest Islamic lender.
“MCB and Maybank can learn from one another,” says Soofian Zuberi, co-head of Asian equity capital markets at Merrill Lynch in Hong Kong, and one of Mansha’s main financial advisers. “Maybank can benefit from MCB’s management and connections across the Middle East. MCB can learn from Maybank, which has probably a higher level of technical sophistication, better Islamic banking offerings, and which has been pushing the envelope – for instance, by putting ATMs in mosques.”
