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ALLIED BANK LIMITED

ALLIED BANK LIMITED Allied Bank Limited was one of the five state-owned domestic commercial banks to emerge from the nationalization of 1972 It was the second bank to be privatized by the government of Prime Minister Nawaz Sharif The privatization of the first nationalized commercial bank, the Muslim Commercial Bank, had led to a court battle between two interested parties This dispute earned a measure of skepticism for the entire privatization effort of the administration An impression was created that the Privatization Commission, headed by Lieutenant General (retired) Saeed Qadir, was neither able nor prepared to resist the government’s pressure to transfer publicly owned assets to the friends and associates of the prime minister In handling the privatization of Allied Bank, therefore, the Commission adopted a different approach It accepted the offer of the bank’s employees to purchase it The employees had campaigned hard to convince the government that their offer, made under the Employee Stock Ownership Plan (ESOP), would help to win back public confidence in the government’s privatization scheme The government took this advice and handed over the bank to its employees Privatization was completed in the fall of 1991, but the government continued to hold a sizable share of the institution’s capital



In the 1992-1993 financial year, the bank reported an impressive turnaround in terms of the return on assets and the cost of doing business from when it was under the control of the government Its performance under the management of Khalid Latif was cited as an example of the benefits that accrued to the economy, from the privatization of publicly owned financial institutions The change of government in October 1993, which saw Benazir Bhutto return to power in Islamabad as prime minister, proved difficult for Khalid Latif, the bank’s president and the person who had negotiated the privatization deal with the Privatization Commission The government used its leverage as a large shareholder to remove Latif from office and to appoint a president whom it could influence and work with Latif was sent to prison, accused of conspiring to defraud the government He was denied bail by the courts and spent five months in jail before he was able to win his release The shares held by the government were liquidated in 2004 as a part of the program of privatization implemented by the government of President Pervez Musharraf

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