With Bank Makramah bid, the Essarani family may become the first Pakistani Hindu bank owners since Partition

In Pakistan’s banking industry, ownership changes usually follow a familiar script. A Gulf investor arrives with capital. A domestic industrial group tries to diversify into financial services. A bank with a damaged balance sheet searches for a sponsor with the money and patience to repair it. Regulators, wary of weak capital and poor governance, proceed slowly. Minority shareholders watch for a public offer. The State Bank of Pakistan, quite properly, makes everyone wait.

The proposed transaction at Bank Makramah Ltd has all of those elements. It also has one that is highly unusual in Pakistan’s post-Partition corporate history: the prospective buyer is a Hindu business family from Sindh. If the transaction is completed and if the group ends up with control, the Essarani family may become the first Pakistani Hindu family to own a bank since Partition.

That is not the formal issue before regulators. The formal issue is capital, ownership, fitness and propriety, and whether a new sponsor can strengthen a small Islamic bank with a chequered past.

Bank Makramah informed the Pakistan Stock Exchange on June 11 that its board had received expressions of interest from prospective investors and had granted in-principle approval to proceed with discussions with a consortium led by DM Holdings Ltd. The consortium has submitted a letter of intent to acquire a significant shareholding in Bank Makramah and to inject up to Rs26 billion of capital into the bank. Any investment will be subject to due diligence, negotiation of transaction documents, and corporate and regulatory approvals.