Telenor Group has announced that it has decided to sell its stakes in Telenor Microfinance Bank. According to their press statement, Telenor Group is considering options for its ownership stake in Telenor Microfinance Bank, and that a process to evaluate interested partners has been initiated.

Muslim Commercial Bank – Pakistan’s second-largest banking institution – is looking to acquire major stakes in Telenor Microfinance Bank, read a notification issued to Pakistan Stock Exchange (PSX). The notification explains that MCB will conduct due diligence of Telenor Microfinance Bank to purchase 55% of its shares.

The commercial bank has been granted an in-principle approval from the State Bank of Pakistan for a potential transaction of acquiring the targeted shares in the microfinance bank held by its parent company Telenor Pakistan (operates under the brand name of Easypaisa).

It bears mentioning that the bank witnessed the transition of ownership more than once in the past.

“Telenor Group is continuously reviewing strategic and structural options to ensure long-term value creation for its shareholders,” shared Lars Erik Tellmann, SVP, and Head of Mobile Financial Services, Telenor Group.

“Telenor Microfinance Bank has been driving digital innovation in the financial sector for more than 10 years and has firmly established its position as a leading Fintech company in Pakistan. A process to evaluate partners committed to support TMB’s long-term growth strategy has been initiated,” he added.

Also commenting on the development, Derek Hao, Country Manager of Pakistan, Ant Group, said, “Telenor Microfinance Bank has been innovating to offer inclusive digital financial services to its customers and its growth speaks of its success.”

“As a shareholder of Telenor Microfinance Bank, and together with Telenor Group, we will continue to support the Bank during this process as it brings innovative solutions to the market,” he added.

According to the press statement, Telenor Microfinance Bank will continue its operation as normal with Telenor Pakistan as a committed partner for TMB.

“There can be no assurance that a transaction will result from this process nor has any decision on the matter been made by the company. In the event Telenor is to enter into any transaction, the company will make the necessary disclosures,” the statement read.

Telenor Microfinance Bank was established in 2005 as Tameer Microfinance Bank. In 2009, the bank launched Pakistan’s first mobile banking platform Easypaisa, transforming digital payments in the country. Late in 2018, Ant Financial bought a 45% share of Telenor Microfinance Bank.

Telenor Microfinance Bank introduced branchless banking with the brand of Easypaisa and has expanded its business countrywide with innovative services, however, the financial performance of the microfinance bank has continued to slide.

According to the balance sheet, the bank maintained assets with the value of Rs. 50 billion but its losses continued unabated at Rs. 7.5 billion by the end of September 2021.

MCB Bank is the second-largest bank in terms of its network. The bank has maintained an expansion approach to scale up its operations. It not only acquired and merged the operations of NIB Bank in 2016 but it also set up a subsidiary of a specialized banking unit, MCB Islamic Bank. The commercial bank also expressed its intention to acquire SME Bank but the plan was revoked later on.

The proposed acquisition of the Telenor Microfinance Bank is likely to bring correction in the microfinance sector with the backing of a major bank, like Khushhali Bank is backed by United Bank Limited and First Microfinance Bank is owned by Habib Bank Limited with major shareholding.