Pakistan- based MCB Bank is planning to set up its own wholly-owned Islamic banking subsidiary after it gave up its plan to buy Burj Bank.
MCB Bank has received the no objection certificate from the State Bank of Pakistan in January to establish the subsidiary.
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Following the set up of the Islamic banking subsidiary, all its Islamic banking branches will be merged to form an Islamic banking entity.
MCB said that the paid-up of the subsidiary will be PKR10 billion to comply with the SBP requirement as per the Islamic banking regulations.
Last month, MCB Bank has conducted a due diligence of Burj Bank in pursuance of its plan to invest and acquire 55% share in Burj along with merger of its Islamic banking division operations.
Upon completion of the due diligence process, the MCB said that said it would not proceed with the deal due to commercial reasons.
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By GlobalDataIn addition, the deal between the parties could not materialise due to the bad debt balance sheet of the Burj Bank.
Mubashar Bashir, head of corporate communications at the MCB, said: "Now in the float, we have to set up our full-fledged Islamic banking subsidiary because there were no financial synergies in the Burj Bank acquisition."
Burj Bank currently operates with 75 branches in Pakistan, while MCB operates the with 28 branches.
