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. INTRODUCTION

4.1 CENTRAL BACKGROUND INFORMATION

ABN-AMRO is a Dutch bank and stands for Algemene Bank of Netherlands- Amsterdam

Rotterdam. ABN-AMRO deals with both Corporate Banking and Consumer Banking. It is

one of the top global banks renowned for its personalized service, innovative products and

services and state of-the-art technology. ABN AMRO ensures a prompt reply to all its

customer queries through its 24-hour Phone Banking service. It also provides a full range of

products including Deposit Accounts, Personal Loans and Home Loans.

For over 50 years, ABN AMRO has prided itself on being a trusted partner to the people of

Pakistan. It is their unique commitment to absolute service excellence that drives them

forward. They are beginning this year with a Celebration of Service Excellence and what it

means to their customers, being a part of the ABN AMRO family. Their global strength

enables them to provide a complete range of financial products and expertise.

4.2 COMPANYS BACKGROUND

ABN AMRO, a prominent bank of international repute has its origins going back to 1824. It

ranks 11th in Europe and 23rd in the world with over 3,400 branches in more than 60

countries, a staff of about 110,000 employees and total assets of EUR 639.9 billion (PKR

45304.92 million) (as at 31 March 2004). ABN AMRO is 8th largest bank in world and 6th

largest in Europe. Excellence of service to its clients and leadership in the chosen markets are

of paramount importance to their long-term business success. The worldwide headquarter of

ABN AMRO is located in Netherlands. It has a set-up of network in different countries

worldwide. ABN AMRO was established in Pakistan in 1948 and was the first foreign bank

to be granted a license by the Government of Pakistan. ABN AMRO is placed and well

positioned as one of the largest foreign banks in Pakistan. Over the last four years, ABN

AMRO has significantly enhanced its profile in Pakistan, and is comfortably ranked amongst

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the top 3 foreign banks in the domestic market. The Bank currently has a presence in 3 cities

namely, Karachi, Islamabad & Lahore and employs 349 employees countrywide. There are

three branches in Lahore three in Karachi and one in Islamabad. Its country head office is

also located in Karachi. It plans to open another branch in Rawalpindi by the end of this year.

Their corporate values include integrity, respect, teamwork and professionalism.

Mission of ABN-AMRO

We strive towards service excellence.

ABN-AMRO is known in Pakistan for offering exceptionally high quality services to its

customers, as evident from their slogan, Experience the Difference

5. COMPANYS ANALYSIS

5.1OPERATION ANALYSIS

There are 9 departments in all at ABN AMRO. They are:

Assets Department (Sales Dept.)

Credits Department

Collection Department

Administration Department

IT department

Economics department

Operation department

Van Gough

Corporate Department

Every department has coordinators and specialists, who report to their respective managers.

The manager reports to the country head of that department. The country head then reports to

the president. The bank has maintained an extensive database, which caters for the

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requirement of the companys various operations.ABN AMROs earnings from operations

are affected by uncertain or unfavorable prevailing economic conditions and the conduct of

monetary and fiscal policy by the Dutch government and by governments in other countries

in which it does business. In Pakistan the bank is subject to supervision and examination by

federal and state banking authorities. It is supervised and examined by the State Bank of

Pakistan. At ABN AMRO the management establishes an environment that fosters strong

controls and designs business processes to identify and respond to risk. Management

maintains a comprehensive system of controls intended to ensure that transactions are

executed in accordance with managements authorization, assets are safeguarded, and

financial records are liable. Management also takes step to see that information and

communication flows are effective and to monitor performance, including performance of

internal control procedures. ABN AMRO provides full-service banking, lending, and

investment services in Europe, Middle East & Africa, Asia, Australia and North and South

America through more than 3400 branches in 60 countries and territories. It provides

personalized wealth management services for high net worth clients, generating fee and

interest income from investment funds management and customer trading activity, trust and

fiduciary services, custody services and banking and lending activities. Its Relationship

Managers and Product Specialists use their knowledge about their clients individual needs

and goals to bring them an array of personal wealth management services. ABN AMRO

maintains adequate reserves for probable credit losses inherent in its loan portfolios.

FINANCIAL ANALYSIS

ABN AMROs highest revenue generating department is Assets Department, which includes

mortgages (Home Finance) and loans such as Balance Transfer Facility (BTF) and Personal

Installment Loans (PIL). Every department is given targets, which have to be met in a

specified time. ABN AMRO is extremely active in the Financial Institution segment in

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Pakistan. Its target markets under this business line include domestic Commercial Banks,

Leasing, & Insurance companies, Development Finance Institutions and Investment Banks.

The current ratio is 1.1, which means the current assets are 1.1 times large as its current

liabilities, and indicates that organization has strong debt-paying ability.In the year 2003-

2004 the organization enjoyed a profit of around RS 1.5 Million. With the well-defined and

strong strategy of the organization is aimed at maintaining high level of professional

standards and also to optimize the financial resources to respond effectively to the rapid

changes in the financial sector.Return on equity is 46.16%. The return on equity is very high.

This suggests that management has financed assets in a manner advantageous to customers.

Return on equity raised which indicates that resources are being used efficiently as well as

generating higher returns to customers. Cash management is a core business for ABN

AMRO. Commitment to service quality and an ability to adopt new technologies are the

components of ABN AMROs Cash Management strategy. Their experience in the local

Pakistani market along with their ability to provide global solutions enables them to offer a

full range of cash management products and solutions. These products are aimed to help

maximize resources while providing you with value-added solutions to meet your needs

.ABN AMRO operates as a branch of a foreign entity. Since it is not registered therefore, it

does not have to share capital. Hence, basic and diluted earnings per share cannot be

calculated. Time-interest earned ratio is 4.38% against the industry average of 6%. This

means that it is covering its interest charges by a high margin of safety. Abn AMRO is

cashing on its name and like other foreign banks it has developed a niche for itself. Since

majority of its clientele comes from the upper class it has succeeded in increasing its deposits

and equity by fourfold.

Acquisition with Faysal bank

Faysal Bank Limited and the Royal Bank of Scotland Pakistan (formerly known asABN AMRO Bank N.V.) on Wednesday confirmed signing of an agreement, which

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will allow FBL to take over local operations of RBS, upon regulatory approval. In aseparate notices issued to Karachi Stock Exchange the other day, it was stated thatFBL will acquire 99.37pc holding of RBS Pakistan for a total consideration of EUR41million ($50.3m) which culminates in a share price of Rs2.5. In the local currency thisamount stands at Rs4.298 billion. The transaction is expected to complete in third

quarter of 2010.RBS Pakistan has 1,717,981,391 ordinary shares listed on theKarachi Stock Exchange, the Lahore Stock Exchange and the Islamabad StockExchange. In a statement issued by RBS here on Wednesday, MuhammadAurangzeb, Chairman of RBS Pakistan said, We have successfully entered into asale agreement with Faysal Bank for RBS Pakistan which comprises of retail,commercial, Islamic and onshore GBM and GTS businesses in Pakistan. FaysalBank will be an excellent owner of the strong customer franchise we haveestablished here in Pakistan. I am particularly pleased that our staff and customerswill become part of one of the country progressive and growing banks which hassuch clear ambition to grow further in the local banking and financial services sector. President& CEO of Faysal Bank Naved A. Khan said: The acquisition will

significantly contribute to Faysal Banks development and will be a major catalyst inachieving our growth strategy. Whilst expanding our geographical footprint, touchpoints, customer base and product portfolio, this acquisition will boost our ability toraise the bar of our service levels. Further, employees of the combined entity couldhave potentially greater career opportunities and development options.

Faysal Bank

Faysal Bank started operations in Pakistan in 1987, first as a branch set-up of Faysal Islamic Bank of Bahrain and then in 1995 as a locallyincorporate Pakistani bank under the present n am e of Fa ys al Ba nkL imi ted . On January 1 , 2002, A l Faysa l Inves tment Bank L imi ted ,another group entity in Pakistan, merged into Faysal Bank Limited which resulted ina larger, stronger and much more versatile institution. In fact it has thehighest share capital amongst private banks in Pakistan and is amongstthe largest in terms of equity. Faysal Bank Limited i s a f ul l se rv ic ebank ing ins t i tu t ion o f fe r ing consumer , corpora t e and inves tmentbank ing facilities to its customers. The Banks widespread and growing network ofbranches in the four provinces of the country and Azad Kashmir, together withits corporate offices in major cities, provides timely and di ff er en ti at edserv ices in an e f fec t ive manner . The s t rength and s tab i l i t y o f

Faysal Bank Limited is evident through the Credit Rating assigned byJCR-VIS Credit Rating Company Limited ofAA (Double A) for long tomedium term and A-1+ (A One Plus) for short term. The majorityshareho ld ing o f Faysa l Bank L imi ted is he ld by I thmaar BankB. S. C an investment bank listed in Bahrain. The remaining shareholderscomprise of general public, NIT and other Pakistani institutions.

VISIONExcellence in all that we do.

MISSIONAchieve leadership in providing financial services in chosen markets through

innovation.

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Group InformationIthmaar Bank B.S.C. is licensed by the Central Bank of Bahrain and listedon the Bahrain Stock Exchange (ITHMR). It has a paid-up capital of US$360million, total equity of US$1.1 billion and is a full investment bank with itsdirect business covering the Middle East and No rt h Af ri ca (M EN A)

reg ion , as we l l as South As ia , As ia -Pac i f i c and Europe. Bes idesholding significant investments in the banking, financial services and realestate sectors ind i f f erent market s , the main act iv i t ies of the Bankinclude underwri t ing (equity and other f inancings), pr ivateequity (structuring, participation and portfolio management), Islamicfinancing, private banking, and advisory services covering projectfinancing, investments, capital markets and mergers & acquisitions.

Capital and OwnershipThe majority shareholding of Faysal Bank Limited is owned by companiesof the DarlM a a l A l I s l a m i T r u s t ( D M I ) i n c l u d i n g S h a m i l B a n k o f B a h r a i

n E . C . T h e r e m a i n i n g shareholders comprise of the general public, NIT andother Pakistani institutions. The Bank's shares are quoted on the Karachi and LahoreStock Exchanges