United Bank Limited

United Bank Limited is a Pakistani commercial bank founded by Agha Hasan Abedi, who built it into the second largest bank in Pakistan before founding the Bank of Credit and Commerce International (BCCI) in 1972. The government of Zulfikar Ali Bhutto nationalized it under the Banks (Nationalization) Act, 1974, and in 2002 the government sold a controlling stake to the Abu Dhabi Group and Bestway Holdings.¹²³

Founding

A 1982 internal BCCI history by Khusro Karamat Elley recorded that "in 1958 he left Habib Bank and was able to get together Investors to form a new bank to be known as United Bank," and that the central bank, which licensed it, "was quite happy with Mr. Abedi's statements that he wanted to make this the largest bank in Pakistan." The Kerry-Brown Senate report dated its formation to 1959. According to Elley, "within ten years, United Bank became the second largest bank in Pakistan," with branches overseas "in quite a few countries including the Middle East."¹

When the bank was formed, Abedi appointed as chairman of its board I. I. Chundrigar, a former prime minister of Pakistan and a close confidant of Ayub Khan, and he later hired Ayub Khan's minister of information as "publisher" of a BCCI promotional magazine, South.¹ Abedi had secured the account of the Saigol family, one of Pakistan's leading industrial groups, at Habib Bank, and took it with him to United Bank, "making the Saigol's United's principal shareholders." Price Waterhouse later attributed the family's loyalty to "Abedi's willingness to reschedule millions in loans to the Saigols whenever they found it inconvenient to repay them." The report found that through such relationships Abedi built United Bank into the second largest bank in the country, "complete with a protocol department responsible for taking care of the personal needs of VIPs," and that he served as its founder, president and chairman.¹

Abu Dhabi

By one account, reported by Najam Sethi in The Wall Street Journal, Abedi flew to Abu Dhabi in 1966 with one assistant and an oriental rug to seek the right to take deposits from the Pakistani workers employed there, and obtained Sheikh Zayed's permission for United Bank to open a branch. By a second account, from Kochan and Whittington's Bankrupt: The BCCI Fraud, Abedi won over Zayed by arranging his first bustard hunting and falconry trip in Pakistan, waiting outside the government guest house while the Sheikh napped. By 1967, according to the Senate report, Abedi was running the Sheikh's financial life.¹

The report also found that BCCI's handling of prostitution for the Al-Nahyan family "was carried over from practices originally instituted by Abedi at the United Bank," working with Begum Asghari Rahim, and that BCCI's protocol department operated "first at the United Bank and later at BCCI."¹⁴

Nationalization

According to the Senate report, from the time Bhutto took power he threatened to nationalize the banks, and when he learned that Abedi had begun forming BCCI outside Pakistan, "he not only went ahead with plans for nationalizing the United Bank, but promptly placed Abedi under house arrest."¹ The Banks (Nationalization) Act, 1974 (Act XIX of 1974), "shall be deemed to have taken effect on the 1st day of January, 1974," and overrode any contrary law, contract or articles of association. Its schedule of fourteen nationalized banks listed United Bank Limited as item ten, with Habib Bank, the National Bank of Pakistan and Muslim Commercial Bank.² The Senate report found that nationalization supplied BCCI with "a group of like-minded Pakistanis to operate the bank."¹

Privatization

On September 5, 2002, the Abu Dhabi Group and Bestway Holdings bought a 51 percent stake in the state-run bank for 12.35 billion rupees (208 million dollars), as the only bidders in the final stage of an auction held by the government's Privatisation Commission; Muslim Commercial Bank and Union Bank, which had taken part earlier, made no new offers. The government had rejected the Abu Dhabi Group's earlier offer of 12.30 billion rupees. Reuters described United Bank as Pakistan's fourth-largest bank, with 1,101 branches and a nine percent market share; non-performing loans stood at 13 to 14 percent of its 88 billion rupees in loans on December 31, 2001, after government injections of 29 billion rupees over three years. Privatisation Minister Altaf Saleem said the process had yielded 350 million rupees more than Muslim Commercial Bank's earlier offer of 12 billion rupees. Pervez Shahid, the Abu Dhabi Group's executive in charge, said: "We believe it's a profitable business." The group also owned a small commercial bank in Pakistan, Alfalah Bank.³