Audit Exposes NBP for Dubious Sale of Its UK Subsidiary

The Auditor General of Pakistan (AGP) has accused the National Bank of Pakistan (NBP) of serious procedural and financial irregularities in the sale of its 45 percent stake in United National Bank Limited (UNBL), United Kingdom, to the Bestway Group, terming the transaction non-transparent, undervalued, and in violation of the State Bank of Pakistan’s (SBP) directives. The audit report for FY 2024-25 reveals that NBP sold its profitable foreign subsidiary for GBP 22.9 million (approximately Rs. 8.2 billion), well below both its book value of GBP 30 million and estimated market value of GBP 35 million. The undervaluation, according to the AGP, potentially caused a significant financial loss to the state-owned bank. The report notes that NBP’s management appointed a valuator and a law firm without open competitive bidding, in clear violation of Rule 20 of the Public Procurement Rules, 2004, which mandates transparent competition. The valuator’s assessment of the property and assets linked to UNBL’s share price was “artificially suppressed” at GBP 25 million, the audit states, enabling the buyer to secure the asset at a bargain price. The NBP Board approved the deal during an emergent meeting on December 21, 2023, just days after receiving Bestway’s offer on December 7, raising questions over the haste and due diligence involved in the process. Although the SBP issued its No Objection Certificate (NOC) on March 13, 2024, it explicitly required the repatriation of the sale proceeds to Pakistan and submission of a Proceeds Realization Certificate. However, the audit found that the Bestway Group transferred GBP 22.9 million to NBP’s Bahrain branch on July 4, 2024, and the funds were never brought back to Pakistan. Instead, NBP management sought permission to retain the proceeds in Bahrain to cover costs associated with the closure of its New York branch, a move the AGP described as unauthorized and contrary to SBP’s directives. Even after SBP’s reminder on April 3, 2024, conditioning final approval of the sale on repatriation compliance, the funds remained parked abroad. The AGP’s report also criticizes NBP for bypassing the Ministry of Finance, its administrative authority, during the divestment process. “The decision was made in haste, without adequate consultation, evaluation, or competitive process,” the report says, calling it a breach of prudent banking and governance practices. NBP, in its defense, maintained that the divestment had the Board’s and SBP’s approval and that the proceeds were utilized as per a later SBP permission dated July 25, 2024. However, auditors rejected the justification, asserting that the core issue of non-repatriation remained unresolved. The audit further noted that despite multiple reminders on November 25, 2024, January 6, 2025, and January 13, 2025, the Departmental Accounts Committee (DAC) meeting was not convened to examine the irregularities. The AGP has called for a full-scale investigation into the sale, the undervaluation of assets, and the non-repatriation of foreign proceeds, warning that such practices compromise the integrity of public financial management and expose the bank to reputational and fiscal risks. ProPakistani approached Spokesperson NBP for comments on this matter but no reply was received by the time of filing this story.