Abstract:
Privatization is a catchall term for the transfer of Operating and/or
Financial control of State Owned Enterprises to the private sector. It is a
process where by the activities of enterprises that were once performed or
operated by the government and its employees are performed, managed or
owned by private business and individuals. The present thesis specifically
examined the case for privatization of banking sector in Pakistan, which
aimed to see impact of privatization on banking companies before and after
they had been Privatized. To conduct the research Muslim Commercial Bank
(MCB) and Allied Bank Limited (ABL) had been studied. Allied Bank
Limited has witnessed and experienced all political, economic, financial and
technological changes, which have taken place in the south Asian Region
since it was incorporated in 1942 at Lahore. It was first bank owned by
employees. About 51 o/o of banks share has been privatized. Muslim
commercial Bank was incorporated in 194 7 and has an edge over other local
banks, as it was the first privatized bank. About 81% of bank shares are
owned by private sector. The focus of analysis was to compare the Financial
and Operating performance of MCB and ABL before and after privatization
with the intention to see weather they improved or not and draw lessons for
the authorities for future course of action. Questionnaire method is used in
order to conduct the survey to obtain the opinion of employees about
privatization. For this purpose employees of four banks has been chosen.
Financial and operating performance is evaluated with the help of different
financial ratios and techniques i.e. ratio analysis, horizontal or common size
analysis, vertical or index analysis and operating ratio analysis. With the help
of questionnaire, financial and operating analysis it has been observed that
privatization of banks leads toward higher level of efficiency both from
financial and operational points of view as except few accounts and ratios
over-all performance of both banks increases after privatization. Thesis
concluded that government decision to privatized banks was correct and in the
end it is recommended that government should continue its policy to privatize
banks and make it as early as possible.
