We advised on and conducted a comprehensive legal due diligence of consumer loan portfolios with an aggregate value of approximately PKR 4 billion in connection with the transfer of a demerged lending portfolio from SME Bank Limited to the National Bank of Pakistan (NBP).
The transaction formed part of a significant restructuring within Pakistan’s banking sector and required a detailed assessment of asset quality, enforceability of security, and legal risk exposure. The mandate required NBP to place reliance on the legal validity and enforceability of underlying collateral and financing documentation in order to evaluate institutional risk and determine the commercial viability of the portfolio acquisition. The engagement is representative of increasing regulatory and transactional scrutiny in Pakistan’s financial services sector, particularly in the context of asset transfers, bank restructuring, and non-performing loan (NPL) portfolio assessments.
ABS & Co was engaged to independently verify the legal status, enforceability, and completeness of mortgaged securities and facility documentation across a portfolio of 611 individual loan files. The review covered multiple jurisdictions across Pakistan, including Islamabad, Rawalpindi, Lahore, Gujranwala, Faisalabad, Sialkot, and Peshawar, requiring a coordinated, multi-jurisdictional legal analysis. The firm adopted a structured diligence framework, including the bifurcation of running finance facilities and fixed-term loan facilities, to ensure accuracy, consistency, and risk-sensitive evaluation.
The scope of work included verification of charge creation, mortgage perfection, documentation integrity, and compliance with applicable banking and regulatory requirements in Pakistan. Particular focus was placed on identifying defects in security documentation, gaps in enforceability, and regulatory non-compliance that could impact recovery prospects or asset valuation.
As a result of this extensive legal due diligence exercise, ABS & Co delivered a detailed risk-mapping of the portfolio, clearly distinguishing between secured and legally enforceable exposures and those carrying legal, documentation, or regulatory risk. This enabled NBP to accurately quantify contingent liabilities, assess recoverability, and establish a legally robust basis for structuring and executing the asset and liability transfer.
This matter was led by Usman Jillani, Partner at ABS & Co, with support from Maaz Ul Mulk, Associate.
