(Adds price, price/earnings ratio, comments by banker and background.)

MCB Bank Ltd. (MCB.KA) has agreed to buy Royal Bank of Scotland Group PLC's (RBS) operations in Pakistan for PKR7.2 billion (US$87 million), people familiar with the situation said Monday, in the latest sale of Asian assets by the Scotland-based bank.

Earlier in the day, MCB Bank said in a statement to the Karachi Stock Exchange that its board had approved a proposal to acquire the assets, but didn't give any details other than to say the deal is subject to the signing of a share-purchase agreement and approvals from the State Bank of Pakistan and other regulators.

MCB, Pakistan's largest privately-owned bank by assets, is paying 0.73 times the book value of about PKR9.89 billion at the end of March of RBS's Pakistan assets, one person said.

Dutch bank ABN Amro, whose institutional and Asian assets RBS acquired in 2007, paid PKR13.8 billion or a four times price-to-book multiple for the bulk of the assets being sold to MCB in March 2007.

Besides MCB Bank, Habib Bank Ltd. (HBL.KA), Egypt's Orascom Telecom Holdings (ORTE.CI) and local JS Group had professed interested in buying the assets earlier. In April, Royal Bank of Scotland said Pakistan's central bank had allowed MCB and local bank Habib Bank to begin due diligence on its operations in the country.

"There are non-price considerations for RBS to choose MCB over others. MCB is perceived as the one which has the ability to close the transaction efficiently. The fact that it has no funding issue and that the assets are a strategic fit are a plus," said Soofian Zuberi, Bank of America Merrill Lynch's head of global markets sales for Asia excluding Japan.

Bank of America Merrill Lynch and KASB Bank advised MCB on the deal.

MCB, which will see its extensive network expanded with RBS's assets, will finance the acquisition with its own internal capital, another person familiar with the situation said. He said an official announcement of the deal is due within 24 hours. "The buyout is beneficial for MCB Bank as RBS has an extensive consumer base," said Mohammed Imran, head of research of First Capital Securities Ltd.

Royal Bank of Scotland currently operates 79 branches in Pakistan, including three Islamic banking branches. It has a loan book of PKR67 billion, deposits of PKR75 billion and assets of PKR104 billion.

MCB has a loan book of PKR257 billion, deposits of PKR338 billion and assets of PKR458 billion as at the end of the first quarter.

"The deal shows that there is still appetite for Pakistan banks and their fast growing customer base," Bank of America Merrill Lynch's Zuberi said.

"But this is probably the last of a slew of sizeable bank acquisitions in Pakistan. There isn't much left if banks are looking to acquire assets that are of scale."

The sale of its Pakistan assets is a part of a three- to five-year plan in unwinding RBS's partial acquisition of ABN AMRO. The US$101 billion, peak-of-the-market purchase of the Dutch bank spearheaded by RBS and is widely seen as the strategic misstep that led to RBS's downfall and the ouster of former chief executive Fred Goodwin.

Early this year, RBS, which is 70%-owned by the U.K. government, said that it planned to sell its Asian retail banking assets as part of moves to shed its non-core assets.

Last week, Australia & New Zealand Banking Group Ltd. (ANZ.AU) announced it was buying the bulk of RBS's Asian banking operations for US$550 million leaving just the Scottish bank's Indian, Chinese and Malaysian assets still on the sale block.

-By Amy Or and Haris Zamir, Dow Jones Newswires; 852-2832 2335; amy.or@dowjones.com