KARACHI (Web Desk/Agencies) – State Bank of Pakistan (SBP) has approved the amalgamation scheme of Barclay Pls Bank with Habib Bank Limited (HBL) under Section 48 of the Banking Companies Ordinance 1962 that will be effective from June 15.
The central bank announced the entire operations, branches, depositors and creditors of Barclays Bank will be converted and shifted to HBL after ten days.
This is the second amalgamation scheme approved by the central bank which also approved amalgamation of KASB Bank with BankIslami showing the consolidation of the banking industry.
In March 2015, Habib Bank Limited is ready to take over operations of Barclays Bank PLC in Pakistan after the two managements had reached on the seal purchase deal successfully.
State Bank of Pakistan (SBP) gave green signal to Habib Bank Limited in November 2014 for conducting its due diligence of Barclays Bank for acquisition of its operations in Pakistan.
Barclays Bank is operating with eight branches in Karachi, Islamabad, Rawalpindi and Lahore but it is facing immense pressure from the competition with local and foreign banks in Pakistan. On the other hand, the closure of the banking operation is said to be a part of its international strategy of austerity.
Besides, Shahzad Dada, its former president also quit the bank to join Standard Chartered as CEO and Bank last year. The bank did not appoint anyone as CEO but gave additional charge to Imran Siddiqui, who is Director Corporate Banking at Barclays Bank.
HBL will improve its balance sheet further with acquisition of bank’s branches, its assets and its depositors’ mainly multinational companies and corporate sector entities.
In 2013, HBL also acquired consumers’ portfolio of Citi Bank at cost of Rs 2 billion which include services of personal banking, credit cards and auto financing.
HBL is the biggest bank in Pakistan with largest deposit of more than Rs 1.5 trillion. The bank is operating with more than 1,644 branches across the country along with 28 offices in different countries. It contributes the big share of remittances inflows of about $3 billion in 2014.
Recently, its subsidiary HBL Asset Management entered into deal of purchasing PICIC Asset Management at Rs 4.1 billion.
It is an irony that the PML (N) government has decided to sell-off HBL shares further despite of the fact that the bank continues to make profit and gives handsome return to the government as well.
Almost 10 years ago, the bank’s majority shares of 51 percent had been sold out to Agha Khan Foundation for Economic and Development (AFED) at Rs 22.409 billion (USD 389 million), which is now more than the profit the bank made of Rs 31.8 billion in a year in 2014 with the continuation of the business by the management in one year.
Experts said that the privatization of HBL privatization was not a right step and it will definitely not be if the government is planning to offload its 41 owned shares.
AFED expanded HBL and its subsidiary significantly in Pakistan in all different areas of financial sectors but this cause the constant outflows of dollar as per international trade agreement.
If the government opted to hold majority shareholding at HBL, it could not have bought back its share but provided handsome dividends to its kitty every quarter and every year.
The profitable entities could be sold out to any investors because the buyer is already available in the market whether in local or international market but it is challenge to privatize losing making units.
