Habib Bank Limited, a gold mine for the government and investors, has entered into agreement with Barclays Bank Pakistan PLC to acquire its operation in Pakistan.
The deal will be sealed after final approval of the central bank which will review the sale-purchase exercise in a few weeks. Earlier in November 2013, State Bank of Pakistan (SBP) gave a green signal to Habib Bank Limited for conducting its due diligence of Barclays Bank for acquisition of its operations in Pakistan.
HBL has previously acquired Citi Bank’s consumer portfolio in 2013
The old saying of big fishing eating small fishes could be used for HBL as it acquired Citi Bank consumers’ portfolio in 2013 after fierce competition with leagues bank including MCB Bank and Bank of Alfalah.
Barclays Bank is operating with eight branches in Karachi, Islamabad, Rawalpindi and Lahore. The bank is facing immense pressure from the competition with local and foreign banks in Pakistan. Besides, Shahzad Dada, its former president also quit the bank to join Standard Chartered as CEO and Bank last year.
Barclays Bank has 8 branches in 4 cities and is facing immense pressure from competition
HBL’s acquisition drive will be carried out by way of amalgamation pursuant to Section 28 of the banking Companies Ordinance, 1962. The bank will further seek approval from Competitive Commission of Pakistan and General Stakeholders).
The shutdown of foreign bank through amalgamation or sell off deal is concern phenomena in Pakistan as last year HSBC was acquired by Meezan Bank in 2014; the Citi Bank sold of its consumer banking unit in 2013 and Royal Bank of Scotland was acquired by Faysal Bank earlier in 2010. Besides, the oldes foreign bank Standard Chartered is also closing down its branches frequently in different cities.
The trend of foreign banks selling off assets and wrapping up business in Pakistan is of grave concern
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.
HBL is the biggest bank in Pakistan with largest deposit of more than Rs 1.5 trillion. The bank is operating with more than 1,600 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.