Pakistani Banks Fail to Make the Most of CPEC

National Bank of Pakistan and United Bank Limited have failed to set up their branches in China after a lapse of two years of making their expansion plans to reap the benefits of China Pakistan Economic Corridor (CPEC).

The two banks made their plans to set up branches in different cities of China, mainly the country’s capital, Beijing, but could not convert their representative offices in China to branches or set up new branches in any city.

On the other hand, Bank of China was granted a license to begin banking services and set up a branch in Pakistan, Karachi in 2017. Another Chinese bank, Industrial and Commercial Bank of China (ICBC) Pakistan has also been operating in Pakistan since 2011 offering various banking services including Yaun Clearing facility since 2015.


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The local banking industry has planned that at least two Pakistani banks should be allowed to operate in China in exchange for two Chinese banks being operated in Pakistan, however, the regulatory approval from central banks of these countries are being awaited by these banks.

UBL is operating its representative office in China since 2008 and is set to establish a branch in Beijing. NBP is also operating its representative office in the capital of China.

Sources in the industry said that these two banks do not prefer spending a huge amount on setting up branches or to spend money on the requirement of paid-up capital and expenses related to expansion of services.

Once the banks do have investment plans in China, it could be easier for the banking regulator to push the case of opening up new bank branches in collaboration with the Chinese banking authority.


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It is worth mentioning here that Pakistan’s leading banks have been facing tough operational challenges of doing business in different countries. These banks have reduced their global operations due to consistent losses in offshore businesses.

The difficult dynamics of doing business in overseas branches also restricted them to put their expansion plans on hold until the situation improves.

Habib Bank Limited is the only bank operating its branch in Chinese city Urumqi – the capital of Muslim-dominated Xinjiang region, since 2017. The bank recently acquired a license to open another branch in Beijing that is expected to commence operations later this year.

Last year, State Bank of Pakistan (SBP) allowed Standard Chartered Bank (SCB) Pakistan Limited to establish their local CNY clearing and settlement setup in Pakistan. Standard Chartered is the only bank with an established network and profitable operations in China and Pakistan.

Local banks can not only cash in on the CPEC opportunities from Chinese branches but they can also settle the CNY-based transactions for traders of the two countries.

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