'Business Week', the reputed global magazine, in its issue of July 11, 2005, has recognised S Ali Raza, Chairman & President, National Bank of Pakistan, as one of its 25 'Stars of Asia', in its title article, 'Leaders at the forefront of change'. The article lists 25 people, including politicians, corporate leaders and people across a broad range of disciplines who, according to the magazine, are honoured for their crisis leadership, managerial smarts, guiding role in innovation, and social activism.
The President of Indonesia, Susilo Bambang Yudhoyono, is also in the list of 25 leaders. The weekly says that "today foreign bankers working in Pakistan shudder at the thought of competing with National Bank of Pakistan. Rival local banks keep a keen eye on what it is doing, and the World Bank calls it a prototype for a successful turnaround".
The magazine goes on to report that "Modernising NBP was no small feat. Until reform began under a $1 billion loan from the World Bank five years ago, Pakistan's big banks were characterised by politically influenced lending, ballooning bad debts, and ineffective management by bureaucrats. The 'Business Week' says that "at NBP, bad loans amounted to 36 percent of total assets", and quoting the President NBP, who has degrees from the London School of Economics and City University of London, "Revenues were falling, costs were rising, non-performing loans were out of control and the financial condition was perilous".
The article continues that "Raza moved quickly to shake up the bank. He offered voluntary retirement that cut staff by 3,500 and shuttered 250 inefficient branches. He has also improved the talent pool by adding 100 young business graduates every year and putting some 11,000 existing employees through rigorous training". The President of NBP has adopted a policy of "aggressive evolution, not revolution".
While the bank is still majority state-owned, the government successfully offered 25 percent of the shares to the public in 2002 and in two subsequent offerings. Despite continuing government control, the NBP President acknowledges that he has been given total freedom to fix NBP and bring in an independent board.
According to the 'Business Week', "the result underscores why Raza is a 'Star'. Assets have risen from $9.2 billion in 2004, and pretax profits are up from $172 million in 2000 to over $200 million in 2004. Bad loans have been reduced to 14 percent of total assets".
Abid Hasan, operations adviser at the World Bank office in Islamabad, is of the view that this is one of the most successful reform programs in emerging markets. "Now that's an image NBP - and Raza - can live with."-PR
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