Habib Bank Limited (HBL), Government of Pakistan's 41.54 percent residual shares of which are up for sale at the country's stocks market, is acquiring Barclays Bank PLC's operations in Pakistan. Habib Bank has long been engaged with the British banking giant for the acquisition of its local business which comprises seven branches in three cities across Pakistan. HBL, the acquirer, is Pakistan's largest bank serving its world-wide customer base of over 7.5 million through 1,600 branches.
According to HBL's Company Secretary Nausheen Ahmed, the bank had entered into an agreement with Barclays Bank for acquiring the latter's business and operations in Pakistan by way of amalgamation. "The amalgamation is subject to regulatory... and other approvals," the company secretary said. The acquisition requires clearance from regulators like State Bank of Pakistan and Competition Commission of Pakistan and HBL's stakeholders at the country's bourses.
Upon completion the proposed transaction would see the business of Barclays Pakistan amalgamated within and into HBL "ensuring that the transition of the business is smooth and seamless so as to provide continuous and uninterrupted services to customers." Barclays Bank's buyout would be second in line after that of the Hong Kong and Shanghai Banking Corporation (HSBC) by Meezan Bank.
Foreign banks are, reportedly, rolling their operations back from Pakistan for their disillusionment that they could not compete with local banks, especially the Big 5: HBL, MCB Bank, National Bank of Pakistan, United Bank Limited and Allied Bank. These five banks are estimated to command 60 percent of the banking sector's deposits and hold 52 percent of the aggregate advances.
Barclays had entered into Pakistan in 2007, a year before global recession. Having made gestation period losses for three subsequent years, Barclays Pakistan, then having seven branches and Rs 55 billion net assets, had earned Rs 426 million profit in FY2013. "Barclays may have pondered over returns on investment felt incommensurate with country risks," M M Alam, a senior banker, reportedly said.
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