HBL eyeing acquisition of Barclays Pakistan

KARACHI: Habib Bank Limited (HBL) is gearing up to acquire operation of Barclays Pakistan, it said in a bourse filing on Thursday as the bank has entered into an agreement with the British bank to buy its local business.
It will be the second foreign bank to exit in the recent years after HSBC if the deal materialises. HBL in a notice did not reveal financial details of the proposed buyout.
“Upon the completion of the proposed transaction, the Barclays Pakistan’s business will be amalgamated into HBL, whilst ensuring that the transition of the business is smooth and seamless so as to provide continuous and uninterrupted service to customers,” said Nausheen Ahmed, company secretary at HBL.
In October last, HBL had announced that it was considering negotiation for the acquisition and planning to start a due diligence, subject to approval by the State Bank of Pakistan and other regulatory approvals.
Recently, Hong Kong and Shanghai Banking Corporation (HSBC) wound up its Pakistani business after its buyout by a local Islamic bank, Meezan Bank Limited.
On departure of foreign banks, analysts said worldwide banks generally went for restructuring after the 2008 world’s financial crisis.
A banker, however, said markets like Pakistan have been very profitable. But, banks’ profit when converted into dollar is waning as the rupee is depreciating its value, he added.
“The big five banks, including HBL, United Bank, Allied Bank, National Bank of Pakistan and MCB Bank are expanding the size of network and financial outreach,” he added. “The banking industry is literally overflowing. There are just too many banks and not enough money.”
Moreover, the banker said the compliance and ‘know your customer’ procedures in Pakistan were too strict, which hampered the deposit raising.
Analysts said globally the banking model has been changed and banks can no longer rely on depositors’ money. In Pakistan, Barclays operates seven branches. The bank’s net assets were recorded at Rs52.402 billion as of December 31, 2013. Its fixed and saving deposits amounted to Rs12.834 billion and Rs16.286 billion, respectively. In 2013, Barclays Pakistan earned profit after tax of Rs426.193 million.