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March 29, 2019

Habib Bank to wind down Afghanistan’s operations


March 29, 2019

KARACHI: Pakistan’s biggest lender Habib Bank Limited (HBL) has decided to wind down its operations in Afghanistan in line with the regulatory requirements in the neighbouring country, a senior official said on Thursday.

“HBL’s exit from Afghanistan is expected to be completed latest by third quarter 2019 and will be done as per the regulatory requirements of Afghanistan and in consultation with the central bank of Afghanistan (Da Afghanistan Bank),” the bank’s spokesman said. “HBL’s international footprint is important for the bank to service its domestic and international clients even better and this role will only strengthen in 2019.”

HBL currently has one branch in Kabul. The bank obtained business licence from Afghanistan Investment Support Agency in April 2004, which is valid till July 30, 2020, according to the information available on the HBL’s website.

HBL has branches in Bahrain, Bangladesh, Belgium, China, Lebanon, Maldives, Mauritius, Oman, Singapore, Sri Lanka, Turkey, UAE and USA. It’s operating with a representative office in Beijing. HBL has around 1,800 domestic and international branches.

A public notice, in an international newspaper, said Habib Bank Afghanistan commenced an orderly and organised winding down of its operations.

“As per the instructions of Da Afghanistan Bank, Habib Bank Afghanistan will not accept any further deposits as of March 11, 2019,” the notice said. “All depositors are requested to withdraw/transfer their funds and close their accounts with Habib Bank Afghanistan on or before June 10, 2019.”

The bank’s spokesman said HBL is winding down operations in Afghanistan, reflecting its priorities to focus on select markets, which meet clients’ requirements.

HBL will be rightsizing their operations in some markets, as HBL has already done in Seychelles, France and now in Afghanistan. The bank is already the largest executor of China-Pakistan Economic Corridor- (CPEC) related financing in Pakistan.

“To compete effectively, HBL will drive greater efficiencies within its global footprint,” the spokesman said. “This drive will be achieved on the back of redeploying HBL’s valuable resources. This will create further capacity for accelerated investment in geographies that support HBL’s customers’ and clients’ strategic priorities.” HBL said the bank completed a strategic review of its global footprint, which it continues to consolidate.

“In the aftermath of the accelerated de-dollarisation and de-risking carried out in late 2017 and early 2018, this has been a year of rebuilding for the international network, with a new strategy for the overall network focused on business / trade corridor connectivity with Pakistan,” the bank said in its annual report for 2018. “As the largest executor of CPEC-related financing in Pakistan, special emphasis has been placed on Pak-China business flows. USD clearing challenges faced in 2018 have been addressed through new arrangements, along with enhanced controls and resources for payment screening and correspondent query management.”

In 2018, HBL’s profit rose 41 percent to Rs12.4 billion, with earnings per share of Rs8.22 compared to Rs5.79 in 2017. Pretax profit of Rs21.6 billion was, however, 27 percent lower than the previous year as a result of the multiple one-offs that affected the bank’s financial performance in 2018, including the impact of the continued slide in the rupee and the remediation, legal and regulatory costs related to its New York branch.

HBL was urging Pakistan to tap the Chinese panda bond market to ease balance of payments worries. The bank is taking interest in the potential issuance since the government has announced to enter the Chinese bond market.

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