Pakistani branch operations of HSBC Bank Middle East have now merged with and into Meezan Bank, a notice on the Karachi Stock Exchange said on Monday.
Subsequently, all customers of HSBC Pakistan will automatically become customers of Meezan Bank.
Earlier on, the State Bank of Pakistan (SBP) sanctioned the scheme of amalgamation of HSBC Pakistan with Meezan Bank following the fulfilment of all regulatory requirements.
An indirect, wholly owned subsidiary of HSBC Holdings, HSBC Pakistan consisted of 10 branches and had total assets of Rs48 billion at the end of 2013.
Meezan Bank has already stated that it intends to make the operations of HSBC Shariah-compliant, while ensuring that the existing customer base continues to receive uninterrupted banking services.
Meezan Bank has the experience of acquiring a foreign bank and converting its operations from conventional to Islamic.
It acquired Societe Generale in Pakistan through a similar transaction in 2002. The Competition Commission of Pakistan also gave its go-ahead to the proposed transaction and issued a no objection certificate in August. The information about the size of the transaction is still not in the public domain.
According to Reuters, the sale of HSBC Pakistan is part of a strategy by Europe’s biggest bank to exit from countries where it is unprofitable or lacks scale.
Being the second most populous Muslim country, Pakistan has been a profitable market for Islamic banks. As many as five Islamic banks operate in Pakistan while 14 conventional banks offer Islamic banking services through window operations.
The year-on-year increase in deposits by each of the five Islamic banks in 2013 was in excess of 17%, with Meezan Bank’s deposits rising 25.7% to Rs289.8 billion. According to the half yearly results, Meezan Bank recorded 16.5% growth in its after-tax profit. It increased to Rs2.25 billion in January-June as opposed to Rs1.93 billion that it earned in the corresponding six-month period of 2013.
Like most foreign banks, the clientele of HSBC Pakistan consists mainly of multinational companies with headquarters in European countries.
Whether these multinational companies stick with their current bank after it merges into the country’s largest Islamic banking institution is yet to be seen.
Like HSBC, Europe-based Barclays Bank is also leaving the Pakistan market for good.
Recently, Habib Bank announced that it was negotiating with Barclays Bank for the acquisition of its Pakistan operations.
Published in The Express Tribune, October 21st, 2014.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
COMMENTS (4)
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ
1713957765-0/BeFunky-collage-(1)1713957765-0-270x192.webp)
1713853507-0/MalalaHilary-(2)1713853507-0-270x192.webp)
@optimist: You can't get a decent car with that +++++++++++++++++ You don't get a decent tank either!
@ Sodomite
When I say that the whole Bollywood industry makes less than one Hollywood blockbuster (according to Times of India and film in question was Pirates of Carribean), everyone starts telling me less expenses in India etc..... Also, when I mentioned that the budget of Stanford University is more than India's defence budget (2006 figures), again I get many answers telling me to look at purchasing power of one dollar in India vis a vis in the US. . You should also remember many other factors when comparing budget of Pakistan with budget of Manhatten. Your Al Khaled tank costs few thousand dollars. In the US, you can't get a decent car with that money.
@Sodomite You are right this is not a merger but you are comparing Alpha++ city with a third world country.
ET a merger is an acquisition by the entity that survives the merger. HSBC sold their interests in order to get out of Pakistan and not as a merger to become a bigger HSBC. Same is happening with the sale of Barclays. You may to remind your readers that only a few years ago there was American Express, Chase, Citibank, Bank of America, ABN, Deutsche Bank, HSBC, Societe General, Barclays and Grindlays that were part of our High Streets serving more Pakistani customers than multi-nationals and providing employment opportunities to their Pakistani employees to serve these companies here and abroad. I am sure all those Pakistani Banks taking over foreign owned Banks have opened offices on Wall Street, City of London, La Defence Paris, Frankfurt etc., They haven't and they never will. You need to remind our people that the budget of the Mayor's Office of New York City is bigger than the budget of Pakistan and Manhattan's GDP is many times that of Pakistan. Let's keep the scale in perspective.