The British lender said the sale, which it expects to complete in the final quarter of the year, represented further progress in its strategy to shed non-core assets to slash group costs.
"HSBC Bank Middle East Limited (HBME), an indirect wholly-owned subsidiary of HSBC Holdings plc, has entered into an agreement to sell its banking business in Pakistan to JS Bank Limited," it said in a statement.
"The transaction, which is subject to regulatory approval and the approval of the direct shareholders in HBME and JS Bank Limited, is expected to complete in the final quarter of 2012.
"It represents further progress in the execution of the HSBC Group strategy."
HSBC said that as of June 30, the bank's Pakistan business had gross assets of about $635 million (496 million euros).
HSBC is Europe's biggest bank by assets, was founded in Hong Kong, and sees Asia as its main market despite being headquartered in London.
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No doubt Pakistan’s economy is in troubles and had worst leadership in its history of 65 years. However, in case of companies like HSBC, its not only about the economy…its the mistakes made by the bank in its strategic expansion in the country. Entering into retail banking from zero anywhere in the world is almost impossible. You have to either buy a local medium sized bank or you simply stick with very niche area of banking….HSBC did not do either and was simply hanging in between. Here comes the new CEO of HSBC with complete new strategy of 12 to15% ROI (which is not happening yet) and Pakistan is not seen as a core asset for the bank. As a Pakistani, I pray for Pakistan and do my best to improve within my range of authority…but our poor government needs to think strategically to move forward.
is veary great
@RealityCheck HSBC is exiting from PK; Barclays is reducing its operations in Pakistan on the retail side and not expanding. Citibank is reducing its consumer operations in Pakistan.
@NazeerKhan I will tell you another good move by HSBC, this time for the employees they are leaving behind. HSBC is giving its employees a minimum of 30 salaries as compensation (goes upto 60 salaries I am told). Barclays was also good about this and has been giving 30 - 36 salaries to its employees on severance.
@adiverseview SCB is not going anywhere and they are steadily expanding their network while being cautious and growing their prime segment for consumer financing. Anyway, they have so much to gain with all the other foreign brand banks killing off their consumer businesses. Do remember that ABN became RBS and then sold itself off to Faysal. Some Chinese and Indian banks are also planning to enter in the short/medium term. Lets see how they do.
Although it would be tough for JS Bank to assimilate HSBC's culture into its own and the integration exercise may be full of ups and downs as it so often is, but I wish JS Bank all the best in the execution part which would be 'the' key factor in determining if it was the right decision in the first place. With the track record of growth they've had, one can hope they would make this acquisition successful for a change. Great strategic move on part of HSBC.
@Khawaja Zaheer:
The total profit of Pakistan's Banking sector is under USD 1billion which is close to what HSBC achieves in India alone. The exit of HSBC like other banks and multinational institutions in the past is an indication of how small the pie is and how limited the potential.
@realitycheck:
HSBC is pulling out because Pakistan is not fitting into its five filter strategy. The fact that a bank is not able to see its future in a country of 180 million people is a matter of real concern for me.
For your knowledge, HSBC is not pulling out of South Korea but only selling its retail banking business, as it has done in some other countires in Asia such as Japan and Thailand.
Additionally,the current scale of Standard Chartered in Pakistan is due to its acquisition of Union Bank in 2006 and is not indicator of its future strategy. And, I am not sure if Barclay is growing or have any growth plans.
No doubt Pakistan's economy is in troubles and had worst leadership in its history of 65 years. However, in case of companies like HSBC, its not only about the economy...its the mistakes made by the bank in its strategic expansion in the country. Entering into retail banking from zero anywhere in the world is almost impossible. You have to either buy a local medium sized bank or you simply stick with very niche area of banking....HSBC did not do either and was simply hanging in between. Here comes the new CEO of HSBC with complete new strategy of 12 to15% ROI (which is not happening yet) and Pakistan is not seen as a core asset for the bank. As a Pakistani, I pray for Pakistan and do my best to improve within my range of authority...but our poor government needs to think strategically to move forward.
It seems continuity of the policies spearheaded by Ishrat Hussain in his term as governer State Bank. e saw many such mergers of foreign banks to local ones. RBS and Barcly's included. It's not the indication of crippling economy but our indigenous banks emerging stronger amidst ensuing global financial crunch.
HSBC has a tiny presence in Pakistan with a branch network of only 10. While other banks such as Standard Chartered have over 130+ plus Barclays is expanding. The Pakistani market is very competitive and only the strong will survive.
Further more, it's not only Pakistan. HSBC is also quitting South Korea and other countries as part of it's global retreat. The pull back from Pakistan is not related to Pakistan's economy.
The fruits of terrorism.
It shows the extreme poor condition of economy. It confirms a crippling country. No where, interest hungry banks will leave a market of 180 million unless they see no business in medium to long term. They can take short term risks, but exiting a country is dangerous. We are simply heading towards a black hole, when our leaders are busy touring washington for more blessings and beijing for selling prime national assets.