Pakistani banks in UK

Need to devise a policy for overseas expansion of banks.

LONDON: Pakistani bankers have earned a stellar reputation in the international market, through working for multilateral institutions (like World Bank, Asian Development Bank and Islamic Development Bank), investment banks (eg JP Morgan, Deutsche Bank, HSBC and Natixis) and Islamic banks (eg Al Rajhi Bank, Kuwait Finance House and Standard Chartered Saadiq Bank) all over the world.

Many high-profile investment and international bankers have also acquired positions of national significance. Moeen Qureshi and Shaukat Aziz were two bankers who served as prime ministers of Pakistan. The outgoing governor of the State Bank of Pakistan (SBP), Yaseen Anwar, was also an investment banker who worked for Bank of America Merrill Lynch before joining the SBP.



Banking has been a respectable profession in the Indian sub-continent and a number of Muslim families were instrumental in building multinational banks like Habib Bank and Bank of Credit and Commerce International (BCCI). Although the reputation of the latter, following the failure of its international business from London, has been besmirched, it is undeniable that during its existence BCCI was a truly international brand under the leadership of Agha Hasan Abidi.

Another international brand is in the making under the leadership of Prince Karim Aga Khan whose Aga Khan Development Network (AKDN) acquired 51% shareholding in Habib Bank Limited (HBL) after the government of Pakistan decided to privatise it in 2003.

Following the acquisition, HBL emerged as the largest private bank in Pakistan, with an international branch network in 17 countries. Just before the privatisation, HBL was nearly shut down in the UK by the then financial regulator, the Financial Services Authority (FSA). It was then restructured under Habib-Allied International Bank, which was a result of merger between six UK branches of HBL and four UK branches of Allied Bank Limited (ABL).

In the UK, HBL is fast emerging as a high street bank focusing on the South Asian Diaspora. Last year, it acquired Habibson Bank and Habib Bank AG Zurich’s UK branches to develop one consolidated business under Habib Bank UK Limited. Today, it has seven branches in the country.

It faces competition from another British bank with shareholders connected to Pakistan. United National Bank was formed with the merger of UK branches of United Bank Limited and National Bank of Pakistan. It has recently been re-branded as United Bank UK Limited or UBL UK.

HBL, along with other Habib brands like Habib Bank AG Zurich, Habib Metropolitan Bank and Bank Al Habib, has the potential to become a globally recognised and respected brand in banking and finance.

If the shareholders, led by AKDN and the government of Pakistan, devise a strategy to develop it as a pan-Islamic financial institution with a strong presence in the Organisation of Islamic Cooperation (OIC) bloc, it can lead to increasing trade amongst member countries and consequently economic integration in due course.

HBL can also be developed as an international bank focusing on the needs of the Pakistani Diaspora. This is a role that UBL is playing in a number of Middle Eastern countries, especially the six countries that comprise the Gulf Cooperation Council.

If somehow, the authorities encourage a merger between UBL and HBL, the combined banking group can emerge as a powerful international bank, with branches in a number of countries where the Pakistani Diaspora is significant in number and proportion.

There are already about 100 overseas branches (including representative offices in the form of what is known as the overseas boots and units) of Pakistani banks. HBL tops the list, followed by UBL and NBP.

There is certainly a need to devise a comprehensive policy for the overseas expansion of Pakistani banks. With growing popularity of Islamic banking, it may be worthwhile for larger Pakistani Islamic banks to expand their operations into territories.

The writer is an economist and PhD  from Cambridge University

Published in The Express Tribune, March 17^th, 2014.

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