While foreign banks are exiting from Pakistan, European and American investors in particular, Pakistan’s very own, National Bank of Pakistan (NBP) has become the first ever bank of the country to cross the `One Trillion Rupee’ bench mark with more than 16500 employees and 1277 branch network across Pakistan and 23 overseas branches and representative offices in four countries.
“The bank is engaged in providing commercial banking and related services in Pakistan and overseas. The bank also handles treasury transactions for the Government of Pakistan as an agent to the State Bank of Pakistan (SBP)”, Syed Ibne Hassan Spokesman and Vice President of the Bank said in a statement issued last week.
Syed Ibne Hassan said that the bank also provides services as trustee to National Investment Trust (NIT), Long-Term Credit Fund (LTCF) and Endowment Fund for student loans scheme.
He said that National Bank of Pakistan (NBP) is leading in agriculture financing among other banks and financial institutions in the country by lending Rs 33.013 billion among nearly 176,372 farmers between July 2011 to March 2012, against a target of Rs 32.400 billion by SBP for nine months.
He further said that the State Bank of Pakistan (SBP) has fixed an indicative lending target of Rs 280 billion for the financial year 2011-12, out of this NBP’s Share is highest after ZTBL.
Highest Credit Rating for any Bank
Thanks to these deposits, Credit Rating Company JCR-VIS has reaffirmed the entity ratings of National Bank of Pakistan (NBP) at (Triple A/A-One Plus) with ‘Stable’ Outlook, highest for any bank in Pakistan.
These ratings also incorporate the sovereign ownership of the bank, the outstanding guarantee of the government of Pakistan as security against deposits and the bank’s status as treasury to the government.
Standard Chartered Pakistan successfully closed a ten year Rs 250 Crore of Unsecured Subordinated Term Finance Certificate (TFC) issue as a Sole Lead Arranger.
The issue represents the largest offering in Pakistan by any financial institution in 2012.
Standard Chartered remains well capitalised with a capital adequacy ratio of 12.9pc compared to requirement of 10pc as 31 December 2011. The issue proceeds shall contribute further towards the Bank’s Tier II supplementary capital.In light of the Bank’s strong brand and AAA rating in Pakistan, the issue was well received by investors and oversubscribed.
The issue size was inclusive of a green shoe option of Rs 50 Crore, enabling the issue to be upsized for the entire green shoe option amount and issued at Rs 250 Crore.
Commenting on the issue, Mohsin Nathani, Chief Executive, Standard Chartered Pakistan, said: “Standard Chartered, consistent with our brand promise of being Here for Good for our clients, offers banking solutions and products that greatly enhance our clients’ efficiency. This landmark transaction is a testament of how the Bank remains at the forefront of the debt capital markets industry in Pakistan.”
In order to facilitate pensioners, State Bank of Pakistan introduced a new mechanism to transfer ‘pension proceeds’ directly into bank account of pensioners.
Interested customers can now open their account in any bank of their choice. State Bank issued instructions to all the banks in Pakistan to immediately facilitate pensioners and let them open their bank accounts ‘without service charge’.
Following is the public order of this announcement:
Standard & Poor’s Ratings Services today affirmed its ‘B-’ long-term sovereign credit rating on the Islamic Republic of Pakistan. The outlook on the long-term rating remains stable. Standard & Poor’s also affirmed its ‘B-’ issue rating on Pakistan’s senior unsecured foreign- and local-currency debt and its ‘B-’ transfer and convertibility assessment.
At the same time, it raised the short-term sovereign credit rating to ‘B’ from ‘C’, following a change in criteria that links long-term ratings with short-term ones. Earlier Moody downgraded the rating of Pakistan’s sovereign credit rating from B3 to Caa1.
The sovereign ratings on Pakistan take into account the country’s weak fiscal profile and associated high public and external leverage, low income level, as well as the underlying weak political and policy setting. These constraints are balanced against strong remittance inflows that help sustain a still-adequate external liquidity position.
Pakistan’s high public and external indebtedness is a main rating constraint. Net general government debt stands at an estimated 52% of GDP in 2012, 40% of which is external debt.
“The interest burden on this debt poses a great constraint on discretionary spending, given already sparse fiscal resources,” said Standard & Poor’s credit analyst Agost Benard. “The large interest bill and other expenditure-side rigidities against a narrow revenue base of about 12.5% of GDP result in ongoing fiscal slippages.”
The country’s political and security environments also constitute a rating constraint. A volatile, fragmented, and adversarial domestic political setting detracts from policymaking and implementation. The resulting weak macroeconomic conditions, together with regional insurgencies, sectarian strife, and weak governance standards are a significant deterrent for private sector investment.
The government’s recent failure to make timely payments on unrated government-guaranteed commercial obligations by the Central Power Purchasing Agency to independent power producers was attributable to bureaucratic delays and does not constitute a default according to our criteria.
“Our ‘B’ rating category considers the potential of administrative weaknesses to result in payment delays from ministries to agencies,” Mr. Benard said.
The ratings on Pakistan are supported by the country’s adequate foreign currency liquidity. Buoyant remittance inflows from a geographically well-diversified off-shore labor force and large Pakistani diaspora amount to 5.6% of GDP, having risen more than threefold in nominal terms over the past seven years.
The raising of the short-term rating reflects our criteria revision regarding the link between long-term and short-term sovereign credit ratings. According to our revised criteria, the short-term rating on a sovereign government is derived directly and solely from the long-term rating. As a result, the raising of the short-term rating does not reflect an improvement in Pakistan’s short-term creditworthiness.
The stable rating outlook balances still-adequate external liquidity against vulnerabilities posed by structural fiscal weaknesses and significant political and security risks.
We may lower the ratings if major slippages in policy occur, resulting in rising public debt, or if the balance-of-payments position deteriorates and external liquidity comes under greater stress.
Conversely, we may raise the ratings if Pakistan shows progress in its fiscal consolidation efforts, manifested in moderating deficits and a steady reduction in the public debt burden.
United Bank Limited (UBL) has taken a lead among all banks of the country in announcing the result with handsome earnings as it profits registered a 39 percent record growth to Rs9.3 billion during January to June 2012.
In second quarter alone, the bank reported a 30% Year-on-Year jump with profits of Rs450 Crore and it announced a second interim cash dividend of Rs2.0 per share, taking the cumulative dividend to Rs3.0 per share.
Despite shrinking banking sector spreads, net interest income of the bank witnessed a decline of 1%.
UBL’s non-interest income jumped 26% to Rs25,600 Crore on the back of better dividend income from treasury and trading.
Moreover, controlled lending along with improved paying capacity of borrowers after decline in interest rates led overall provisioning to decline from Rs49o Crore to Rs 130 Crore.
Mian Mohammad Mansha, Pakistan’s richest man and chairman of the $5-billion Nishat Group, says he is keen to launch banking services in India. Mansha told ET that the State Bank of Pakistan is examining a proposal from his MCB Bank to open at least three branches in Delhi, Mumbai and Amritsar.
Launched days before the partition, the MCB Bank is one of the largest private sector banks in Pakistan with over 1,130 branches and 4.5 million customers. The Nishat Group, which is Pakistan’s largest business conglomerate, has interests in banking, textiles, insurance, cement and power.
“We are very keen on opening branches in India and have applied to our central bank for clearances,” Mansha said over the phone kn an interview to Economic Times India. “As soon as the State Bank of Pakistan okays our application, it would refer it to the Reserve Bank of India for approval.”
Mansha said he sees no difficulties in meeting the stiff eligibility norms for banks in India. “We are aware of the capital adequacy requirements and other eligibility criteria for Indian operations and won’t have any problems in complying with them,” he said.
The MCB Bank is the first Pakistani lender to formally apply for an Indian banking permit after officials from the central banks of the two countries met this April to discuss modalities for cross-border banking operations.
According to Mansha, two of Pakistan’s largest private commercial banks – the United Bank and the Habib Bank – are also considering forays into India.
Mansha, however, warned against the loss of intensity in revival of India-Pakistan ties.
“To be honest, after our recent positive exchanges in Delhi and Lahore, things have again started cooling off lately,” he said. “India and Pakistan have been distracted with their own political processes. Maybe we need to revive the spirit again.”
Mansha said the Nishat Group is setting up a cell to facilitate steady exchanges between the business houses of the two countries. The group has also hired Shahid Malik, Pakistan’s former high commissioner to India, to bolster bilateral commercial ties.
“A key part of Malik’s mandate in our group is to persistently keep pushing for greater engagement between the two countries, which he is well-positioned to do with his knowledge of people in the establishment on both sides,” Mansha said.
The first few months of 2012 saw an unusual spurt in bonhomie between India and Pakistan, with the uneasy neighbours taking a liberal stance on cross-border trade and investment.
Allowing banks to launch operations across the border is part of a larger strategy to improve bilateral trade ties by making transactions easier for exporters.
Mansha is learnt to have met senior Indian officials in April this year to apprise them of his intent. The MCB Bank, which in the past has had informal discussions on information technology systems with the ICICI Bank, has a major presence in Sri Lanka and an indirect presence in the UAE, Bahrain, Azerbaijan and Hong Kong.
Apart from a banking foray, Mansha is also keen on setting up single-brand retail outlets in India for his wife’s textile business – Nishat Linen. The firm’s designer collections for men and women were sold out at the Pakistan Trade show held in Delhi this April. “She is already selling to one store (in India) and has three successful stores in Dubai, but we would be really happy to open a few permanent retail outlets in India,” Mansha said.
Summit Bank received ‘The Rock Award for 2011-12’ from Xpress Money Services Limited in a prestigious ceremony held recently in Abu Dhabi (UAE).
Farrukh Majeed, Head of Home Remittance received the award on behalf of Summit Bank for overall best performing agent in the Middle East, North Africa, Afghanistan and Pakistan regions receiving markets.
The ceremony was attended by senior management of leading financial institutions from various regions.
Speaking on the occasion Head of Home Remittance Summit Bank, Farrukh Majeed, said “Home Remittance is vital element for Pakistan economy and Summit Bank has taken various initiatives to contribute in this national cause and that is why Summit bank is now rated among top banks in Pakistan in terms of home remittance”.
If you’re keeping an eye on daily advertisement – it won’t surprise you that Money Gram is gradually taking over remittance market in Pakistan and giving a tough competition to Western Union in terms of network and volume.
According to a recent press release issued by the company, MoneyGram has generates 30 percent growth in Pakistan with the additions of Bank Al Habib, KASB Bank, Bank Islami and Tameer Bank, in their network.
The bank brings 650 locations to the network increasing the total location to 2,500 plus throughout Pakistan.
Pakistan the sixth largest remittance market of the world has more than 3 million Pakistan leaving in UAE, Saudi Arabia and GCC countries alone.
According to Richard Meredith, MoneyGram’s Senior Regional director of the Middle East, the four banks and their geographic are the ideal agents of MoneyGram.
To capture the remittance business in the geographically the large country, proximity to consumers is key. As such, these new bank agreements are significant step for ensuring we have locations that are convenient to our customers”, he said.
CFA Society Pakistan has announced 9th Annual Excellence Awards at a ceremony held at a local hotel here on Wednesday. As many as thirteen awards were announced for the different categories. Governor State Bank of Pakistan (SBP) Yasin Anwar gave these awards to the winners.
According to the results, MCB Bank Limited won the Best Bank of the year 2011 Award in the large banks category. The President and CEO of MCB Bank M.U.A Usmani received the award. Habib Bank Limited was the runner up in this category.
Bank Al Habib won The Best Bank of year 2011 Award for medium banks while Soneri Bank was the runner up in this category. Deutsche Bank won The Best Bank of the year 2011 Award in the small banks category while HSBC was the runner up. MCB Bank also won the Most Stable Bank Award. The Best Islamic Bank of the Year 2011 Award won by Meezan Bank.
The Corporate Finance House of the Year 2011 Award (Fixed Income) won by National Bank of Pakistan while United Bank Limited was the runner up in this category. The Corporate Finance House for the year 2011 – Equity & Advisory (Banks) Award won by KASB Bank while ABL was the runner up in this category.
The Corporate Finance House for the year 2011 – Equity & Advisory (Security Firm) Award won by AKD Securities while Arif Habib Limited was the runner up in this category. Transaction of the year 2011 Award was won by Allied Bank Limited in Kohinoor Inter pool Debt Swap, NBP in offer of sale Engro Foods and UBL in offer for sale Engro Foods.
The Investor Relations Award was won by Engro Corporation. The Best Trader Award was won by Shaikh Zia-ur-Rehman while Mohammad Imran was the runner up in this category. The Best Brokerage House Award was won by KASB Securities while the runner up was AKD Securities in this category.
The Best Analyst Award was given to Muhammad Fawad Khan while the runner up was Ayub Ansari. The other three analysts declared among the top five best analysts include Taha Khan Jeved, Farhan Mahmood and Khurram Schehzad.
The Competition Commission of Pakistan (CCP) has imposed a penalty of R s77 Crore on the ATM service provider and the banks for noncompetitive behavior and deciding the uniform service rate.
Back in March, Anti-trust watchdog issued show-cause notices to One-Link and member banks for fixing the charges of ATM Cash Withdrawal services.
The Competition Commission of Pakistan (CCP) imposed a Rs 5 Crore fine on 1-Link Guarantee Limited and Rs 5 Crore each on its 11 founding member banks and Rs 1 Crore on each of its 17 non-founding member banks for imposing uniform customer charges for using ATMs of other banks in violation of the Competition Act 2010, according to the CCP.
A fine of Rs 5 Crore each has been imposed on founding members namely, National Bank, Allied Bank, Habib Bank, Bank Alfalah, Askari Bank, Soneri Bank, NIB Bank, United Bank, Standard Chartered Bank, Faysal Bank and Bank Al-Habib Limited.
And Rs 1 Crore fine has been imposed on each non-founding members namely Albaraka Bank Pakistan, Burj Bank, Meezan Bank, BankIslami, KASB Bank, Habib Metropolitan Bank, Bank of Khyber, Dubai Islamic Bank Pakistan, JS Bank, Silkbank Limited, Bank of Punjab, Samba Bank, Sindh Bank, Barclays Bank Plc Pakistan, Tameer Microfinance Bank, Kashf Microfinance Limited and Summit Bank.
However no penalty has been imposed on Citi Bank which has not followed the collective behaviour of charging uniform fee for use of ATM transaction from the facilities of these banks.
The order was passed by a CCP bench comprising its Chairperson Rahat Kaunain Hassan and members Abdul Ghaffar and Dr Joseph Wilson in respect of the proceedings initiated against 1-Link and its member banks for imposing uniform customer charges.
The bench also observed that despite the financial liberalisation and deregulation measures of the banking sector, the efficiency of the industry is far below the banking sector of some of the developed countries and even the banking sector of countries like India and Bangladesh. The banking spread – gap between lending and borrowing – in Pakistan is currently at 8.12% while India and Bangladesh have a better rate of 0.92% and 5.90%, respectively.
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