Published On: Tue, Apr 19th, 2016

Pakistan’s largest bank opens branch in China



Pakistan’s Habib Bank Limited on Monday announced it had received a licence to open a branch in China, a move that would make it the first South Asian lender to operate in the world’s number two economy.

More commonly known by its acronym ‘HBL’, the bank said it would open a branch in Urumqi, the largest city in the province of Xinjiang, which lies along the traditional Silk Route and borders Pakistan.

“Habib Bank Limited is the first South Asian bank to get this permission,” a bank statement said, without setting a precise timeframe for opening.

Urumqi is a growing commercial and trade centre and the regional hub for China’s Belt and Road Initiative (B&RI) in Central Asia.

The programme is closely linked to the “China Pakistan Economic Corridor” (CPEC), a $46 billion development project, which will connect Gwadar port inPakistan‘s southwestern Balochistan province to Xinjiang.

Hamza Kamal, an investment analyst at Shajar Capital said: “The bank could capitalise over the growing investment and trade activities between the two countries as it has already developed its reputation with the Chinese business and trade sector.”

Founded in 1947, HBL has over 40 percent of Pakistan‘s banking market share.

Chinese investment in Pakistan grew in the first eight months of the current fiscal year to US$523 million from US$204 million in the same period last year.

Pakistan imports over US$5 billion in commodities from China every year.

The Industrial and Commercial Bank of China, one of the largest banks in China, has branches in Pakistan‘s main cities Karachi, Islamabad and Lahore.

In the 1950s, the HBL started its international expansion. In 1951 it opened the first of what would become three branches in Sri Lanka. The next year HBL established Habib Bank (Overseas). Then in 1956 HBL opened the first of five branches in Kenya.

  • 1957 or 1958 HBL opened a branch in Aden.
  • 1961 HBL opened the first of what would become 6 branches in the UK.
  • 1964 HBL opened the first of 4 branches in Mauritius and a branch in Beirut.
  • 1966 HBL opened the first of 8 branches in the UAE.
  • 1967 Hyder Mohamedali Habib founded Habib Bank AG Zurich Zurich. After the Pakistan nationalised Habib Bank Ltd in 1974, this became the main branch of the family held Habib Bank.
  • 1969 HBL opened the first of 3 branches and an OBU in Bahrain. However, HBL’s branch in Aden was nationalized.
  • 1971 HBL opened an OBU in Singapore and a branch in New York.
  • 1972 HBL opened the first of 11 branches in Oman. HBL constructed Habib Bank Plaza in Karachi to commemorate the bank’s 25th Anniversary.
  • 1974 The government of Pakistan nationalized HBL and HBL merged with Habib Bank (Overseas).
  • Habib Family, any of its undertakings and/or its affiliates had no stake in HBL after its nationalization.
  • 1975 HBL opened a branch in Belgium. HBL also merged with Standard Bank, a Pakistani bank.
  • 1976 HBL opened a branch in the Seychelles, the first of two branches in Bangladesh, and a branch in the Maldives.
  • 1979 HBL opened a branch in the Netherlands.
  • 1980 HBL opened a branch in Paris and another in Hong Kong.
  • 1981 HBL established Nigeria Habib Bank with 40% ownership. HBL also opened a representative office in Teheran.
  • 1982 HBL opened a branch in Khartoum.
  • 1983 HBL opened branch in the Karachi EPZ and a branch in Istanbul.
  • 1987 HBL opened in Australia.
  • 1991 The Habib Group established a separate private bank, the Bank AL Habib, after private banking was re-established in Pakistan. HBL opened a branch in the Fiji Islands, and took over the branches in Paksistan of failed bank, BCCI.
  • 1992 In Nepal HBL acquired 20% of Himalayan Bank.
  • 1995 HBL established a representative office in Cairo.
  • 1990s HBL established Habib Finance (Australia), and Habib Finance International Limited, Hong Kong.

On 13 June 2002, Pakistan’s Privatization Commission announced that the Government of Pakistan would grant the Aga Khan Fund for Economic Development (AKFED), a subsidiary of the Aga Khan Development Network, majority ownership of HBL against an AKFED’s investment in the bank.

During 2002, HBL’s UK operation came close to being shut down due to regulatory issues with the Financial Services Authority. The issue was resolved by converting the operations to a subsidiary. Then Habib Bank Limited and Allied Bank of Pakistan merged their operations (Habib contributed its 6 branches and Allied its 4), into a new bank, called Habib-Allied International Bank, in which Habib Bank has a 90.5% shareholding, while Allied Bank has 9.5%. Simultaneously with the transfer of business to the new bank, both Allied and Habib Bank closed down all independent operations in the UK.

In 2003, HBL received permission to open a branch in Afghanistan.

On 29 December 2003, Government of Pakistan granted AKFED rights to 51% of the shareholding in the bank against an investment of PKR 22.409 billion (USD 389 million). the next year, on 26 February, the government of Pakistan handed over management control of Habib Bank to AKFED. The Board of Directors was reconstituted to have four AKFED nominees, including the Chairman and the President/CEO and three Government of Pakistan nominees. The bank’s owners now comprise the Aga Khan Fund for Economic Development (51%), Government of Pakistan (42.5%), and the general public (7.5%).


About the Author

Syed Ammar Alavi

- is Lahore (Pakistan) based journalist & writer with 25-year experience in print, wire and broadcast forms of journalism. His major fields of interest are politics, film,tv,sports, climate change and technology