HABIB BANK LIMITED thegkworld
Habib Bank Limited is a multinational, Pakistani bank based in Habib Bank Plaza, Karachi, Pakistan. It belongs to the Aga Khan Economic Development Fund and is Pakistan’s largest asset bank.
Establishment of HBL
HBL was established in 1941 and became the first commercial bank in Pakistan. Its first international branch was opened in Colombo, Sri Lanka in 1951.
In 1972 the bank moved its headquarters to Habib Bank Plaza, which at the time became South Asia’s tallest building. The government nationalized and privatized the bank in 1974 when the Aga Khan Economic Development Fund inherited it in 2003.
Branches of Habib Bank
HBL has more than 1700 branches with a presence in more than 25 countries spanning four continents as of 2018. It is Pakistan’s largest asset-making company and has repeatedly ranked top Pakistani company in Forbes Global 2000.
HBL announced Senior Banker Muhammad Aurangzeb (formerly CEO of Global Corporate Bank – Asia Pacific at JP Morgan). As its President & CEO in February 2018 following Nauman K. Dar’s early retirement on December 31, 2017. After the bank was marred by a $225 million (USD) fine for non-compliance with risk management and anti-money laundering laws.
Habib Bank Services provides its customers with a basic range of banking services. including commercial banks in emerging markets.
History of Habib Bank Limited
The first Governor-General of Pakistan, Mohammad Ali Jinnah, realized the importance of financial intermediation. When fighting for the Muslims to create a separate homeland. He convinced the Habib family to set up a commercial bank which might serve the Muslim community.
His initiative led to the establishment of Habib Bank in 1941, with headquarters in Bombay and fixed capital 25,000. The bank was instrumental in mobilizing funds from the Muslim community to support the All-India Muslim League campaign for Pakistan’s government.
Role of HBL
Habib Bank also played an important role in channeling relief funds to hurt Muslims in the communal uprisings and violence surrounding British India’s withdrawal and subsequent partition.
Since Pakistan was established in 1947, Habib Bank moved its headquarters to Karachi. Pakistan’s first capital at Governor-General Jinnah’s insistence. This gave the newly formed Pakistan Karachi its first commercial bank.
The Habib family would own and run the bank until it was nationalized on 1 January 1974 by the Pakistan government
Privatization Commission Declared of HBL
On 13 June 2002, the Pakistan Privatization Commission declared that the Government of Pakistan would grant majority ownership of HBL to the Aga Khan Fund for Economic Development (AKFED). A subsidiary of the Aga Khan Development Network, against investment by AKFED in the bank.
Regulatory Issues with HBL
Owing to regulatory issues with the Financial Services Authority, HBL’s UK operation came close to closure during 2002.
Converting the activities to a subsidiary solved the problem. Then Habib Bank Limited and Allied Bank of Pakistan combined their operations into a new bank called Habib-Allied International Bank (Habib contributed its 6 branches and Allied its 4 branches).
In December 2003, Pakistan’s government granted AKFED rights to 51 percent of the bank’s shareholding against an investment of PKR 22.409 billion (US$ 389 million).
In February 2004, Pakistan’s government handed over ownership of Habib Bank to AKFED. The Board of Directors has been reconstituted with four members from the AKFED, including the Chairman and the President / CEO and three Government of Pakistan nominees.
$ Percent with HBL
In 2015, Pakistan’s government for $1.02 billion sold its 41.5 percent stake or 609 million bank shares. The Privatization Commission Board has proposed the strike price of Rs.168 per share according to the finance ministry. The shareholders of the bank now form the Aga Khan Economic Development Fund (51 percent), and the remaining 49 percent share is in free float.
CDC Group of Habib Bank
The CDC Group holds 5% and the International Finance Corporation holds 3% while the remaining shares are owned by individuals, institutions, and funds. On 18 April 2016, HBL was approved to operate a subsidiary in Ürümqi, Xinjiang as the first Pakistani bank to operate in China.
The HBL began international expansion in the 1950s. In 1951, it opened the first of three branches in Sri Lanka which would become. HBL founded Habib Bank (Overseas) the following year. Then opened the first of five branches in Kenya in 1956.
- HBL opened a branch in Aden 1957 or 1958.
- 1964 HBL opened the first of its four branches at Mauritius and the Beirut branch.
- 1966 In 1966 HBL opened the first of eight UAE branches.
- 1967 Hyder Mohamedali Habib founded Habib Bank AG Zurich. This became the main branch of the family held Habib Bank after Pakistan nationalized Habib Bank Ltd in 1974. 1969 HBL opened the first of its three branches in Bahrain and an OBU. The branch of HBL in Aden was, however, nationalized.
- 1971 HBL opened an OBU in Singapore and a New York City branch.
- 1972 The first of 11 branches opened in Oman by HBL. To celebrate the 25th Anniversary of the bank, HBL built Habib Bank Plaza in Karachi.
- 1974 HBL and HBL were nationalized by the Government of Pakistan and merged with Habib Bank (Overseas). After its nationalization, the Habib Family, any of its undertakings or affiliates had no stake in HBL. HBL opened a branch in Belgium in 1975.
- HBL also fused with the Pakistani bank, Standard Bank.
Seychelles Branch of Habib Bank
- 1976 HBL opened a Seychelles branch, the first of two branches in Bangladesh and a Maldives branch. In 1979 HBL opened a Dutch branch.
- 1980 HBL opened its Paris branch and Hong Kong branch.
- 1981 Nigeria Habib Bank was established by HBL with 40 percent ownership. HBL has also opened a Teheran Representative Office.
- In 1982 HBL opened its Khartoum office.
- 1983 HBL opened a branch in the Karachi EPZ and an Istanbul branch.
- HBL opened in Australia in 1987.
- 1991 After the reestablishment of private banking in Pakistan, the Habib Group created a separate private bank, Bank AL Habib. HBL opened a Fiji Islands branch and took over the failed bank branches in Pakistan, BCCI.
Habib Bank Fined Paid
In September 2017, HBL agreed to pay a fine of $225 million in an out-of-court settlement with the New York State Department of Financial Services (DFS) against 53 different infringements allegedly committed between 2007 and 2017.
Following a 5 percent increase in HBL’s stock to Rs.160.58 per share, with investor relief that the penalty was not greater than $225 m. Nevertheless, the fine is the biggest ever levied on a Pakistani financial institution. HBL had already agreed to surrender its license to operate a branch in New York starting from 1978.
The DFS had previously pursued up to $630 million in HBL penalties for failing to comply with state and federal laws in its sole U.S. branch. According to The Nation, enforcement concerns date back to 2015 when the DFS directed Karachi-listed Habib Bank (HBL) to implement a series of reforms related to bank policies to discourage illegal money transfer.
The DFS claimed in its statement in December 2015 that it found problems in the bank’s compliance with anti-money laundering. Habib has reportedly cleared transactions to a cybercriminal wanted by the U.S. Federal Investigation Bureau and a Chinese arms manufacturer subject to U.S. sanctions. Because Habib’s New York operations were used to clear dollar-denominated transactions, the bank is required to follow the laws and regulations of the US to know your client.