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Habib Bank Limited

For other uses, see Habib Bank.

Habib Bank Limited (Urdu: حبیب بینک) commonly known as HBL, is a Pakistani commercial bank based at Habib Bank Plaza, Karachi, Pakistan.

Habib Bank Limited
Native name
حبیب بینک
Company typePublic
PSX: HBL
KSE 100 component
KSE 30 component
IndustryBanking
Founded25 August 1941; 83 years ago (1941-08-25)[1]
FounderMohammed Ali Habib[2]
Dawood Habib[2]
HeadquartersHabib Bank Plaza, Karachi-75650, Pakistan
Number of locations
1,758[3] (2023)
Key people
ProductsLoans, credit cards, debit cards, savings, consumer banking, business banking, Islamic banking, prestige banking, etc.
RevenueIncrease Rs. 299.58 billion (US$1.0 billion) (2023)
Increase Rs. 126.816 billion (US$440 million) (2023)
Increase Rs. 57.67 billion (US$200 million) (2023)
Total assetsIncrease Rs. 5.53 trillion (US$19 billion) (2023)
Total equityIncrease Rs. 363.214 billion (US$1.3 billion) (2023)
Number of employees
20,301 (2023)
ParentAga Khan Fund for Economic Development
SubsidiariesHabib Allied Holding Limited
HBL Bank UK Limited
HBL Currency Exchange Limited
HBL Asset Management Limited
HBL Zarai Services Limited
Habib Bank Financial Services Limited
HBL Microfinance Bank (79.92%)
Websitehbl.com
Footnotes / references
Financials as of 31 December 2023 [3]

Established in 1941 by the Habib Family, HBL is Pakistan's oldest, largest and the first commercial bank. In 1951, it opened its first international branch in Colombo, Sri Lanka. In 1972, the bank moved its headquarters to the Habib Bank Plaza, which became the tallest building in South Asia at the time. The Government nationalised the bank in 1974 and privatised it in 2004; at that time, the Aga Khan Fund for Economic Development acquired a controlling share and management control.[4]

HBL significant shareholding lies with the Aga Khan Fund for Economic Development (AKFED) which is based in Geneva, Switzerland.[5]

HBL is the largest domestic multinational company in Pakistan in terms of assets, and has repeatedly ranked as the top Pakistani company in the Forbes Global 2000.[6][7] It is also Pakistan’s largest private sector bank, with over 1,700 branches and more than 2,000 ATMs. All HBL ATMs are linked to Visa and Mastercard, China UnionPay, and to the domestic 1LINK, MNET, and PayPak switches. IBFT (Interbank Funds Transfer) facility and utility bill payment capability are also provided at HBL ATMs. HBL branches also exchange foreign currency, initiate SWIFT and FEDWIRE transfers, and facilitate RAAST real-time money transfer transactions.[8]

History

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HBL Tower in Clifton, Karachi

Habib Bank Limited was established as a public limited company in Bombay in 1941 by the Habib family, previously engaged in internal trade and private banking.[9] The bank's founding was influenced by the revitalization of Muslim politics by Muhammad Ali Jinnah in 1936, prompting the Habibs to challenge the existing Hindu-British dominance in the banking industry.[9] Supported by Jinnah and the All India Muslim League, Habib Bank aided the Muslim League, subsequently serving as the appointed banker for the Muslim League Fund, the Pakistan Fund, and the Quaid-e-Azam Bihar Relief Fund.[9] Relations between Jinnah and Mahomedali Habib, a key figure in the bank, were notably close.[9] In 1937, under Mahomedali's influence, the Habib family converted from Isma'ilism to Isnasheri Shia Islam, aligning religiously more closely with Jinnah.[9]

In early 1947, at Jinnah's request, the bank's headquarters were relocated to Karachi on August 7, 1947, just before the Partition of India.[9] It was done to facilitate the transfer of Muslim assets to Pakistan, aiding both individual depositors and larger accounts.[9] The bank played a crucial role in the economic framework of newly independent Pakistan.[9]

The Habib family owned and managed the bank until the Pakistan government nationalised it on 1 January 1974. The Habib family received compensation of PKR 36.31 per share from the Government of Pakistan and subsequently the bank was delisted from the Karachi Stock Exchange.[10]

On 13 June 2002, Pakistan's Privatisation 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 AKFED's investment in the bank.[11]

In 2002, HBL's UK operation came close to being shut down due to regulatory issues with the Financial Services Authority. The problem was resolved by converting the operations to a subsidiary. Then Habib Bank Limited and Allied Bank of Pakistan merged their operations (Habib contributed its six branches and Allied its four branches) into a new bank, called Habib-Allied International Bank, in which Habib Bank has a 90.5% shareholding, while Allied Bank has 9.5%.

In December 2003, the Government of Pakistan granted AKFED rights to 51% of the shareholding in the bank against an investment of PKR 22.409 billion (US$389 million).[12] In February 2004, 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.[13]

In 2013, the bank acquired Citibank Pakistan consumer business for Rs. 2 billion.[14]

In April 2015, the Government of Pakistan sold its 41.5% stake or 609 million shares in the bank for $1.02 billion.[15] According to the finance ministry, the strike price of Rs. 168 per share (compared to the floor price of Rs. 166 per share) was recommended by the Privatisation Commission Board. The bank's owners now comprise the Aga Khan Fund for Economic Development (51%), and the remaining 49% of shares are in free float. CDC Group holds 4.99%, and the International Finance Corporation holds 0.87%, while individuals, institutions, and funds hold the rest of the shares.[16]

In June 2015, the bank acquired Barclays's Pakistan operations and absorbed the staff.[17]

On 18 April 2016, HBL received a licence to operate a subsidiary in Ürümqi, Xinjiang, becoming the first Pakistani bank to operate in China.[18] It became the first Pakistani bank and one of three banks from South Asia & MENA Region to open branches in China, with permission to trade in local currency, the Renminbi Yuan (CNY).[19]

In February 2018, HBL appointed senior banker Muhammad Aurangzeb (formerly CEO of Global Corporate Bank – Asia Pacific at JP Morgan) as its President & CEO following the early retirement of Nauman K. Dar on 31 December 2017, after the bank was marred by a penalty of $225 Million (USD) for its non-compliance with risk management and anti-money laundering rules.

In 2020, HBL was designated one of the domestic systemically important banks (D-SIB) of the year by the State Bank of Pakistan.[20]

International expansion

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In the 1950s, HBL started its international expansion. In 1951, it opened the first three branches in Sri Lanka. The following 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 six branches in the UK.
  • 1964 HBL opened the first of four branches in Mauritius and a branch in Beirut.
  • 1966, HBL opened the first of eight branches in the UAE.
  • 1967 Hyder Mohamedali Habib founded Habib Bank AG Zurich Zurich. After Pakistan nationalised Habib Bank Ltd in 1974, this became the main branch of the family-held Habib Bank.[21]
  • 1969, HBL opened the first of three branches and an OBU (Offshore Banking Unit) in Bahrain. However, the then-South Yemeni government nationalised the HBL branch in Aden.
  • 1971 HBL opened an OBU in Singapore and a branch in New York City.
  • 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 nationalised HBL, and HBL merged with Habib Bank (Overseas). After its nationalization, the Habib Family, any of its undertakings, or its affiliates had no stake in HBL.[22]
  • 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 Tehran.
  • 1982 HBL opened a branch in Khartoum.
  • 1983, HBL opened a branch in the Karachi EPZ (Export Processing Zone) and a branch in Istanbul.
  • 1987 HBL opened a branch 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 Pakistan of the failed 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.
  • 2002 The Government of Pakistan granted the Aga Khan Fund for Economic Development majority ownership of HBL.
  • 2017 HBL opened a branch in China at Ürümqi High-tech Industrial Development Zone.[23]
  • 2021 HBL became the first Pakistani bank to open a branch and serve clients in Beijing, China.[24][25]
 
Map depicting worldwide operations of HBL Pakistan. Highlighted countries have branches, subsidiaries and/or representative offices of the bank. Pakistan is highlighted in dark green for reference.

Corporate governance

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Board of Directors[26]
Name Position
Sultan Ali Allana Chairman of the board
Moez Ahamed Jamal Director
Shafiq Dharamshi Director
Salim Raza Director
Najeeb Samie Director
Saba Kamal Director
Khaleel Ahmed Director

List of CEOs

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  1. R. Zakir Mahmood (2000 – September 28, 2012)[27]
  2. Nauman K. Dar (September 28, 2012 – December 31, 2017)[28]
  3. Rayomond Kotwal - Interim CEO (December 31, 2017 – April 30, 2018)[29]
  4. Muhammad Aurangzeb (April 30, 2018 – 11 March 2024)[30]
  5. Muhammad Nassir Salim (11 March 2024 – )[31]

DFS Investigation

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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 separate violations allegedly committed between 2007 and 2017.[32][33]

Following this, HBL shares surged 5 percent, to ₨.160.58 per share, amid investor relief that the fine was not larger than $225 million.[34] The penalty, however, is the largest ever imposed upon a Pakistani financial institution. HBL had already agreed to surrender its licence to operate a branch in New York that had been operational since 1978.[32]

The DFS had earlier sought up to $630m in penalties from HBL for failing to comply with state and federal laws at its only U.S. branch.[35] According to The Nation, compliance issues dated back to 2015 when the DFS told Karachi-listed Habib Bank (HBL) to institute a series of reforms about the bank's policies for preventing illicit money transfers. In a December 2015 statement, the DFS identified issues in the bank's anti-money laundering compliance.[36]

Habib also allegedly cleared transactions to a cybercriminal wanted by the US Federal Bureau of Investigation and a Chinese weapons manufacturer that was subject to US sanctions. Since Habib's New York operations were used to clear dollar-denominated transactions, the bank is required to follow US "know your customer" rules and sanctions law.[37]

Allegations of terror financing

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On 28 September 2022, a New York district court passed an order under the Justice Against Sponsors of Terrorism Act placing secondary liability on Habib Bank Limited as a party that "aids and abets, by knowingly providing substantial assistance, or who conspires with the person who committed such an act of international terrorism". The plaintiff claimed that between 2010 and 2019, the bank had aided and abetted Al-Qaeda terrorism and had participated in a conspiracy to launch attacks in Afghanistan that killed or injured 370 people. In response, HBL released a statement claiming the accusations were "meritless" and that the bank was fiercely and thoroughly contesting them.[38]

FinCEN

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HBL was named in FinCEN leak, published by Buzzfeed News and the International Consortium of Investigative Journalists (ICIJ). It had one suspicious transaction flagged.[39]

HBL Asset Management Limited

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HBL got State Bank of Pakistan approval to inject Rs500mn in its wholly owned subsidiary namely HBL Asset Management Limited.[40]

HBL Microfinance Bank

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In 2024, HBL announced an equity investment of 6 billion Pakistani rupees in its subsidiary HBL Microfinance Bank.[41][42]

Sponsorship

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HBL has also served as the title sponsor of the Pakistan Super League (PSL) since the league's first edition in 2016. In November 2021, the sponsorship deal was renewed for another four-year cycle until 2025.[43]

See also

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References

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  1. ^ "HABIB BANK LIMITED". opencorporates.com. Retrieved 6 September 2018.
  2. ^ a b "About us – House of Habib". www.hoh.net.
  3. ^ a b "HBL Annual Report 2023" (PDF). hbl.com. Retrieved 25 March 2024.
  4. ^ "History". www.hbl.com. Retrieved 21 June 2016.
  5. ^ "HBL – Stock quote for Habib Bank Limited – Pakistan Stock Exchange (PSX)". dps.psx.com.pk. Retrieved 22 February 2021.
  6. ^ "Habib Bank on the Forbes Global 2000 List". Forbes. Retrieved 16 February 2017.
  7. ^ "The World's Biggest Public Companies". Forbes. Retrieved 16 February 2017.
  8. ^ "HBL Islamic Banking expands footprint in Pakistan". Profit by Pakistan Today. 16 February 2021. Retrieved 28 March 2021.
  9. ^ a b c d e f g h Papanek, Hanna (1972). "Pakistan's Big Businessmen: Muslim Separatism, Entrepreneurship, and Partial Modernization". Economic Development and Cultural Change. 21 (1): 1–32. doi:10.1086/450605. JSTOR 1152902 – via JSTOR.
  10. ^ Ahmad, Aijaz (2002). Lineages of the Present: Ideology and Politics in Contemporary South Asia. Verso. p. 34. ISBN 978-1-85984-358-1.
  11. ^ "Summary of Project Information, Habib Bank Ltd". Summary of Project Information, Habib Bank Ltd – International Finance Corporation. 1 December 2006. Archived from the original on 23 May 2011. Retrieved 5 December 2007.
  12. ^ History Archived 8 December 2015 at the Wayback Machine HBL Retrieved 27 December 2011
  13. ^ "History". HBL. 5 December 2007. Archived from the original on 15 December 2007. Retrieved 5 December 2007.
  14. ^ "Banking license of Barclays cancelled – Business Recorder".
  15. ^ Nauman, Qasim (12 April 2015). "Pakistan gets $1.02 billion for Habib Bank stake". The Wall Street Journal. Retrieved 26 September 2017.
  16. ^ Rana, Shahbaz (12 April 2015). "Privatisation proceeds: Final approval granted to $1b HBL stock offering". The Express Tribune. Retrieved 26 September 2017.
  17. ^ "HBL acquires Barclays Pakistan".
  18. ^ "HBL to open branch in China". The Express Tribune. 18 April 2016. Retrieved 18 April 2016.
  19. ^ "HBL: Pakistani Bank with a China Vision". Global Village Space. 12 May 2021. Retrieved 4 June 2021.
  20. ^ "HBL, NBP, UBL declared important banks". DAWN.COM. 4 September 2020. Retrieved 7 September 2020.
  21. ^ Obituary notice in Neue Zürcher Zeitung 108/2011.
  22. ^ HABIB BANK LTD. v. HABIB BANK A.G. ZURICH – 1980/82 HABIB BANK LTD. v. HABIB BANK A.G. ZURICH – Passing Off – Risk of confusion – Use of family name – Banks incorporated by well-known banking family – Banks in Pakistan and Switzerland closely associated with substantial business – Nationalisation of banks in Pakistan – Whether Swiss bank passing off in carrying on independent trading – Whether goodwill and reputation exclusive – Whether nationalised banks' claim barred by acquiescence, laches, and estoppel
  23. ^ "Pakistan's largest multinational bank opens branch in Beijing—China Economic Net". en.ce.cn. Retrieved 28 March 2021.
  24. ^ "HBL becomes first Pakistani bank to operate in China". The Nation. 22 March 2021. Retrieved 28 March 2021.
  25. ^ "HBL Creates History: Becomes The First Pakistani Bank To Open A Branch In Beijing, China". UrduPoint. Retrieved 28 March 2021.
  26. ^ "Board of Directors". HBL. Archived from the original on 24 March 2024. Retrieved 24 March 2024.
  27. ^ "Mr R. Zakir Mahmood,Board of Trustees | About AKU | The Aga Khan University". www.aku.edu.
  28. ^ "HBL announces retirement of Dar as CEO, other appointments". Profit by Pakistan Today. 23 October 2017.
  29. ^ "HBL CEO Nauman K. Dar bows out". DAWN.COM. 24 October 2017.
  30. ^ "HBL appoints new President and CEO". Profit by Pakistan Today. 30 April 2018.
  31. ^ "In a remarkable act of national service, Muhammad Aurangzeb steps down as President & CEO - HBL". Aga Khan Development Network.
  32. ^ a b "HBL agrees to pay $225m fine". Dawn. 8 September 2017. Retrieved 8 September 2017.
  33. ^ McLannahan, Ben (8 September 2017). "New York regulator kicks Pakistan's Habib Bank out of US". Financial Times. Archived from the original on 11 December 2022. Retrieved 8 September 2017.
  34. ^ Price, Michelle (7 September 2017). "Pakistan's Habib Bank to pay $225 million New York fine for compliance failures". Reuters. Retrieved 8 September 2017.
  35. ^ "NY DFS Fines Pakistani Habib Bank $630M". www.pymnts.com. 29 August 2017. Retrieved 29 August 2017.
  36. ^ "HBL says New York regulator seeks to fine it up to $630m". The Nation (Pakistan). Retrieved 29 August 2017.
  37. ^ "New York regulator seeks $630m penalty from Habib Bank". Financial Times. 28 August 2017. Archived from the original on 11 December 2022. Retrieved 29 August 2017.
  38. ^ "HBL faces liability in terror financing case in the US, the bank says will 'vigorously' contest allegations". Dawn. 29 September 2022. Retrieved 4 October 2022.
  39. ^ "Six Pakistani banks named in FinCEN leak". Profit by Pakistan Today. 21 September 2020. Retrieved 23 September 2020.
  40. ^ Ahmed, Ali (26 September 2020). "HBL gets central bank approval to inject Rs500mn in its subsidiary". Brecorder. Retrieved 26 September 2020.
  41. ^ "HBL to inject up to Rs6bn equity in its microfinance bank". Brecorder. 30 April 2024. Retrieved 24 July 2024.
  42. ^ "HBL to inject Rs6bn in subsidiary". DAWN.COM. 1 May 2024. Retrieved 24 July 2024.
  43. ^ "HBL retains title sponsorship of Pakistan Super League till 2025". www.PSL-t20.com. Retrieved 18 November 2021.
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