Press Releases
print

IFC Finances Expansion of Pakistan’s Habib Bank into Small Business, Retail, and Consumer Markets


In Singapore
Andrew Mak
Phone: +65-8134-6274
E-mail: Amak@ifc.org        

Corrie Shanahan
Phone: +1-202-294-4697
E-mail: Cshanahan@ifc.org

In Washington, DC:
Rita Jupe
Phone: 202 458-8967
E-mail: rjupe@ifc.org

Singapore, September 18, 2006—The International Finance Corporation, the private sector arm of the World Bank Group, today announced $50 million in long-term funding for Habib Bank Limited, the largest private commercial bank in Pakistan, to support its postprivatization expansion into the retail, consumer, and small and medium enterprise markets.

Habib Bank is the first bank in Pakistan to raise dollar-denominated debt that can be used to expand its capital base and provide loans with longer maturities to its clients.

Beyond financing, IFC’s Private Enterprise Partnership for the Middle East and North Africa (PEP-MENA) will work with Habib on a range of technical assistance projects to:

  • Address the shortage of skilled bankers in the expanding Pakistani banking system by upgrading Habib’s staff training facilities and curriculum  
  • Increase Habib’s capacity to provide credit and other financial services to small and medium businesses
  • Collaborate with Habib, local banks, and banking associations to introduce environmentally and socially sustainable financial products and develop the capacity of banks to make environmental assessment of projects

Michael Essex, IFC’s director for the Middle East and North Africa, said, “IFC’s loan and technical assistance will support Habib’s postprivatization expansion and make credit available to smaller enterprises that are typically overlooked or underserved by banks, yet are the engine of growth and economic diversification in Pakistan.”

The $50 million in IFC financing is part of a broader $120 million investment package for Habib Bank approved by IFC’s board, which includes a proposed equity investment and trade finance facilities under IFC’s Global Trade Finance Program.

Zakir Mahmood, Habib Bank’s president and CEO, said, “This loan qualifies as tier II capital for Habib Bank and will further strengthen our strong balance sheet. We are pleased to be working with IFC in areas of mutual interest, that is, the development of longer-term products for smaller businesses and other high-priority sectors.  We look forward to working closely with IFC on further projects, including the continued upgrading of banking skills within the banking industry in Pakistan.”

Jyrki Koskelo, IFC’s director of Global Financial Markets, said, “IFC is particularly pleased with initiating a broad-based engagement with the leading private bank in Pakistan.  This program has several innovative features that will support the development and expansion of the banking sector in Pakistan, which is almost entirely private sector–led, and is moving toward increased scale, efficiency, and sophistication.”

About IFC

The International Finance Corporation, the private sector arm of the World Bank Group, is the largest multilateral provider of financing for private enterprise in developing countries. IFC finances private sector investments, mobilizes capital in international financial markets, facilitates trade, helps clients improve social and environmental sustainability, and provides technical assistance and advice to businesses and governments. From its founding in 1956 through FY06, IFC has committed more than $56 billion of its own funds for private sector investments in the developing world and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. With the support of funding from donors, it has also provided more than $1 billion in technical assistance and advisory services. For more information, visit www.ifc.org.

About Habib Bank

Habib Bank is the leading private commercial bank in Pakistan, which was privatized in 2004 following sale of a 51 percent stake and management rights to the Aga Khan Fund for Economic Development. As of December 31, 2005, Habib Bank had total consolidated capital of $687 million, total assets of $8.9 billion. It has over 14,000 employees and a network of 1,425 branches across the country, in addition to a large international network in 26 countries.