Meezan Bank Acquires Countrywide Operations of

HSBC Pakistan

Meezan Bank, the first and largest Islamic bank of Pakistan, has acquired
the countrywide operations of Hongkong and Shanghai Banking
Corporation (HSBC) in Pakistan, as HSBC has wound up its operations in
the country.

SCENARIO
Meezan Bank has signed an agreement with HSBC Bank Oman to
acquire the latters banking business in Pakistan
Owned 51% by HSBC Holdings, HSBC Bank Omans operations in
Pakistan consist of only one branch.
At the end of the first quarter of 2015, the bank had gross assets
amounting to Rs4.1 billion.
HSBC Bank Oman currently operates in Oman, India and Pakistan. It
decided in 2012 to sell off its India and Pakistan operations. It signed an
agreement to sell its banking business in India to Doha Bank QSC in
April last year.

SCENARIO
Earlier on, Meezan Bank also acquired Pakistan branch operations of
HSBC Bank Middle East in October. This resulted in all customers of
HSBC Pakistan automatically becoming customers of Meezan Bank.
An indirect, wholly owned subsidiary of HSBC Holdings, HSBC Bank
Pakistan consisted of as many as 10 branches and had total assets of
Rs48 billion at the end of 2013.
Meezan Bank stated at the time it intended to make the operations of
HSBC Shariah-compliant while ensuring that the existing customer
base continued to receive uninterrupted banking services.

SCENARIO

SCENARIO
According to Reuters, the sale of HSBC Bank Pakistan was part of a
strategy by Europes biggest bank to exit from countries where it is
unprofitable or lacks scale.
Being the second most populous Muslim country, Pakistan has been
a profitable market for Islamic banks. As many as five Islamic banks
operate in Pakistan while 14 conventional banks offer Islamic
through
window
operations.
banking
Depositsservices
of Islamic
banking
institutions
crossed the Rs1-trillion mark
for the first time, registering year-on-year growth of 23.3% in 2014.
Meezan Banks deposits rose 31.2% to Rs380.4 billion at the end of
2014. According to the latest quarterly results, Meezan Bank recorded
growth of 18.7% in its after-tax profit that stood at Rs1.3 billion for
January-March.
Like HSBC Bank Pakistan and HSBC Bank Oman, Europe-based
Barclays Bank has also left the Pakistan market for good by selling its
operations to Habib Bank recently.

Experienced In Acquisitions
This is the second time that Meezan Bank has acquired the Pakistan operations
of a foreign bank.
The first was when Meezan Bank took over the Pakistan operations of Society
Generale (SG) the French bank, in 2002 and successfully converted Society
Generales entire banking portfolio to Shariah-compliant lines, making it
Pakistans first ever successful conversion of a conventional banks business to a
Shariah compliant business. That was at a time when Meezan Bank was itself
only recently established as Pakistans first Islamic commercial bank.
It was considered a great achievement of the Meezan Bank team that hardly any
SG customers were lost during this process and the bank managed to continue
relationships with almost all the customers.
Meezan Bank has one of the worlds largest set-ups of Islamic finance research
and development and also provides Shariah advisory and technical services to
businesses and institutions across the world that want to convert their business
to Shariah compliant lines, or to start a Shariah compliant business locally or
internationally.
Further to the merger, Meezan Bank will convert the acquired operations into
Shariah-compliant banking and ensure that customers continue to enjoy
uninterrupted banking services. The Banks Shariah Supervisory Board had also

dustry Leadership And Growth

Meezan Bank has been the undisputed leader of Pakistans Islamic
banking industry for well over a decade and has always followed
the strategy of aggressively expanding its branch network.
Starting with a network of six branches in four cities, 12 years ago,
the Bank now has a network over 380 branches in more than 100
cities across Pakistan, and has the countrys eighth largest branch
banking network.
The bank is also Pakistans 11th largest bank in terms of deposits.
The banks deposits and branches have grown at an average rate of
approximately 50% per year over the last 11 years.

Profitability
Meezan Bank has demonstrated excellent performance not just
in terms of growth in network and deposits, but also in terms of
the profitability of its business operations.
Meezan Bank has never posted a loss in its entire 12 years of
operations despite the challenging financial environment that
has pushed the bottom line of many reputable banks into the
red.
The bank has always given excellent results to its stakeholders
and has an unbroken dividend payout record since inception.
An analysis of the banks latest accounts shows that its profit
after tax is the ninth highest in the industry and return on equity
the third highest amongst all banks in Pakistan.

Setting An Example
Following Meezan Bank, other global Islamic banks also entered
the Pakistani market with the aim of providing Islamic
alternatives to the banking customers on both the liability and
asset side of the balance sheet.
Local conventional banks have also followed the lead and
several conventional banks have opened stand-alone Islamic
windows and sub-branches as the growth of Islamic banks in the
industry is greater than the average.

Corporate, SME and Consumer

Finance Business
Meezan Bank has a strong end established presence in the country's
corporate banking sector with many blue-chip companies on its clients
list.
On the consumer banking side, Meezan Bank is among Pakistans
leading banks in the housing finance as well as the automobile finance
markets.
The Bank has a large portfolio of corporate, consumer, trade finance
and retail deposit products that cater to all customer segments and
provides a one-stop shop for fulfilling the banking needs of all
categories of customers.

Credit Rating
JCR-VIS, the banks credit rating agency, has upgraded banks longterm entity rating to AA from AA-with stable outlook; and
maintained its short-term rating atA-1+ which is the highest shortterm rating available.
The AA rating assigned by JCRVIS denotes high credit quality,
strong protection factors and modest risk but may vary from time to
time because of economic conditions.
The short-term rating A-1+ denotes high certainty of timely
payments, excellent liquidity factors supported by good fundamental
protection factors and minor risk factors.

The Islamic Banking Industry In

Pakistan
The industry has shown significant growth of above 30% annually,
occupying 8.6% in terms of assets and around 10% in terms of deposits
which depicts its rising acceptability and recognition across the country.

The HSBC Acquisition

The HSBC acquisition will increase the size of Meezan Banks network
by 10 branchesand enhance the banks outreach to an even larger
customer base.
Furthermore, Meezan Bank launched its priority banking segment,
Meezan Premium Banking, two years ago and this has proven to be
a very successful initiative in introducing Islamic banking to the high
net worth customer segment.
The HSBC acquisition will help the bank further strengthen itself in
this segment and establish itself as a leader in the countrys priority
banking segment.

Awards And Recognitions

Meezan Bank has been consistently recognized as the best Islamic
bank in Pakistan by numerous local and international institutions
including CFA Society - Pakistan, Asiamoney magazine Hong Kong,
Islamic Finance News - Malaysia, Global Finance magazine, New York
and Asset AAA - Hong Kong. The Bank has also received Best
Research and Development in Islamic Finance 2013 award by Global
Islamic Finance Awards (GIFA), London.

Acknowledgment
I would like to express my sincere appreciation to my teacher, Mr.
Fairoze Burah for his
guidance, encouragement and continuous support through the course
of this work. The extensive knowledge, vision, and creative thinking of
Mr. Burah have been the source of inspiration for me throughout this
work.

NUWAN THARANGA LIYANAGE

ASSOCIATE SME BANKING
NATIONAL DEVELOPMENT BANK
PLC
https://lk.linkedin.com/in/nuwan-tharanga-liyanage55b5083a