Why are international banks withdrawing from the Pakistani market?
Banking
Asked by Question Bot09/Jun/20141 answer
1 Answer
F
Faisal Khan
Answered 09/Jun/2014
HSBC is consolidating, worldwide, Pakistan is one of those countries that doesn't generate much of an income for HSBC, hence the exit. The bank had a good advantage earlier on in trade finance and global banking, but others have caught up too.
HSBC is exiting from many other countries as well (US could perhaps be one of the major geographic regions from where they just might pull out from). With the recent HSBC money-laundering scandal in the US, the re-evaluation of markets is on top of the board's agenda, PK just doesn't make the cut any more.
Barclays - loss consolidation. Simple. Barclays is known for its premier banking, and sadly for them, it just did not pick up the way they had hoped. Too much competition already from the likes of ABN-AMRO Bank premier banking (which has since moved out of PK) and Standard Chartered Bank. Not to mention, the close proximity of Dubai, where most premier banking has gone.
Barclays' been losing money, since Day 1, they have decided to call it a loss and shut down.
Citibank is exiting the consumer banking operations only. They will be reducing their branch network down to 6 branches (from 13). Their commercial business will still continue to flourish. Citi's exit from Pakistan is part of their overall restructuring that was drafted back in 2008. As with Citi as well, they are existing many markets to consolidate themselves.
Markets like Pakistan are profitable for banks and have been, heck any emerging country's banking markets are very profitable. The issue also stems from repatriation of profits (which are earned in Rupees) and have to be converted to US Dollars. With the US Dollar gaining strength, and the Rupee losing its value, a lot is lost is such conversions.
The Big 5 Banks of Pakistan (Habib Bank, United Bank, Allied Bank, National Bank and Muslim Commercial Bank) have been making great strides. With the size of their network and outreach, the banking industry is literally over-flowing. There are just too many banks and not enough money to legal economy to sustain it all. Sometimes, the bean-counter just decides that they do not wish to put more money in.
HSBC is exiting from many other countries as well (US could perhaps be one of the major geographic regions from where they just might pull out from). With the recent HSBC money-laundering scandal in the US, the re-evaluation of markets is on top of the board's agenda, PK just doesn't make the cut any more.
Barclays - loss consolidation. Simple. Barclays is known for its premier banking, and sadly for them, it just did not pick up the way they had hoped. Too much competition already from the likes of ABN-AMRO Bank premier banking (which has since moved out of PK) and Standard Chartered Bank. Not to mention, the close proximity of Dubai, where most premier banking has gone.
Barclays' been losing money, since Day 1, they have decided to call it a loss and shut down.
Citibank is exiting the consumer banking operations only. They will be reducing their branch network down to 6 branches (from 13). Their commercial business will still continue to flourish. Citi's exit from Pakistan is part of their overall restructuring that was drafted back in 2008. As with Citi as well, they are existing many markets to consolidate themselves.
Markets like Pakistan are profitable for banks and have been, heck any emerging country's banking markets are very profitable. The issue also stems from repatriation of profits (which are earned in Rupees) and have to be converted to US Dollars. With the US Dollar gaining strength, and the Rupee losing its value, a lot is lost is such conversions.
The Big 5 Banks of Pakistan (Habib Bank, United Bank, Allied Bank, National Bank and Muslim Commercial Bank) have been making great strides. With the size of their network and outreach, the banking industry is literally over-flowing. There are just too many banks and not enough money to legal economy to sustain it all. Sometimes, the bean-counter just decides that they do not wish to put more money in.