Meezan Bank has signed an agreement with HSBC Bank Oman to acquire the latter’s banking business in Pakistan, according to a stock filing.
Owned 51% by HSBC Holdings, HSBC Bank Oman’s 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. The acquisition is expected to materialise in the second half of 2015 subject to regulatory approvals.
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. Separately, HSBC Oman announced in November that it was in discussion with Meezan Bank regarding the possible sale of its operations in Pakistan.
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.
Meezan Bank already had the experience of acquiring a foreign bank and converting its operations from conventional to Islamic. It acquired Societe Generale in Pakistan through a similar transaction in 2002.
According to Reuters, the sale of HSBC Bank Pakistan was part of a strategy by Europe’s 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 banking services through window operations.
Deposits of Islamic banking institutions crossed the Rs1-trillion mark for the first time, registering year-on-year growth of 23.3% in 2014. Meezan Bank’s 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.