American banks declare their latest, mixed, results. The results unveiled this week by America's financial giants were, however, far from uniform.
Punjab Government Mulling Privatising BoP
Friday, February 25, 2011
The Punjab government is contemplating to privatise the Bank of Punjab (BoP) with the aim that proceeds of the privatisation of bank will help bailout the provincial government from current financial crunch and Mian Muhammad Mansha, a prominent banker is the potential buyer, Business Recorder has learnt.
Sources told this scribe that Punjab government officials and BoP senior management has given a detailed briefing to the PML-N Quaid Nawaz Sharif and Mian Mohammad Mansha owner of Muslim Commercial Bank (MCB) limited regarding the equity, assets, manpower and infrastructure of BoP.
It may be added that during first tenure of Nawaz Sharif as Prime Minister (1991-93) Mian Mansha purchased the state owned Muslim Commercial Bank (MCB) which is now one of the leading banks of Pakistan with a deposit base of Rs 368 billion and total assets over Rs 500 billion.
It may be added that Punjab government has been living on over-drafts of nearly billions of rupees from the State Bank. In order to improve its financial position it has already identified and put 1410 properties including commercial, residential and agriculture lands for sale to fetch more than Rs 12.5 billion from market since November 2009.
Till the end of January 2011, out of total properties on sale, the Punjab Privatisation Board sold out 325 properties of all kinds in open auctions and earned Rs 3.29 billion to meet its expenses said an official. In January this year, the government also announced rightsizing in public sector to save Rs 6.1 billion from current expenditures, he added.
It is pertinent to mention here that Punjab government established BoP in 1989, in pursuance of The Bank of Punjab Act 1989 and was given the status of scheduled bank in 1994. The Bank of Punjab is working as a scheduled commercial bank with its network of 284 branches at all major business centres in the country. The Bank provides all types of banking services such as Deposit in Local Currency, Client Deposit in Foreign Currency, Remittances, and advances to Business, Trade, Industry and Agriculture. A wholly owned subsidiary of BOP, First Punjab Modaraba, was established in 1992 and is being managed by Punjab Modaraba Services (Pvt) Ltd.
The Punjab government has owned 51 percent shares of the bank whereas 49 percent shares were owned by various individual, companies and foreigners. According to official record, the deposits of BoP is calculated Rs 225 billion till December 2010. Whereas, its assets were calculated Rs 173.6 billion according to Annual General Meeting 2008. The manpower is above 6,000 employees.
The bank remained under tremendous financial pressure during 2009 and 2010 owing to bad loaning particularly to Haris Steel Mill by the former president Hamesh Khan. The Punjab government provided Rs 10 billion finances to bank as equity injection to come out from the crises. Now BoP is doing business at breakeven level (no profit no loss basis), said an official requesting anonymity.
A senior finance department official said banking was a corporate activity and should be done by the private sector. If the government was interested to privatise BoP, fair market value should be carried out first to assess the total outlay (equity+loan+assets) of the bank to attract most appropriate price from the market. Privatisation should be done in open auction. It was in the interest of the government to privatise bank because it was passing through constant financial crises to deal government business and financial issues. The privatisation would help the government to avoid future loss and generate handsome funds to be diverted into development projects, he added.
Another senior Punjab government official requesting anonymity said discussions were being made at high level and political elite would decide about the privatisation of the bank. The privatisation would be done under "The Punjab Privatisation Board Act, 2010, he added.
The Punjab government can sell only 51 percent shares owned by her and the new management would purchase the remaining shares in hostile take-over from stock markets. If 51 percent shares would be sold then the purchaser would take-over the management control of the bank, he added. When contacted, Tariq Bajawa secretary finance Punjab said "it is not in my knowledge."
When asked, Ameer Mumtaz media manager BoP said it was news for me that bank was going to be privatised. When contacted, Mubashir Bashir head of corporate communication MCB on the behalf of Mansha said "we have no such intentions yet," adding that it was routine that Mansha holds meetings on various issues.
He said Mansha purchased MCB during first tenure of Nawaz Sharif as Prime Minister (1991-93) Mian Mansha purchased the state owned Muslim Commercial Bank (MCB) which is now one of the leading banks of Pakistan with a deposit base of Rs 368 billion and total assets over Rs 500 billion. Incorporated in 1947, MCB soon earned the reputation of a solid and conservative financial institution managed by expatriate executives.
Labels: BOP, Commercial Banks, MCB, SBP
posted @ 5:29 PM,
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NBP FOREE CASH
Saturday, February 19, 2011
National Bank of Pakistan (NBP) has formally launched instant, reliable, convenient and absolutely free remittance product in Madina region of Kingdom of Saudi Arabia.
According to NBP here, the product with the brand name of "NBP FOREE CASH" was launched on 12th Rabi-ul-Awwal. This instant remittance product is available from all centers of Tahweel Al Rajhi to facilitate the large Pakistani community for sending instant remittances to their families at home.
It is a cash-to-cash remittance delivery product through which beneficiaries from across Pakistan can receive home remittances in minutes from their loved ones abroad.
Labels: Commercial Banks, NBP, SBP
posted @ 11:11 AM,
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BankIslami Has Acquire Citibank Pakistan’s House Financing Portfolio
Tuesday, December 28, 2010
BankIslami has signed a first-of-its-kind deal to acquire Citibank Pakistan’s house financing portfolio amounting to Rs953 million. This is the first time an Islamic bank has acquired mortgage assets of a conventional bank.
“This acquisition will serve as a milestone for the Islamic banking industry in Pakistan and elsewhere,” said BankIslami CEO Hasan Bilgrami. He added that the acquisition of the housing portfolio is in line with BankIslami’s growth strategy in this segment.
Citibank’s house finance customers will now be required to switch to the Islamic mode of financing. “The transition for customers to BankIslami will be made easy and convenient,” said the CEO. Despite a general slowdown in the banking industry, BankIslami has expanded to 100 branches in less than three years.
A compound annual growth rate of 72 per cent over the last two years has made it one of the fastest growing banks in the country.
Labels: BankIslami, Banks, Citibank Pakistan, Commercial Banks
posted @ 5:13 PM,
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Know Your Customer - State Bank Advice
Sunday, February 14, 2010
The State Bank advised banks on Saturday to prevent money transfers through ‘Benami Accounts’ and remain extra vigilant about Know Your Customer (KYC) requirements of the central bank.
This advice was given at a compliance forum arranged by the SBP in collaboration with the Financial Monitoring Unit (FMU) in Karachi on Saturday.
The meeting was part of the consultative approach being followed by the SBP to help build capacity of banks in their compliance framework.
Syed Irfan Ali, Director Banking Policy and Regulation Department, State Bank, briefed the participants about various steps taken by the central bank with regard to strengthening the regulations to curb money laundering and illegal transfer of funds.State Bank’s representatives provided detailed guidelines and clarifications to commercial banks for proper implementation of regulatory requirements.
Representatives of banks gave their suggestions to improve systems and procedures in this regard.
The meeting was attended, among others, by senior executives from the banking industry besides senior officials of the State Bank.
Labels: Commercial Banks, Know Your Customer, SBP
posted @ 6:12 PM,
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American Banks Announcing Good and Bad News
Friday, January 22, 2010
From The Economist
- Citigroup and Bank of America (BofA) posted thumping quarterly losses.
- Morgan Stanley eked out a modest gain.
- Wells Fargo and JPMorgan Chase made healthy profits.
- Goldman Sachs is expected to report a glittering set of numbers later this week.
The differences were partly down to one-off hits. Citi, for instance, had to swallow $6.2 billion in after-tax charges related to repayment of its federal bail-out funds. Behind the noise, however, some trends are emerging. Loan losses appear to be stabilising. For some, the worst may even be over. At BofA, America's biggest lender, net write-offs fell by 13% in the fourth quarter, the first decrease in nearly four years. Across the industry credit-card delinquencies are flattening out.
Nevertheless, the mood is cautious. In a call with analysts, Jamie Dimon, JPMorgan Chase's boss, hinted at the possibility of a double-dip recession. Even if the recovery continues, loan losses could remain high for some time. They lingered at peak rates for six quarters in the 1991-92 downturn, says Chris Whalen of Institutional Risk Analytics. One uncertainty is mortgage modification: banks may yet be forced to reduce the principal owed on some loans.
The outlook is cloudy in investment banking, too. Merger advice is picking up smartly, but capital-markets revenues fell in the fourth quarter, thanks to a big drop in fees from fixed income, currencies and commodities (FICC), previously the heart of the rebound.
This decline was partly seasonal. After a great year, many investors reduced activity in the fourth quarter to preserve profits. But it may presage a longer slowdown. The bid-offer spreads that banks earn on trades are falling from artificially high levels. Analysts at Citigroup expect FICC revenues, an estimated $190 billion in 2009, to be 15-20% lower this year. A further 15% of the pie could be lost if most over-the-counter derivatives migrate to exchanges. In absolute terms, any shrinkage is likely to hit hardest at Goldman, the market leader in FICC, unless it can continue to grow its share beyond the current 14% level.
Banks face other headwinds. The lacklustre economic recovery will keep loan demand weak. Tougher rules on capital will hurt banks' return on equity, as will restrictions on credit-card practices. JPMorgan Chase expects America's new card act to cost it $500m in annual profit--though it may be cheered that plans for a new financial consumer-protection agency seem to be in disarray. Banks must also swallow painful accounting adjustments. Bringing securitised assets back on its balance-sheet will erode Citi's core capital by 1.4 percentage points.
Punitive taxes will bite, too. Writing in the Financial Times, Mohamed El-Erian, head of Pimco, a fund manager, suggested that Barack Obama's plan to recover bail-out costs through an annual levy on large financial firms "marks the beginning of the era of banks being targeted for selective incremental taxation in advanced economies." Congress may yet raise the tax above the 0.15% of liabilities proposed, he added. The chances of further taxes will rise if bonuses continue to inflame tempers. Banks have made what they consider to be big changes to their pay structures. JPMorgan will hand its investment bankers just 11% of the revenue they generated in the last three months of 2009, a quarter of the norm; Citi has capped cash bonuses at $100,000. But this is unlikely to calm public fury, which could flare up again when Goldman announces its bonus pool.
On top of all this, banks face the gradual withdrawal of extraordinary government support. The industry's attention is turning to interest-rate risk. Rate cuts in 2007-08 greatly steepened the yield curve, handing banks a huge profit boost. As and when short-term rates start to rise again, banks' net interest margins (the difference between their interest income and funding costs) will come under pressure. These are already being squeezed as some firms restructure their balance-sheets: Citi's margin tumbled from 2.95% to 2.65% in the fourth quarter. Over the past three years, America's banks have gone from feast to famine and (for some) back again. The future lies somewhere in between.
Labels: Banks, Commercial Banks
posted @ 3:06 PM,
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Mergers and Acquisitions of Commercial Banks
Monday, November 16, 2009
By Mr. Shoaib
One fine morning when our Governor SBP woke up from his sleep, he stated that the banks operating in Pakistan were too much and weak and therefore the Malaysian model needed to be followed where there were less but strong banks.
Consequently he came up with the idea to squeeze the banking strucutre by raising the minimum capital requirements which was later on pursued by his predecessors but later reversed and modified to make it work.As a result of this measure alone, the banking sector in Pakistan saw mergers and acquisitions. Today the banking system of Pakistan has become rock solid and undefeatable by any standards and does not carry any chance of failure due to systemic or any other risk.
With the mergers and acquisitions the quality of service, products and assets quality improved greatly, thanks to this measure. It has also added to the deepening of the capital and financial markets as in the case of Malaysia. As a result of this measure, the banking sector became so strong that it became a danger tro the economy. Consequently certain weak Islamic banks had to be introduced to balance the equation.
As a result of this measure, the banking services which previously were available to less than 18% of the people suddenly became available to all and sundry as in the case of the Malaysian model and today nobody can say that people do not have access to the banking services. As a result of reduction of number of banks, the number of banking staff stood considerably reduced adding to the profitability of the banking sector and the deterioration in the assets quality was made up from this source .
The emerging victorous Presidents of the newly merged entity, preferred not to continue with the exisiting employees and decided to hire the old team from his previous bank. As a result the employees of the newly merged bank who were told that their services would no longer be required as also employees of the bank who expected that they would be hired by the newly merged entity, stopped working and started to look for new opening and business came to a standstill.
Later the surrendered team alongwith the defeated President were declared redundant and were sent home where they are now serving abroad in various insitituions and contributing to their respective economies.
One fine morning when our Governor SBP woke up from his sleep, he stated that the banks operating in Pakistan were too much and weak and therefore the Malaysian model needed to be followed where there were less but strong banks.
Consequently he came up with the idea to squeeze the banking strucutre by raising the minimum capital requirements which was later on pursued by his predecessors but later reversed and modified to make it work.As a result of this measure alone, the banking sector in Pakistan saw mergers and acquisitions. Today the banking system of Pakistan has become rock solid and undefeatable by any standards and does not carry any chance of failure due to systemic or any other risk.
With the mergers and acquisitions the quality of service, products and assets quality improved greatly, thanks to this measure. It has also added to the deepening of the capital and financial markets as in the case of Malaysia. As a result of this measure, the banking sector became so strong that it became a danger tro the economy. Consequently certain weak Islamic banks had to be introduced to balance the equation.
As a result of this measure, the banking services which previously were available to less than 18% of the people suddenly became available to all and sundry as in the case of the Malaysian model and today nobody can say that people do not have access to the banking services. As a result of reduction of number of banks, the number of banking staff stood considerably reduced adding to the profitability of the banking sector and the deterioration in the assets quality was made up from this source .
The emerging victorous Presidents of the newly merged entity, preferred not to continue with the exisiting employees and decided to hire the old team from his previous bank. As a result the employees of the newly merged bank who were told that their services would no longer be required as also employees of the bank who expected that they would be hired by the newly merged entity, stopped working and started to look for new opening and business came to a standstill.
Later the surrendered team alongwith the defeated President were declared redundant and were sent home where they are now serving abroad in various insitituions and contributing to their respective economies.
Labels: Commercial Banks, SBP
posted @ 12:23 PM,
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