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Project Information

Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature.
Project Name Habib Metropolitan Bank Limited
Guarantee Holder Habib Bank AG Zurich
Investor Country Switzerland
Host Country Pakistan
Sector Banking
Gross Exposure ($million) 91.2
Fiscal Year 2011
Status Proposed
Project Number 6115
Environmental Category FI
Date SPG Disclosed June 3, 2011
Projected Board Date June 21, 2011

This summary covers an investment by Habib Bank AG Zurich (HBZ) of Switzerland in its subsidiary, Habib Metropolitan Bank (HMB) in Pakistan. HBZ, an existing MIGA guarantee holder, has requested additional coverage for its investment in HMB and the consolidation of all guarantees previously issued by MIGA into one single contract. MIGA’s proposed new coverage would be for 80 million Swiss Francs for a period of up to 20 years against the risks of transfer restriction and expropriation.

HMB is one of the 10 largest banks in Pakistan. The bank was formed in 2006 as a result of a merger between the Pakistani branches of HBZ and Metropolitan Bank Limited, a local bank. HBZ currently holds 51 percent of the shares, with the remaining shares owned by local and foreign investors. MIGA’s additional coverage to HBZ, as well as the denomination of MIGA’s contract in Swiss Francs, will help HBZ meet its obligations to the Financial Markets Supervisory Authority (FINMA), the Swiss banking regulator.

Environmental Categorization

The project is a category FI under MIGA’s Policy on Social and Environmental Sustainability.

Development Impact

HMB plays a major role in offering financial services to Pakistan’s population. It operates more than 120 branches in 19 cities throughout the country, including four full-service Islamic banking branches. Moreover, the bank’s network connectivity has been substantially upgraded, including a 17 percent increase in ATM rollout across the country and various internal control process enhancements. Investment in human capital has also continued, bringing the total number of staff to nearly 2,700.

HBZ’s expansion and modernization continues to contribute to the strengthening of the local banking sector through the transfer of know-how, expertise, and technology as HMB’s policies, directives, and business practices are aligned with those of its parent company, which is subject to the supervisory authority of FINMA. The impact of this is to introduce international best practices to both HMB and to the local industry. Moreover, foreign presence in the banking sector is considered to play a positive role in strengthening the banking sector against systemic risk.

MIGA’s support is also aligned with the World Bank Group’s strategy in Pakistan’s financial sector, which aims at increasing competition and expanding access to financial services to different segments of the population. The sector still suffers from low banking penetration and limited access to finance, especially with respect to the provision of banking services to underserved segments, including small and medium enterprises, consumer and housing finance, microfinance, and rural finance.

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