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Projects

Project Brief

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. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.

 

Project name
Habib Metropolitan Bank Limited
Project ID
6115
Fiscal year
2011
Status
Active
Guarantee holder
Habib Bank AG Zurich
Investor country
Switzerland
Host country
Pakistan
Environmental category
FI
Sector
Banking
Date SPG disclosed
June 03, 2011
Project Board date
June 21, 2011
Gross exposure
 $95.1 million
Project type
Non-SIP
Strategic priority area
IDA

View Summary of Proposed Guarantee


On June 24, 2011 MIGA issued a guarantee to Habib Bank AG Zurich (HBZ) of Switzerland covering its investment in its subsidiary, Habib Metropolitan Bank (HMB) in Pakistan. The coverage is for 80 million Swiss Francs (CHF) for a period of up to 20 years against the risks of transfer restriction and expropriation. This is a new guarantee, which involves consolidation of existing coverage into one contract of guarantee, extended risk coverage, and an additional amount of coverage of CHF 14.6 million.

This project involves the continued operation and expansion of HMB in Pakistan. MIGA’s ongoing support is considered critical to this investor, and this project will contribute to strengthening Pakistan’s banking sector, one of the top reform priorities of the government. HMB’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 its policies, directives and business practices are aligned with those of its parent company, HBZ, which is subject to the supervision by the Financial Markets Supervisory Authority (FINMA), the Swiss banking regulator.

HMB plays a major role in offering financial services to Pakistan’s population. It operates more than 135 branches in 20 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. HMB’s growing branch network also facilitates deposit taking by HMB, thereby contributing to formal savings by the population. Investment in human capital has also continued, bringing the total number of staff to nearly 2,400.

MIGA’s support is 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. The project is also aligned with MIGA’s strategic priority of supporting investments into countries eligible for lending from the International Development Association.

 
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