BANK ALFALAH, UBL PLAY VITAL ROLE IN PAKISTAN'S FINANCIAL SECTOR

SHABBIR H. KAZMI
Nov 16 - 22, 2009

Investment from United Arab Emirates has attained a significant share in Pakistan's financial sector. These investors not only have substantial investment in two leading Pakistani commercial banks but these banks have also established subsidiaries for undertaking insurance and asset management businesses. The story will remain incomplete without mentioning Bank Credit & Commerce International, commonly known around the globe as BCCI.

Bank Alfalah was incorporated in Pakistan and commenced its operations on 1st November 1997. It took over the operations of Habib Credit and Exchange, an entity which had taken over operations of defunct BCCI in Pakistan. Since its inception the management of the bank has implemented strategies and policies to carve a distinct position for the bank in the market place.

Drawing strength from the Abu Dhabi Group and being driven by the strategic goals set out by its board of management, the bank has invested in revolutionary technology to have an extensive range of products and services.

This facilitates the commitment of the sponsors to inculcate the culture of innovation and attain synergy. Over the years the bank has emerged as one of the foremost financial institutions in the region endeavoring to meet the needs of tomorrow today.

Over the years the sponsors and the management have been following the plan of expanding its branch network and deposit base, along with making profitable advances and increasing the range of products and services. It follows the path of excellence for maximizing customer satisfaction.

PACRA, the premier rating agency of the country, has rated the Alfalah 'AA' (double A), Entity Rating for long term and A1+ (A one plus) for the short term. These ratings denote a very low expectation of credit risk, strong capacity for timely payment of financial commitments in the long term and by highest capacity for timely repayment in the short term respectively. The ratings of first and second and third unsecured listed and subordinated TFC issues of Rs650 million, Rs1,250 million and Rs1,325 million have been maintained at AA- (Double A minus).

The bank has also established an asset management company, Alfalah GHP Investment Management. It has been licensed by the Securities and Exchange Commission of Pakistan to provide asset management and investment advisory services to retail, corporate and institutional investors. The company is a joint venture Non-Banking Finance Company established by Bank Alfalah Limited and GHP Arbitrium of Switzerland. It manages a number of funds.

The bank has also established a risk mitigation company Alfalah Insurance Company. Alfalah Insurance started operations in 2006 and since then it has already established offices in major cities of Pakistan that includes Lahore, Karachi, Islamabad, Faislabad, Peshawar, Gujranwala and Sialkot. Paid up capital of Alfalah Insurance is Rs230 million which is almost three times the minimum paid up capital requirement required for establishing a general insurance company in Pakistan.

Backed by the state of the art IT platform, the company offers first class security and service to clients. It has secured the support from some of the most renowned reinsurers.

A new chapter was written in the history of banking sector when the Privatization Commission received the highest bid of twelve billion and thirty five hundred million rupees for 51% shares of United Bank held by the GoP in the second and final round of the open bidding. The consortium of Abu Dhabi Group of UAE and Bestway Holdings of UK raised Rs50 million in the fixed floor price of Rs12.3 billion and offered the highest bid of Rs12. 35 billion.

Minister for Privatization Altaf M. Saleem said that UBL was a historic and landmark transaction for the country, which would pave the way for other upcoming transactions being scheduled for the near future and would have a positive impact on them.

United Bank is one of the largest commercial banks of Pakistan. It also has overseas branches in the United States of America, Qatar, UAE, Bahrain, and Republic of Yemen. It also has representative offices in Iran, and Kazakhstan. It owns subsidiaries in the UK and Switzerland.

The bank was established by legendary Agha Hasan Abedi in 1959. In 1971 the government of Pakistan nationalized it. In 2002, the government of Pakistan sold it in an open auction to a consortium of Abu Dhabi Group and Bestway Group. Since its privatization the bank has successfully been turned around and emerged as a robust performer in all major segments of its operations.

In 2002 it merged its operations in the UK with those belonging to National Bank of Pakistan to form United National Bank Limited, of which it owns 55%, with National Bank of Pakistan owning the remainder.

The bank has established UBL Fund Managers a wholly owned subsidiary, making it the first asset management company to be launched by a bank in Pakistan. UBL Fund Managers have been operating since the year 2002 and ranks amongst one of the leading asset management companies in Pakistan.

UBL Fund Managers was the first asset management company in Pakistan to voluntarily undergo a rating of its own for the Funds being managed by it. It has been awarded a 'High Management Quality' rating of AM2- by JCR-VIS Credit Rating Agency. This signifies a team of qualified personnel and the management's initiatives to streamline operations. UBL Fund Manager works in collaboration with a large network of UBL which makes the task of reaching out customers much easier and faster. Its performance and achievements are an indication of the determination to become a leading asset management company in the country.

UBL Insurers is an associated undertaking of UBL. Licensed to transact general insurance business in Pakistan UBL Insurers seeks to bring banking and insurance together in comprehensive financial solutions to better serve the existing customers as well as to bring in new business.

The company had underwritten gross premium of Rs373 million during first year of operations and was assigned A- (Single A minus) rating by JCR VIS which was a land mark achievement by any means. The company in its first year established full fledged branches in Karachi, Lahore, Multan, Faisalabad and Islamabad.