SINGAPORE, Sept 18: The International Finance Corporation and Habib Bank Limited on Monday announced the signing of a deal under which the IFC is extending a $50 million in long-term funding to the bank to support its post-privatisation expansion into retail, consumer and small and medium enterprise markets.
Giving details of the deal in a ceremony to mark the initiation of what they called "long-term partnership" between the two institutions, Habib Bank President Zakir Mehmud highlighted enviable performance of the bank amidst a general environment of high growth in the financial sector of Pakistan.
"This loan qualifies as tier-II capital for Habib Bank and will further strengthen strong balance sheet. We are pleased to be working in areas of mutual interest, that is, development of long-term products for smaller businesses and other high priority sectors. We are looking forward to work closely with the IFC on further projects, including the continued upgrading of banking skills within the industry," he said.
Lars Thunell, IFC'S executive vice-president said that $50 million in IFC financing was a part of a broader $120 million investment package for Habib Bank approved by IFC's board, which included a proposed equity investment and trade finance facilities under IFC's Global Trade Finance Programme.
He said: “IFC is pleased with initiating a broad-based engagement with the leading private bank. This programme has several innovative features that will support development and expansion of the banking sector that is moving towards increased scale, efficiency and sophistication."
The State Bank of Pakistan governor and head of official delegation to the World Bank/IMF meetings, adviser to prime minister on finance Dr Salman Shah and Habib Bank Chairman Sultan Allana also spoke on the occasion. Some high ranking bankers and notable Pakistanis in Singapore also attended the ceremony.
Earlier, in a briefing to the press Mr Thunell said: "IFC has expanded its operations in Pakistan markedly over the last year and a half." He was responding to a question regarding the shyness of private investors in Pakistan to commit their capital in long-term projects citing a highly risky political environment and dangerous neighbourhood.
The IFC announced gains on key development indicators for 2006, with investment in high-risk and low income countries up 20 per cent, and a record $9.5 billion in investment commitments and resource mobilisation for private sector projects in developing countries.
"We made tremendous progress this year targeting financing in areas where IFC's help is needed most," said Mr Thunell said in a press conference.
During 2006, the IFC activities were focussed on Africa and the Middle East where investment increased 80 per cent. The investment in infrastructure and private and education projects were up more than 50 per cent.
Mr Thunell said the IFC and its donors approved more than new technical assistance and advisory projects for businesses and government during the year.