The State Bank of Pakistan (SBP) has recently issued a banking license to the Bank of China. The Chinese financial institution will start its business operations in branch mode after meeting other regulatory requirements in the country. The bank will initially bring approximately US $100 million in order to fulfill the Minimum Capital Requirement of SBP.
Reports indicate that the long term plan of the bank is to set up its strong foothold in the country’s banking sector by opening branches in various cities across the country, aiming to become one of the largest foreign banks in Pakistan.
Moreover, many analysts believe Chinese bank’s interest in Pakistan’s banking industry is symbolic of its plan to play a vital role in financing big infrastructure projects in the country that are expected to be completed under the $57 billion China-Pakistan Economic Corridor (CPEC) in the next decade.
“Bank of China is coming here to gain benefit from CPEC-related projects,” Invest and Finance Securities CEO Muzammil Aslam commented. However, he said that the initial $50 million is not enough, which indicates that the bank will increase its investment in the country.
There are many firms in Pakistan that are looking for financing and Bank of China must be looking forward to tap the opportunities. In future, the borrowing needs of these firms will grow and Bank of China will make it efforts to grab those openings, Muzammil Aslam added.
The Bank of China is currently the 4th and 5th biggest bank across the world in terms if Tier-1 Capital and total Assets respectively. Also, it is listed on the Hong Kong Stock Exchange and Shanghai Stock Exchange. On the other hand, the entry of Bank of China in Pakistan depicts the growing confidence of international investors on the country’s banking sector and reflects a stable economic outlook.
It is pertinent to note that Pakistan’s Habib Bank Limited (HBL) is currently making its efforts to set up a new branch in China. National Bank of Pakistan, on the other hand, is also waiting for the licensee to open its branch in China.