29 January 2004

Aga Khan Fund to pay Rs11.4bn next month: Top HBL management to stay

By Mohiuddin Aazim

KARACHI, Jan 28: The buyers of Habib Bank Ltd have decided to retain its senior officials including President Zakir Mahmood. They will take over the bank management after paying for 26 per cent of the bank shares in the middle of next month.

HBL sources told Dawn the Aga Khan Fund for Economic Development Fund (AKFED) that bought 51 per cent HBL shares last month had asked Mr Mahmood to continue as its president with his present team. They said the Fund had apprised the State Bank of its decision to retain Mr Mahmood, and the central bank had approved it. The Fund has also informed the SBP that it would make payment for 26 per cent of HBL shares in the middle of next month to take over the bank.

The Fund has bought 51 per cent HBL shares for Rs22.4 billion. But under the rules it can take over the bank management after paying for 26 per cent of the total shares which comes to Rs11.4 billion. It will have to pay the remaining Rs11 billion within two years.

The AKFED has nominated four persons on the board of directors of HBL, including Sultan Allana as chairman and Zakir Mahmood as President and CEO. Mr Allana is also a senior banker and has remained associated with Citibank in the past. The other two directors are: Iain Cheyne and Barrister Sajid Zahid. Mr Cheyne is an international banker and director of the AKFED and Barrister Sajid Zahid is senior partner in Karachi-based Orr Dignam & Company Lawyer.

The AKFED has submitted the names of its nominated directors to the State Bank and the central bank has cleared them. Now the government would also nominate four persons on the board of directors of HBL.

HBL sources say Zakir Mahmood met members of the managing committee on Tuesday evening and indicated to them that they would possibly continue to work with him for the privatized Habib Bank.

At present there are eight members of the managing committee of HBL - all senior executive vice-presidents. They are Khaleeq Kayani, Sohail Malik, Jamil Iqbal, Ayaz Ahmad, Atif R. Bokhari, Jamil Ahmad Khan, Hanif Akhai and Shahid Loan.

Except for Mr Loan, who has recently been promoted as SEVP and made member of the managing committee, all present members of the committee are contractual employees.

Three SEVPs - Khayyam Mehmood Butt, Altaf Hussain and Naeem Iqbal - who were also members of the managing committee recently retired. Shahid Loan has filled in one of the three vacancies thus created. Two more appointments are expected.

HBL Employees Federation Secretary General Muhammad Ali Memon has asked Mr Mahmood to meet the representatives of bank employees and share with them the latest developments.

"We are surprised that we have not been taken into confidence so far," he remarked while talking to Dawn over telephone. He said the employees wanted to know about their job's safety and working environment in the privatized bank. "We hope the management has a good news for us - not bad news," he said when told that the buyers of the bank may have to opt for downsizing the staff after a year.

The AKFED has inherited a workforce of 1,871 regular employees for 1,468 branches of HBL as of end-December 2003, with their total annual pay bills exceeding Rs4.68 billion. Sources close to the AKFED say the buyers may offer a voluntary separation scheme for the bank employees to reduce this huge workforce. But they have given a firm assurance to the Privatization Commission that this would not be done in the first year.

Mr Memon said the HBL Employees Federation was going to have the next round of discussions with the management on its charter of demand after Eid holidays. The two sides were originally scheduled to meet on January 25 at Peshawar. The venue remains unchanged.