Seychelles' branch of Habib Bank will close in February

The Central Bank of Seychelles Building in Victoria (Seychelles News Agency)

(Seychelles News Agency) - The Seychelles' branch of Habib Bank Limited will cease operations and close on February 28, the Central Bank of Seychelles (CBS) said in a press conference on Friday.

The bank said it has more than enough assets to transfer customer funds to other financial institutions. 

The Central Bank’s governor, Caroline Abel, said the board has approved the closure of Habib Bank, which is headquartered in Pakistan, following a formal request submitted by Habib Bank Limited. The Central Bank said that the management of Habib Bank Limited has advised officials that the decision to close down the business is based on the strategic reorganisation being undertaken by the bank.

“While Habib Bank will not be accepting any new business as of today, Friday, September 21, there is a clear process that the bank needs to undertake as part of its winding up. This includes repaying all of its depositors and other creditors in respect of its operations in Seychelles,” explained Abel.

Abel said clients of Habib Bank Limited have until December 28 for necessary formalities, in terms of deposits and transfer of loans to other commercial banks.

“We are working in close collaboration with Habib, to ensure that the interest of the bank’s customers and the public is safeguarded. We would also like to affirm that Habib is fully solvent and has sufficient liquidity. This means that the bank is in a position to honour its obligation towards all depositors and repay all debts,” Abel told journalists.

Habib Bank Limited, headquartered in Karachi, Pakistan, opened a branch in Seychelles – an archipelago of 115 islands in the western Indian Ocean - in 1976. It is the largest bank in Pakistan, with total assets of $22 billion and over 1,700 branches. The bank operates in 24 countries.

The Habib Bank Plaza which houses the head office of the Habib Bank Limited in Karachi. (Wajahatali001, Wikipedia) Photo License: CC BY-SA 3.0

Habib Bank said in a statement that “since its establishment in the island nation, the bank has endeavoured to contribute to the growth and development of the country, but has now decided to exit this market.”

The communique said “our foremost priority is to fulfil our responsibilities towards our staff, customers, creditors and all other business partners to ensure minimal disruption. “

Naadir Hassan, from CBS’s Financial Surveillance, said that the bank has 1,870 account holders and is financially stable. “The total deposit of the bank is $7 million. This is the amount that clients have with the bank. If we look at assets, in terms of liquid assets with the Central Bank, Habib Bank has $1.3 million.”

According to Hassan, the bank has an additional $7.4 million in investments.  “We want to reassure the public and clients that Habib has enough liquidity to pay off all its debtors and will still have funds left over. So clients can easily have their money back with no problems,” said Hassan.

Habib Bank Limited account holders are being encouraged to use electronic transfer facilities available to move their funds to accounts with other commercial banks. To facilitate this process, Habib Bank will be waiving all charges associated with the transfer of funds, and other transactions, as well as the closure of accounts.

The governor of the Central Bank said a meeting was held with all financial institutions to inform them of this development and to facilitate new transactions with former clients of Habib Bank.

James Jean -- head of the Financial Inclusion and Market Conduct of the CBS -- said clients have until December 28 to access their funds. 

As for loans, clients have two options. “Their loans can be transferred to another bank and this can be done by Habib Bank or the clients can apply for a loan from another bank and repay Habib. We are reminding all clients that they have a legal obligation to repay their debts.”

Clients are also being advised to refrain from issuing and accepting cheques related to HBL accounts after September 21. However, the Central Bank and Commercial Banks will continue to accept valid cheques up to October 31.

The Habib Bank employs 12 staff, amongst which 10 are Seychellois nationals. The governor of the CBS has already met with these employees and Central Bank will be facilitating the process so that these employees can find employment opportunities within the finance sector.