Faysal Bank Explained

Faysal Bank
Native Name:Urdu: فیصل بینک لمیٹڈ
Type:Public
Traded As:
KSE 100 component
Location:Karachi, Pakistan
Industry:Islamic banking
Products:Islamic banking, loans, consumer banking, business banking, priority banking, credit cards, debit cards, savings
Revenue Year:2023
Income Year:2023
Net Income Year:2023
Assets Year:2023
Equity Year:2023
Num Employees:8,789
Num Employees Year:2024
Owner:Ithmaar Bank (66.78%)
Parent:Ithmaar Bank
Subsid:Faysal Asset Management
Faysal Islami Currency Exchange
Footnotes:Financials [1]

Faysal Bank Limited (FBL) is a Pakistani Islamic bank headquartered in Karachi.[2] [3] It is a subsidiary of Ithmaar Bank. It is named after Mohammed bin Faisal Al Saud.

History

1987–2002: Beginnings as an investment and conventional bank

Faysal Bank started in Pakistan in October 1987, with a tiny branch and as a subsidiary of Faysal Islamic Bank, a Bahraini bank owned by Mohammed bin Faisal Al Saud, the son of the late King Faisal of Saudi Arabia.[4] [5] The bank was part of a broader initiative by the Dar al-Maal al-Islami Trust (DMI), a Geneva-based organization founded in 1981 to promote Islamic banking worldwide.[6] Faysal Bank's operations in Pakistan consisted of the branch operations established in 1987 and Faisal Islamic Investment Bank, which was set up in 1996.[6]

In 1995, the branches of Faysal Islamic Bank were incorporated as a conventional bank in Pakistan and it took over the six branches of Faysal Islamic Bank of Bahrain E.C in Pakistan.[6] [7] In the same year, it was listed on Karachi Stock Exchange.[8]

2002–2008: Merger, slow growth, and controversies

In 2002, the Islamic investment bank merged with the conventional bank, resulting in the loss of its Shariah-compliant status.[6] This decision was driven by management choices rather than shareholder demands and led to a significant decline in deposits, from Rs31.9 billion in 2001 to Rs24 billion by the end of 2002, representing a 23 percent drop.[6] Despite these setbacks, Faysal Bank managed to recover and even double its initial deposit base by the end of 2005.[6] This recovery was largely attributed to deposits from Arab-owned businesses, particularly the Attock Group, which has a presence in Pakistan's oil industry. At one point, the Attock Group alone accounted for nearly a quarter of the bank's deposits.[6]

In the mid-2000s, Faysal Bank faced additional challenges related to its involvement in capital markets and legal issues involving its head of investment banking, Ajaz Rahim, who was charged with insider trading in New York.[6] [5] [9]

2008–present: Acquisition of Royal Bank of Scotland in Pakistan and growth

In March 2008, Faysal Bank appointed Naved A. Khan, a former banker at ABN Amro, as its new head.[6] He was tasked by the board to restructure the bank's management.[6] He implemented major changes, which included dismissing many existing staff members and hiring a large team from ABN Amro.[6]

In 2010, under Khan's leadership, Faysal Bank acquired RBS Pakistan for, which had previously acquired the Pakistan operations of ABN Amro.[6] [10] Previously, ABN AMRO Bank Pakistan had acquired Prime Commercial Bank, consisting of 69 branches and spanning 24 cities in 2007 for, which was merged into Faysal Bank after RBS Pakistan acquisition.[11]

Nauman Ansari, who succeeded Naved Khan, focused on integrating the acquisition and streamlining the bank's operations.[6] Ansari reduced the bank's workforce, which had grown significantly over the years.[6] During Ansari's tenure, Faysal Bank shifted its focus on growth, which included converting more branches to Islamic banking in an effort to capitalize on the faster deposit growth associated with Islamic finance.[6] The bank also expanded its branch network.[6]

In 2014, it announced to convert itself into a full-fledged Islamic Bank in three to five years.[12] It finally converted to a full-fledged Islamic bank by December 2022.[13]

Notes and References

  1. Web site: Faysal Bank Annual Report 2023. faysalbank.com. 26 March 2024.
  2. Web site: A Bank in Pakistan is Splurging on 200 New Branches . 1 May 2019 . Bloomberg . 6 August 2020.
  3. Web site: About Faysal Bank . 2011-09-24 . https://web.archive.org/web/20111011230720/http://faysalbank.com/aboutus.html . 2011-10-11 . dead.
  4. Web site: Gulf investors seek exit opportunity from Pakistan's banking industry . Monitoring . Report . April 16, 2018.
  5. Web site: Insider Trading Can Now Touch Many Corners of the World . Landon . Thomas Jr. . Michael . J. de la Merced . June 20, 2007 . New York Times.
  6. Web site: Three major banks are up for sale. Who will buy them?. Farooq. Tirmizi. April 16, 2018. Profit by Pakistan Today.
  7. Web site: Faysal Bank. November 5, 2002. DAWN.COM.
  8. Web site: Banks: FAYSAL BANK LIMITED - Half Year Ended June 30 2004. December 22, 2004. Brecorder.
  9. Web site: Hafiz Muhammad Zubair Naseem (10-year sentence, $7.5 million fine) . May 11, 2011 . Aaron . Couch . The Christian Science Monitor.
  10. Web site: RBS sells its operations in Pakistan . 16 June 2010 . BBC . 6 August 2020.
  11. Web site: Banks' appetite for acquisitions . May 3, 2010 . DAWN.COM.
  12. News: 2014-03-25 . Pakistan's Faysal Bank to convert into Islamic bank . en . Reuters . 2020-07-09.
  13. News: 2022-12-30 . Faysal Bank branches now 100% Islamic; awarded Islamic Banking license. en .