Banking sector is a very important sector of any country. Only 10 years ago, the Pakistani banks were doing very poorly. Now the scenario has changed. After 1997, the banks observed a turn around. In the fiscal year 2005-06, Pakistan observed a growth of 6.6%. For the last four years, Pakistan’s economy is growing at a constant pace. This is why the Pakistani banking sector has made significant development.
In order to increase productivity and quality of service, most of the banks of Pakistan are now being privatized. Recently, Standard Chartered, one of the largest banks of United Kingdom, is buying up majority stakes of Pakistan Union Bank. Sources vary on the amount of the stakes. Some say that Standard Chartered is buying 66% of the total stakes; others say that it is planning to buy all the shares. On next week, officials of the two banks are signing a Sales-Purchase-Agreement. Standard Chartered makes 95% of its profits from Asia. In Pakistan, in 2005, it had a very good performance. Presently, it has forty four branches in ten different cities in Pakistan. Union Bank has 53 branches, situated in different areas of Pakistan and last year it made a net profit of 1.74 billion rupees.
When foreign banks enter into a country, it has many positive effects on the country’s economy. It increases foreign direct investments and quality of service of the banks as well. The privatization of the state owned banks show that foreign banks in Pakistan are having a very good time. In addition, the people who are working in these banks, will observe a rise in their salary.
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