Pakistan Appoints Raza Central Bank Governor After Akhtar Quits: Bloomberg

By Cherian Thomas and Khaleeq Ahmed

Dec. 29 (Bloomberg) -- Pakistan appointed Saleem Raza, a former Citigroup Inc. executive, as governor of the central bank after Shamshad Akhtar said she will step down from the post as the nation grapples with its worst economic crisis in a decade.

Prime Minister Yousaf Raza Gilani “expressed confidence that the new governor, who has sound experience in the financial sector and international banking, would work to the best of his abilities to meet the enormous economic challenges,” according to a statement from the Prime Minister’s office in Islamabad.

The new leader of the State Bank of Pakistan will have to subdue inflation running at more than 24 percent while economic growth is slowing. The governor will also have to deal with conditions imposed last month by theInternational Monetary Fund when it lent $7.6 billion to buffer the nation’s depleting foreign-exchange reserves.

“It’s a pretty challenging situation,” said Sakib Sherani, country economist at Royal Bank of Scotland in Islamabad. “The risk is the new person may not be up to speed with the nuances of monetary policy. Continuity would have been good.”

For more on this article, please click on the following link: Pakistan Appoints Raza Central Bank Governor After Akhtar Quits: Bloomberg

Pakistan Raises Interest Rates Ahead of IMF Bailout: Bloomberg

By Khalid Qayum and Farhan Sharif

Nov. 12 (Bloomberg) -- Pakistan's central bank increased its benchmark interest rate by 2 percentage points, the most in more than a decade, as the government seeks a loan from the International Monetary Fund to avoid defaulting on its debt.

The State Bank of Pakistan raised the discount rate at which it lends to commercial banks to 15 percent, Governor Shamshad Akhtar said today in Karachi. The increase was part of conditions for an IMF loan, said Ahsan Iqbal, a spokesman for the Pakistan Muslim League-Nawaz party and former deputy chairman of the Finance Ministry's planning commission.
``It was the toughest decision of my life,'' Akhtar told reporters. ``The IMF program will be good for Pakistan as we need to be disciplined.''

Pakistan has been forced to seek funds from the IMF after its foreign reserves shrunk to $3.5 billion as of Nov. 1 from $14.2 billion a year ago, raising concern the country will not be able to pay the $3 billion in debt-servicing costs due in the next 12 months. Higher borrowing costs may also tame inflation, which accelerated to near a three-decade high in October.

For more on this article, please click on the following link: Pakistan Raises Interest Rates Ahead of IMF Bailout: Bloomberg

Dr. Shamshad Akhtar listed among ten outstanding Asian women leaders: The News

KARACHI: State Bank of Pakistan (SBP) Governor, Dr. Shamshad Akhtar has been listed among the ten outstanding Asian women leaders.

The report published in a newspaper, Asian Wall Street Journal said that SBP Governor, Dr. Shamshad Akhtar was the first woman Governor of Pakistan’s Central Bank placed in a better position for tackling the existing financial crisis in the country.

For more on this article, please click on the following link: Dr. Shamshad Akhtar listed among ten outstanding Asian women leaders: The News

MCB Plans Takeovers as Crisis Pushes Pakistan's Banks to Merge: Bloomberg

By Naween A. Mangi

Oct. 21 (Bloomberg) -- MCB Bank Ltd., Pakistan's biggest by market value, plans to acquire domestic rivals as the nation's deepest economic crisis in a decade and tighter central bank rules push more lenders to consolidate.

``We have excess capital and we want to deploy it in assets that make sense for us,'' Chief Executive Officer Atif Bajwa said in an interview in Karachi yesterday. He didn't say which banks he was evaluating. ``The advantage of looking to get something now is that asset prices are low.''

Central Bank Governor Shamshad Akhtar last month increased banks' capital requirements almost fourfold within five years to spur mergers and reduce risk. Bajwa will need to grapple with Asia's highest borrowing costs and a faltering economy that forced Pakistan to seek a $10 billion bailout to avoid default.

``There's going to be a domestic scenario of acquisitions and mergers in which MCB will be a prominent player,'' said Saad Bin Ahmed, head of research at Karachi-based Capital One Equities Ltd., who rates MCB's stock ``hold.'' ``MCB is part of a group which is financially very strong.''

For more on this article, please click on the following link: MCB Plans Takeovers as Crisis Pushes Pakistan's Banks to Merge: Bloomberg

Pakistan’s banking system remains unhurt by financial market turmoil: SBP Governor: APP

KARACHI, Oct 21 (APP): Banking system of Pakistan has escaped the major ravaging effects of the recent financial market turmoil emerging from the US and engulfing the developed European economies. This was stated by Governor, State Bank of Pakistan (SBP), Dr. Shamshad Akhtar while speaking at the Asian Banker Dialogue on “The Banks We Like : and the Impact of the Global Financial Crisis on Pakistan’s Banks” here at a hotel on Tuesday.

The SBP Chief, however observed “In my assessment, Pakistan’s economy to- date has been affected mainly by the indirect impact of global events which led to the rise in the global commodity prices.”

Pakistan is perhaps the worst hit economy by the surge in global commodity prices as it has been a predominant factor in derailing the macro-economic fundamentals, she remarked.

Citing an example to explain this situation, she said almost 80 percent of the external current account deficit in FY08 is equivalent to the oil import bill which shot up to more than dollars 11 billion in FY08 as compared to below dollars 3 billion a few years back. Similarly, a large increase in FY08 fiscal deficit is on account of delay in pass-through of the international price hike at retail level, she observed.

Dr Akhtar said the financial markets in Pakistan have not been hit by the subprime markets or the associated contagion directly as Pakistan’s banking system from July 2007 to September 2008 did not face any liquidity problems. With strong regulatory oversight, we have seen significant enhancement of capital and capital adequacy ratio supported by high provisioning requirements.

For more on this article, please click on the following link: Pakistan’s banking system remains unhurt by financial market turmoil: SBP Governor: APP

Pakistan central bank cuts cash ratio to inject liquidity: AFP

KARACHI (AFP) — Pakistan's central bank moved to inject liquidity into the country's struggling financial system on Saturday by cutting the amount of cash commercial banks must hold in reserve.

The bank lowered the cash reserve ratio two percentage points to six percent, and said it would be cut to five percent on November 15, as it sought to ease tight credit conditions that have hit economic demand around the globe.

Shamshad Akhtar, governor of the State Bank of Pakistan (SBP), said the move would inject 180 billion rupees (2.2 billion dollars) into the system and that the overall package would total 270 billion rupees.

"The State Bank will monitor the liquidity flow after the injection of massive liquidity into the banking system," she said.

"We would like judicious use of liquidity," she said, adding Pakistan's banking sector was "quite resilient and fully capable of withstanding market shocks and adverse macro economic conditions."

For more on this article, please click on the following link: Pakistan central bank cuts cash ratio to inject liquidity: AFP

Pakistan Central Bank to Cut Cash Reserve to Improve Liquidity: Bloomberg

By Khalid Qayum

Oct. 9 (Bloomberg) -- State Bank of Pakistan, the nation's central bank, said it will cut the cash reserve requirement for banks by two percentage points to improve liquidity in the financial markets.
The central bank will slash the cash reserve, or the proportion of deposits banks must set aside as cash, for all deposits up to one year by one percentage point to 8 percent from Oct. 11, according to a statement late yesterday by Karachi-based State Bank. The measure will be cut by another percentage point on Nov. 11, it said.
The step will release 61 billion rupees ($766 million) into the financial markets, the statement said, citing Governor Shamshad Akhtar.

"This is a temporary measure aimed at accommodating extraordinary liquidity requirements of the banking system,'' Akthar was cited in the statement as saying.

For more on the article, please click on the following link: Pakistan Central Bank to Cut Cash Reserve to Improve Liquidity: Bloomberg

State Bank of Pakistan Launches New design 50 Rupees and new 5 Rupees Banknotes: Daily.pk

The Governor, State Bank of Pakistan, Dr Shamshad Akhtar launched Rs 50 new-design and new Rs 5 banknotes at a simple but impressive ceremony held at SBP,Karachi , on Monday.

Addressing a press conference on the occasion, she announced that all the field offices of SBP Banking Services Corporation will start issuing these banknotes from tomorrow (8th July, 2008).

Dr Akhtar said that the state-of-the-art security features incorporated in Rs 50 new-design and new Rs 5 banknotes are of international standards and thus minimize the possibility of their counterfeiting. Nevertheless, it is important for the public to be well-versed with these security features so that they can easily recognize a counterfeit banknote when they come across it. Dr Akhtar urged the media to effectively play their vital and constructive role in educating the public by giving wide coverage to the security features of Rs 50 new-design and new Rs 5 banknotes.

It may be recalled that the State Bank has already introduced new-design banknotes of Rs 10, 20, 100, 500, 1000 and 5000 denominations. The new-design-upgraded series started gradually by introduction of Rs 20 banknote from 13th August 2005, has now been completed with the launch of Rs 50 new-design and new Rs 5 banknotes from today.

The launch of new high-tech banknotes has helped modernize the banking industry in Pakistan as the new-design banknotes are equipped with machine readable features. This will facilitate the automation of handling of banknotes by banks and use of equipment to detect counterfeiting while processing the banknotes.

For more on this article, please click on the following link: State Bank of Pakistan Launches New design 50 Rupees and new 5 Rupees Banknotes: Daily.pk