Introduction to Business Finance Report: Habib Bank AG Zurich



                                                  habib bank limited




Habib Bank AG Zurich was incorporated in Switzerland in 1967. The group consists of Habib Bank AG Zurich and two fully owned subsidiaries, Habib European Bank limited and HBZ Bank Limited, South Africa.


The house of Habib pioneered by Mr. Habib Esmail Ali of Jamnagar of India had a slow start as he was an orphan from the age of 13. Early success by God’s grace gave him tremendous encouragement and he soon captured the big and lucrative customers in Bombay, Karachi, Madras and Calcutta.


After his death his generations took the hold of further expanding the house of Habib. Namely  Ahmed Habib, Dawood Habib, Mohammed Ali Habib, Ghulam Ali Habib joined the business and from there the merchant banking became a core business interest. Habib and sons went on to become to the flagship of the family and the parent of Habib Bank limited.


In 1967, Habib Bank AG Zurich was incorporated in Zurich as an independent bank affiliated to Habib Bank ( overseas ) limited with a paid up capital of Swiss Francs 2 million.




Habib Bank AG Zurich has a solid foundation, very good financial traditions and management. It is a privately owned Bank and managed professionally by a dedicated team of very loyal officers and staff.


In1979, the UK Government passed a legislation to regulate and supervise banking by bifurcating Banks in two categories Licensed Banks and Licensed  Deposit Takers. It goes to the credit of Habib Bank AG Zurich that even though it had one small branch and a modest business base in London, the Bank of England accorded the Bank a full recognized status.


The year 1992 is the silver jubilee year of the Bank.  The bank has an asset base of over 1.4 billion Swiss Franks, with 27 Branches, 2 representative offices and one fully subsidiary Bank namely Habib European Bank Ltd and a committed, dedicated and loyal staff of 780 around the world.





Habib Bank AG Zurich is a commercial bank and provides a wide range of services normally associated with this business the main sources of revenue are from the interest differential business (52%), Commission & Services (27%) and dealing in foreign exchange and precious metal (17%). The bank also provide a wide range of private banking services from its Zurich Head office.


Interest Differential Business


The Bank except deposits from the general public and provides loan facilities generally on a fully secured bases to a wide range of private and commercial borrowers. Due to the banks high liquidity policies, significant surplus funds are either placed with top rated international banks or invested in easily realizable government securities.


Commission Business  & Services


The majority of revenues under this heading also comes from the credit business of which approximately 50% relates to the commission form trade financing activities (Letters of Credit). Other income drives primarily from private banking services including commissions on fiduciary business.




Except for some minor hedging transactions, the bank does not generally deal on its own behalf. The main source of profits from dealing is income from foreign exchange transactions made on behalf of customers, significant portion of which relates to the home remittance business. Realized exchange gains or losses made on the repatriation of profits from the overseas branches are also recorded here.


Other Business Activities


The bank holds long term investment in three associated companies, but none of these holdings exceed 10%.


It provides lockers and safe custody facilities to its clients, together with wode range of other services including credit cards and ATMs.


An interesting thing about Habib Bank AG Zurich’s master cards is that we have to pay in  Durham and not in Rupees.


Risk Management


Habib Bank AG Zurich’s business strategy is to keep risks to a minimum by a clear policy of broad diversification in terms of geography and product mix, and by spreading the bank’s credit and trade financing activities over a wide range of customers with the emphasis on secured,  short term, self liquidating lending.


Effective risk management is considered essential in the preservation of the assets and long term profitability of the bank. Clear guidelines and limits – which are under regular review – are backed up by a comprehensive system of internal controls and management inspections.


Interest rate risk


Interest rate risk is monitored locally in each country, in the major centres by means of interest rate balance sheets. The bank’s exposure, however, is very low due to short-term nature of the majority of business transacted and the fact that the vast majority of loan and deposit rates are variable. Fixed rate business accounts for less than 10% of the respective portfolios.


Market risk


As the bank carries out very limited trading on its own behalf, market risk are also kept to minimum. The major exception is exchange rate risk which is detailed below.


Profits earned in the bank’s overseas branches are subject to exchange rate risk up to their remittance to Head Office. These risks are monitored in Zurich, and profits hedged as felt appropriate. Capital and reserves held in the overseas branches are also subject to risk insofar as they are held in local currencies. Any unrealized game or losses on these reserves are taken directly to the P&L in the year in which they occur.


Otherwise, the overseas operations of the bank are re-financed entirely locally, with treasury management being carried in each country in accordance with strict limits and guidelines, subject to regular monitoring from Head Office.


Credit risk


The credit business is the major activity of the bank. Mainly short-term, fully secured lending is transacted within strict limits and margins which are under the direct supervision of the main board. Credit reviews constitute the major element of regular general management inspections of all branches.


Country risks are monitored monthly and are either guaranteed with the World Bank (MIGA) or provided for in accordance with the guidelines of the Swiss Federal Banking Commission.


Derivative financial instruments


Habib Bank AG Zurich is very cautious in its use of derivatives and only undertakes such transactions on its own behalf to a very limited extent in its asset and liabilities management activities. In addition, the bank issues capital guaranteed products from its Head Office in Zurich. These products are subject to daily valuation and are fully backed by triple ‘A’ rated zero coupon bonds, and options portion fully-hedged.


Transactions in derivatives are carried out on behalf of customers on a fully secured basis, in strict compliance with the credit policies of the bank. These transactions are almost invariably forward currency or interest rate instruments.




At the 31st December 1996, the group employed 1,074 people (1995: 1,066) at 34 locations (1995: 35).


Branches in Pakistan



City No.
Karachi 3
Lahore 2
Faisalabad 1
Rawalpindi 1




Board of Directors



Dr. André  Aloys Wicki *



Dr. Robert Sutz *

Vice Chairman


Dr. Marco Duss


Dr. Konrad  Hummler *


Prof. Dr. Leo Schuster


(* Member of the Executive Committee)





General Management



Hyder M. Habib



Habib M. Habib

Joint President


Muhammad H. Habib

Joint President













Services Habib Bank AG Zurich


  • Current, deposit and trust account facilities for private and corporate clients, in all currencies
  • Portfolio management services
  • Lending in the form of overdrafts, loans and other credit facilities
  • Foreign exchange dealing in all the major international currencies
  • Financing of foreign and domestic trade
  • Import and export letters of credit
  • Remittances/transfers of funds
  • Bullion and silver dealing
  • Financial services, including trade and credit information
  • Issuance of cheque cards/issuance and encashment of traveler’s cheques and foreign currency notes
  • Safe-deposits lockers
  • Dealing in gilt-edged securities, bonds and stocks
  • Correspondents banks world-wide
  • Credit cards



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