ABL’s credibility issue halts its growth

KARACHI: Allied Bank Limited (ABL) has expanded its branches significantly as compared to many banks, which saw an addition of 800 new point of sales in the past 40 years reaching to 1,002 now, but few incidents related to firing of CEOs, chairman and board members remains as bad patch on the credibility of the bank, which apparently halts its growth in the banking industry.

In a programme of Business Plus TV aired on Thursday, Anchor Khalil Ahmed along with a panel of economists – S M Arif and Ihsan A Sheikh highlighted various major setbacks witnessed by ABL in its history, which do still exist presently in the functions of banking company. S M Arif said Allied Bank Limited (ABL) enhanced its branches network to more than 1,000 mark to be one of the five banks in the country’s banking industry, but it was seemed slow to achieve the benchmark compared with various banks earlier attained the same target.

He said that the privatisation of the ABL, though seemed smooth as compared to Muslim Commercial Bank (MCB) in early 1990’s, as shares were transferred to employees and the management, but its expansion of operations was slower than MCB which is far ahead of the ABL in spreading its business. It was because of the fact that employees were given access to accounts of the ABL, but their role was not under suspicious due to transition political period, which hurt its performance badly. The bank was initially seen taking a paradigm shift in business and operations but its benefits could not be availed in a certain transition period, which was being run by the present leadership, he added.

It was an unfortunate incident that raised question on the competence and performance of present management because the central bank earlier had taken stern actions against the bank and had removed chairman and its three directors in 2001, as it found them doing business against the interest of bank and its depositors. The incidents of 2001 and 2014 were black spots on the bank’s image, S M Arif observed. The central bank should investigate that if there is any issue with the DNA of bank.

There is a question mark on the efficiency of the commercial bank, as Rs 1.5 billion worth scam was concocted under the very nose of the management, which was a big embezzlement case in the entire banking industry taken by ABL’s own employee, said Ishsan A Shaikh. No such incident was reported in any bank in Pakistan though there were scams reported earlier in different banks, he added. The amount is equal to 10 percent of the profit recorded by the bank in the past nine months.

The staffers of Audit and Compliance departments must have taken decision but the central bank was very merciless to control the operations of the ABL, which could be witnessed from the frequent intervention of the central bank. The action of the central bank was to maintain the confidence of depositors not only in the ABL, but also in the entire banking industry, he maintained.

A caller, Khalid, who was ex-employee at the ABL, said the retrenchment of the staff was forcibly left hundreds of people in the lurch. The new management removed the overall union with its oppressive actions despite the contribution of these employees were significant and quite satisfactory, he regretted. There was not a single package offered to compensate employees who were retrenched after privatisation of the bank. But the situation has got improved with the employees after privatisation of the the corporation, he added.

The performance was improved after removal of board members whereas improvisation was not seen in the operation after the retrenchment of staff members in hundreds. ABL’s NPLs were comparatively less than the MCB, but it stood now vice versa over the period of time. It is because of the political intervention in the bank’s affairs. The bank’s contribution is negligible in the economy but its investment is massive in the government papers. It attained agri-credit targets, but ignored marine Fishery Department at all. Before 2001, the bank did not publish its annual report, which was ignored or tolerated by the central bank which was black patch on the credibility of the bank.

Banker unleashed their criticism over ABL’s attitude and negligence of the central bank because disclosure of information actually reflected the performance of the bank. Any shortcomings could be overcome with the flow of information, economists said. The purpose of privatisation of any public sector entity is to improve its business in a way that its contribution to economy and employment generation should increase, however, it does not work in the case of the ABL.


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