THE INVESTORS ARE ADVISED IN THEIR OWN INTEREST TO …

DRAFT

ADVICE FOR INVESTORS

Habib Bank Limited

Habib Bank Limited

Offer for Sale of Shares

THE PRESENT OFFER CONSISTS OF 250,000,000 ORDINARY SHARES REPRESENTING 17% OF THE TOTAL PAID UP SHARE CAPITAL OF HABIB BANK

LIMITED WITH AN UPSIZE OPTION OF UP TO AN ADDITIONAL 359,317,135 ORDINARY SHARES REPRESENTING A FURTHER 24.5% OF THE PAID UP

CAPITAL OF HABIB BANK LIMITED AT A PRICE FALLING WITHIN THE PRICE RANGE AND WHICH SHALL BE AT A PREMIUM TO THE PAR VALUE OF PKR

10/- PER SHARE (THE “OFFER”).

THE OFFER IS BEING MADE THROUGH THE BOOK BUILDING ONLY TO THE INSTITUTIONAL INVESTORS AND HIGH-NETWORTH INDIVIDUAL INVESTORS

BIDDING PERIOD DATE: APRIL 7 – APRIL 10, 2015

FROM: 09:00 AM – 05:00 PM PST

THIS IS NOT A PROSPECTUS BY HABIB BANK LIMITED (THE “BANK”) BUT AN OFFER FOR SALE BY THE ISLAMIC REPUBLIC OF PAKISTAN, PRIVATISATION

DIVISION OF THE MINISTRY OF FINANCE, REVENUE, ECONOMIC AFFAIRS, STATISTICS AND PRIVATISATION OF THE GOVERNMENT OF PAKISTAN,

ACTING THROUGH THE PRIVATISATION COMMISSION; AND THE STATE BANK OF PAKISTAN (TOGETHER REFERRED TO AS THE “OFFERORS”) FOR THE

DIVESTMENT OF THE OFFERORS’ RESIDUAL EQUITY INTEREST IN THE BANK.

JOINT DOMESTIC LEAD MANAGERS & CO-BOOKRUNNERS

THE DATE OF PUBLICATION FOR THIS OFFER FOR SALE DOCUMENT IS APRIL 3, 2015

FOR FURTHER QUERIES YOU MAY CONTACT

Syed Saquib Ali Abdul Qadir Shaheer Shaikh Waqar Ali

P: +92 21 3246 2597 P: +92 21 3246 2597 P: +92 21 111 354 947 x 3124 P: +92 21 3568 0756

THE ELIGIBLE INVESTORS SHALL NOT PLACE CONSOLIDATED BIDS. A BID APPLICATION WHICH IS BENEFICIALLY PLACED (FULLY OR PARTIALLY) BY PERSONS OTHER THAN THE ONE NAMED THEREIN SHALL BE DEEMED TO BE A CONSOLIDATED BID.

INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THIS OFFER FOR SALE DOCUMENT, ESPECIALLY THE RISK FACTORS GIVEN AT PARA 5.4 BEFORE MAKING ANY INVESTMENT DECISION.

A SINGLE INVESTOR CANNOT SUBMIT MORE THAN ONE BIDDING APPLICATION EXCEPT IN THE CASE OF REVISION OF A BID. IF AN INVESTOR SUBMITS MORE THAN ONE BIDDING APPLICATION THEN ALL SUCH APPLICATIONS SHALL BE SUBJECT TO REJECTION AND SUCH INVESTOR’S APPLICATION MONEY SHALL BE LIABLE TO CONFISCATION UNDER SECTION 18A OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969.

PLEASE NOTE THAT THIS IS AN OFFER FOR SALE DOCUMENT (“OFSD”) FOR BOOK BUILDING AND DOES NOT CONTAIN A FLOOR PRICE OR A PRICE RANGE FOR THE OFFER. FOR AVOIDANCE OF DOUBT THERE WILL BE NO SUBSEQUENT PROSPECTUS / OFFER FOR SALE DOCUMENT AND THE PRICE

RANGE AFTER APPROVAL BY THE PC BOARD & CCOP WILL BE NOTIFIED THROUGH ANNOUNCEMENT BY STOCK EXCHANGES AND/OR PLACED ON

THEIR WEBSITES AND/OR ON THE WEBSITES OF ARIF HABIB LIMITED AND ELIXIR SECURITIES PAKISTAN (PVT.) LIMITED AFTER CLOSE OF MARKET HOURS ON APRIL 6, 2015.

NONE OF THE SHARES HAVE BEEN OR WILL BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES UNLESS THE SHARES ARE REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENST OF THE SECURITIES ACT IS AVAILABLE. THE SHARES ARE BEING OFFERED ONLY OUTSIDE THE UNITED STATES IN OFFSHORE TRANSACTIONS AS DEFINED IN, AND IN RELIANCE ON REGULATION S, UNDER THE SECURITIES ACT (“REGULATION S”).

DISCLAIMER: CREDIT SUISSE (SINGAPORE) LIMITED AND DEUTSCHE BANK AG, LONDON BRANCH HAVE NOT PARTICIPATED IN THE PREPARATION OF THIS OFFER FOR SALE DOCUMENT, NOR ARE THEY RESPONSIBLE FOR THE CONTENTS OF THE SAME, INCLUDING ANY REPRESENTATIONS MADE HEREIN.

INVESTORS ACKNOWLEDGE THAT THEY HAVE NOT RELIED ON CREDIT SUISSE (SINGAPORE) LIMITED AND DEUTSCHE BANK AG, LONDON BRANCH OR ANY PERSON AFFILIATED WITH THEM IN CONNECTION WITH ANY INVESTIGATION OF THE ACCURACY OF ANY INFORMATION CONTAINED IN THIS OFFER FOR SALE DOCUMENT, OR THEIR INVESTMENT DECISION.

THIS DOCUMENT IS NOT INTENDED FOR RELEASE, PUBLICATION OR DISTRIBUTION OUTSIDE THE ISLAMIC REPUBLIC OF PAKISTAN. PERMITTED INVESTORS OUTSIDE THE ISLAMIC REPUBLIC OF PAKISTAN MAY REFER TO THE OFFERING MEMORANDUM PUBLISHED

E: [email protected] E: [email protected] E: [email protected] E: [email protected]

mailto:[email protected]




Offer for Sale Document | Habib Bank Limited

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IMPORTANT INFORMATION ABOUT THIS OFSD

THIS OFFER FOR SALE DOCUMENT SHALL BE DEEMED A CONTRACT FOR SALE OF SHARES UNDER THE LAWS OF PAKISTAN, TO THE EXTENT AN ELIGIBLE INVESTOR RELIES ON THIS OFFER FOR SALE DOCUMENT. SUCH AN ELIGIBLE INVESTOR, IN CASE OF ANY DISPUTE, SHALL HAVE THE RIGHT OF ACTION UNDER, INTER ALIA, THE CONTRACT ACT, 1872.

This OFSD is not a prospectus for the purposes of the prospectus rules of the U.K. Financial Conduct Authority (the “FCA”) (the “Prospectus Rules”) and has not been approved by the FCA, nor is it a prospectus for the purposes of Section 12(a)(2) or any other provision of, or rule under, the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”). The contents of the website of the Bank and its subsidiaries do not form any part of this OFSD. You are authorised to use this OFSD solely for the purpose of purchase of Offer Shares. In making an investment decision, you should rely on your own investigation and analysis of the Bank, the terms of the Offer, including the merits and risks involved, your own determination of the suitability of any such investment, with particular reference to your own investment objectives and experience, and any other factors that may be relevant to you in connection with an investment in the Offer Shares. Any decision to buy the Offer Shares should be based solely on the information contained in this OFSD. No person is authorised to give information or to make any representation in connection with the Offer other than as contained in this OFSD. If any such information is given or any such representation is made, such information or representation must not be relied upon as having been authorised by the Bank, the Offeror, the DLMs, any of their affiliates or advisors or selling agents, or any other person. At any time following the date of this OFSD, the information contained in this OFSD may no longer be correct and the Bank’s business, financial condition or results of operations may have changed. Neither the delivery of this OFSD nor any sale made hereunder shall under any circumstances imply that there has been no change in the Bank’s affairs or that the information set forth in this OFSD is correct as of any date subsequent to the date of this OFSD. The DLMs are acting exclusively for the Offeror and no one else in connection with the Offer. They will not regard any other person (whether or not recipients of this OFSD) as their respective clients in relation to the Offer, and will not be responsible to anyone other than the Offeror for giving advice in relation to the Offer or any transaction or arrangement referred to herein. None of the Bank, the Offeror or the DLMs, or any of their respective representatives, is making any representation to any offeree or purchaser of the Offer Shares regarding the legality of an investment in the Offer Shares by such offeree or purchaser under the laws applicable to such offeree or purchaser. You should not consider any information in this OFSD to be investment, legal or tax advice. Each investor should consult with his or her own advisors as to the legal, tax, business, financial and related aspects of a purchase of the Offer Shares. This OFSD does not constitute an offer of, or an invitation to purchase, any of the Offer Shares in any jurisdiction in which such offer or sale would be unlawful. In connection with the Offer, each of the DLMs and any of their respective affiliates, acting as an investor for its own account, may subscribe for or purchase, as the case may be, Offer Shares in the Offer and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for its own account in such


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securities, any other securities of the Bank or other related investments in connection with the Offer or otherwise. Accordingly, references in this OFSD to Offer Shares being offered or sold or otherwise dealt with should be read as including any offering or placement of Offer Shares to any of the DLMs or any of their respective affiliates acting in such capacity. The Offer Shares have not been, nor will they be, registered under the U.S. Securities Act or with any securities regulatory authority of any state or other jurisdiction in the U.S., and may not be offered, sold, pledged or otherwise transferred except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act, and in compliance with any applicable state securities laws.


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NOTICE TO CERTAIN INVESTORS THE OFFER SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION IN THE UNITED STATES OR ANY OTHER UNITED STATES REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON, OR ENDORSED THE MERITS OF THE OFFER OR THE ACCURACY OR ADEQUACY OF THIS OFSD. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE IN THE UNITED STATES. NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED STATES None of the Offer Shares have been or will be registered under the U.S. Securities Act and may not be offered or sold in the United States unless the Offer Shares are registered under the U.S. Securities Act or an exemption from the registration requirements of the U.S. Securities Act is available. The Offer Shares are being offered only outside the United States in offshore transactions as defined in, and in reliance on Regulation S. NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED KINGDOM This OFSD is being distributed only to, and is directed only at: (i) persons who are outside the UK; or (ii) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”); or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). Offer Shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Offer Shares will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this OFSD or on any of its contents. NOTICE TO PROSPECTIVE INVESTORS IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE In the Dubai International Financial Centre (the “DIFC”), no offer of the Offer Shares may be made to or by any person in the DIFC unless such offer is an “Exempt Offer” for the purposes of the Markets Rules (MKT) Module of the DFSA Rulebook issued by the Dubai Financial Services Authority (the “DFSA”). Persons into whose possession the Offer Shares may come must inform themselves about the nature of the Offer Shares as restricted securities in certain jurisdiction and observe any applicable restrictions in any such relevant jurisdiction on the distribution of this OFSD and the offering, purchase and sale of the Offer Shares. The DFSA has no responsibility for reviewing or verifying any documents in connection with the Offer Shares and has not approved this OFSD nor taken steps to verify the information set out in and has no responsibility for this OFSD. NOTICE TO PROSPECTIVE INVESTORS IN HONG KONG The Offer Shares may not be offered or sold in Hong Kong by means of any document other than: (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong); or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder; or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating


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to the Offer Shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to Offer Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder. NOTICE TO PROSPECTIVE INVESTORS IN SINGAPORE This OFSD has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this OFSD and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Offer Shares may not be circulated or distributed, nor may the Offer Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than: (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”); (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA; or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA. Where the Offer Shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is: a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole

business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares pursuant to an offer made under Section 275 of the SFA except: to an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person

defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions specified in Section 275 of the SFA;

where no consideration is or will be given for the transfer; or where the transfer is by operation of law.

NOTICE TO OVERSEAS INVESTORS No actions have been taken to allow a public offering of the Offer Shares or otherwise register the Offer Shares under the applicable securities laws of any jurisdiction outside Pakistan. The Offer Shares may not be offered or sold in any jurisdiction outside Pakistan. This document does not constitute an offer of, or


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the solicitation of an offer to purchase any of the Offer Shares to any person to whom it is unlawful to make such offer or solicitation.


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STATEMENT ON OFFERORS’ ABSOLUTE RESPONSIBILITY: The Offerors, having made all reasonable inquiries, accept responsibility for the disclosures made in this Offer for Sale Document and confirm that: This Offer for Sale Document (“OFSD”) contains all necessary information with regard to the Bank, the

Offerors and the Offer, which is material in the context of the Offer and nothing has been concealed; The information contained in the Offer for Sale Document is materially true and correct to the best of

our knowledge and belief; The opinions and intentions expressed herein are honestly held; and There are no other facts, the omission of which makes this document as a whole or any part thereof

misleading.

For and on behalf of the Offerors, -sd- __________________

Sardar Ahmad Nawaz Sukhera Additional Secretary (In-charge) Privatisation Division Ministry of Finance, Revenue, Economic Affairs, Statistics & Privatisation Government of Pakistan Islamabad


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GLOSSARY OF TECHNICAL TERMS & ABBREVIATIONS

AHL Arif Habib Limited

Bank/HBL Habib Bank Limited

BOD Board of Directors

CCOP Cabinet Committee on Privatisation

CDA Central Depositories Act, 1997

CDC/CDCPL The Central Depository Company of Pakistan Limited

CDS Central Depository System established under Section 4 of the Central Depositories Act, 1997

CGT Capital Gains Tax

CNIC Computerized National Identity Card

Commission / SECP Securities and Exchange Commission of Pakistan

COD Commercial Operations Date

CS / Credit Suisse Credit Suisse ( Singapore ) Limited

CVT Capital Value Tax

DB / Deutsche Bank Deutsche Bank AG, London Branch

DLM Joint Domestic Lead Managers & Co-Bookrunners

ES Elixir Securities Pakistan (Pvt.) Limited

FDI Foreign Direct Investment

FED Federal Excise Duty

GoP Government of Pakistan, Privatisation Division of the Ministry of Finance, Revenue, Economic Affairs, Statistics and Privatisation, acting through the Privatisation Commission

ISE Islamabad Stock Exchange

JGCs Joint Global Co-ordinators, International Lead Managers and Bookrunners

JLMs Joint Lead Managers

KIBOR Karachi Inter Bank Offered Rate

KPI Key Performance Indicator

KSE Karachi Stock Exchange

LIBOR London Inter Bank Offered Rate

LSE Lahore Stock Exchange

OFS/OFSD Offer for Sale/Offer for Sale Document

Ordinance The Companies Ordinance, 1984

PACRA The Pakistan Credit Rating Agency Limited

PC Privatisation Commission

PKR Pakistani Rupee

PRCL Pakistan Reinsurance Company Limited

PST Pakistan Standard Time (GMT + 05:00 hours)

SBP State Bank of Pakistan

SCRA Special Convertible Rupee Account

SLIC State Life Insurance Corporation of Pakistan

Stock Exchanges ISE, KSE and LSE collectively referred to as Stock Exchanges

SWIFT Society for World Interbank Financial Telecommunication

TFC Term Finance Certificate

UAE United Arab Emirates


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UK United Kingdom

WHT Withholding Tax

WWF Worker’s Welfare Fund

WPPF Worker’s Profit Participation Fund

YoY Year on Year


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DEFINITIONS

Allocable Demand The total number of ordinary shares which will be offered as part of the Offer after close of Book Building and as decided by the PC Board and CCOP. Such Allocable Demand could be less than, equal to or greater than the Base Offer but shall not exceed 609,317,135 ordinary shares.

Application Money The total amount of money payable by a successful Bidder which is equivalent to the product of the Offer Price and the number of shares to be allotted, plus CDC charges at 0.004% of the product of the Offer Price and the number of shares to be allotted. Refer to 2.2 for illustrations

Base Offer 250,000,000 Ordinary Shares representing 17% of the total paid up share capital of HBL. The Offeror has the option to revise up the Base Offer at any time prior to the commencement of Book Building subject to approval of PC Board and CCOP. The revised Base Offer shall be informed to Eligible Investors through announcement on the Stock Exchanges and/or placed on their websites and placed on the websites of the DLMs

Bid An indication to make an offer during the Bidding Period by a bidder to subscribe to the Ordinary Shares of Habib Bank Limited at a price which is within the Price Range, including all the revisions thereto

Bidder Eligible Investor who makes a Bid pursuant to the terms of the OFSD and the Bidding Form

Bid Amount The total amount of the Bid which is equivalent to the product of the bid price and the number of shares bid for. Refer to 2.2 for illustrations

Bid Collection Center Pre-determined places where the applications for bidding are collected by the DLMs on behalf of the Offerors and it may include offices and branches of DLMs or branches of Scheduled Banks. For the purpose of this Offer they are defined in Section 2.3

Bid Application Bidding Form duly filled and submitted by the Bidder

Bidding Form The form prepared by the Offerors for the purpose of making bids which will be considered as the application for subscription of Offered Ordinary Shares

Bidding Period The period during which bids for subscription of shares of the Bank will be made by Eligible Investors. The Bidding Period commences at 09:00 AM PST on April 7, 2015 and ends at 05:00 PM PST on April 10, 2015.

Book Building A mechanism of price determination through which indication of interest for subscription of shares offered by the Offerors is collected from the Eligible Investors. The price at which investors submit their Bids will be based on the Price Range approved by the PC Board and the CCOP and communicated by the DLMs to the Eligible Investors. Through this process a book is built which gives an idea of demand for the shares at different price levels. At the close of the Book Building process all


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orders will be tallied across the Price Range and the final Strike Price will be determined as the maximum price at which the Offer size gets fully subscribed. The Offerors shall decide the offer size which may be equal to or lower or greater than the Base Offer and the corresponding Strike Price based on Allocable Demand. The Offer size and the Strike Price will be subject to approval by the PC Board and the CCOP.

Book Building Account Account(s) opened by the Offerors with the Collection Bank(s). The Bidder will pay the Margin Money/Bid Amount through demand draft or pay order only, in favor of this account and the balance of the application money, if any, shall be paid through this account after successful allocation of shares under Book Building

Eligible Investor(s) Both Institutional Investor and HNWI as defined below

Filer Filer means a person whose name appears in the active taxpayers’ list issued by the Federal Board of Revenue from time to time or who is a holder of a taxpayer’s card, whereas all other persons are defined to be treated as “Non-Filers”

High Net worth Individual (“HNWI”) Individual investor who place a Bid of at least the Minimum Bid Size

Institutional Investor Companies, bodies corporate or other legal entities incorporated or established in or outside Pakistan (to the extent permitted by their constitutive documents and existing regulations, as the case may be) who place a Bid of at least the Minimum Bid Size

Joint Domestic Lead Managers & Co-Bookrunners (DLMs)

Arif Habib Limited and Elixir Securities Pakistan (Pvt.) Ltd

Joint Global Coordinators, International Lead Managers and Bookrunners (JGCs)

Deutsche Bank AG, London Branch and Credit Suisse (Singapore) Limited

Joint Lead Managers Together the DLMs and the JGCs

Limit Bid The Bid for a specified number of shares at the Limit Price.

Limit Price The maximum price a prospective Eligible Investor is willing to pay for a share under the Book Building process which must be within the Price Range.

Market hours The daily trading hours of the Stock Exchanges (Mon-Thurs: 09:30 AM PST to 3:30 PM PST, Friday: 09:00 AM PST to 12:30 PM PST and 02:30 PM PST to 04:30 PM PST)

Margin Money The partial or total amount, as the case may be, paid by a Bidder at the time of making a Bid

Minimum Bid Size PKR 500,000/-

Offer Offer is defined in para 2.1


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Offer Price The Strike Price determined through the Book Building process based on Allocable Demand and duly approved by the PC Board and CCOP.

Offer Shares The Ordinary Shares comprised in the Base Offer and the Upsize Option

Offerors The Islamic Republic of Pakistan, Privatisation Division of the Ministry of Finance, Revenue, Economic Affairs, Statistics and Privatisation, acting through the Privatisation Commission; and the State Bank of Pakistan

OFSD The OFSD containing all the information and disclosures as required under the Companies Ordinance, 1984, and Rule Book/Listing Regulations, as the case may be, of the Stock Exchanges approved by the Commission under section 62 read with section 61 and 57(1) of the Companies Ordinance, 1984 and circulated amongst the Eligible Investors for bidding of shares through the Book Building Process

Ordinary Shares Ordinary Shares of HBL having par value of PKR 10/- each unless otherwise specified in the context hereof

PC Board PC Board shall have the meaning assigned to the Board in the Privatisation Ordinance, 2000

Price Range

Privatisation

The price range set by the Offerors and approved by the PC Board and CCOP for the Offer. This price range will be notified through announcement through the Stock Exchanges and/or placed on their websites and on the websites of the DLMs after close of Market hours on April 6, 2015. A bid placed below or above the said price range will not be entertained by the DLMs The option of upward revision of the Price Range will be available to the Offeror

Privatisation shall have the meaning ascribed to such term in the Privatisation Ordinance, 2000

Step Bid Step Bid means a series of limit bids at increasing prices. In case of a step bid the amount of any limit bid shall not be less than PKR 100,000/- and there shall be no more than 5 limit bids.

Strike Price

The price of the shares determined on the basis of the Allocable Demand discovered through Book Building. The Strike Price shall be subject to approval of the PC Board and the CCOP

Upsize Option An option exercisable by the Offerors if, as a result of the Book Building process, the demand for the Offer is higher than the Base Offer and the Offerors decide to offer up to an additional 359,317,135 Ordinary Shares representing up to approximately 24.5% of the paid up share capital of HBL. At the end of the Book Building process, the Offerors may notify through an announcement on the Stock Exchanges, after approval of the PC Board and the CCOP, the extent to which the said upsize option may be exercised.


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TABLE OF CONTENTS

IMPORTANT INFORMATION ABOUT THIS OFSD............................................................................. 2

NOTICE TO CERTAIN INVESTORS ................................................................................................... 4

1. Approvals of the Stock Exchanges and Securities & Exchange Commission of Pakistan ........ 16

1.1 Approval of the Securities & Exchange Commission of Pakistan ....................................................................... 16 1.2 Clearance of the Offer for Sale Document by the Stock Exchanges ................................................................... 16 1.3 Filing of the OFSD and Other Documents with the Registrar of Companies ...................................................... 17 1.4 Listing on the Stock Exchanges .......................................................................................................................... 17 1.5 Statement by the Offerors ................................................................................................................................. 18 1.6 Statement by the Bank ...................................................................................................................................... 19

2 Book Building Procedure ................................................................................................... 20

2.1 Brief Offer Structure .......................................................................................................................................... 20 2.2 Book Building Procedure .................................................................................................................................... 20 2.3 Role and Functions of DLMs............................................................................................................................... 22 2.4 Opening and Closing of the Bidding Period........................................................................................................ 23 2.5 Eligibility to Participate In Bidding ..................................................................................................................... 23 2.6 Information for Bidders ..................................................................................................................................... 24 2.7 Bidding Form and Procedure for Bidding ........................................................................................................... 24 2.8 Bank Account for Book Building ......................................................................................................................... 25 2.9 Payment into the Book Building Account .......................................................................................................... 26 2.10 Payment by Foreign Investors ............................................................................................................................ 26 2.11 Revision of Bids by the Bidder............................................................................................................................ 27 2.12 Rejection of Bids by the Book Runner ................................................................................................................ 27 2.13 Withdrawal of Bids by the Bidder ...................................................................................................................... 27 2.14 Withdrawal of Offer by the Offerors .................................................................................................................. 27 2.15 Mechanism for Determination of Strike Price ................................................................................................... 28 2.16 Basis of Allocation of Shares .............................................................................................................................. 29 2.17 Refund of Margin Money ................................................................................................................................... 29 2.18 Bid Collection Centers ........................................................................................................................................ 29 2.19 Exemptions ........................................................................................................................................................ 29 2.20 Statement by Joint Domestic Lead Managers & Co-Bookrunners ..................................................................... 30

3 Share Capital and Related Matters .................................................................................... 31

3.1 Share Capital as at 17th March 2015 .................................................................................................................. 31 3.2 Offerors .............................................................................................................................................................. 32 3.3 Offer for Sale through Book Building ................................................................................................................. 32 3.4 Opening and Closing of the Book Building ......................................................................................................... 32 3.5 Refund of Subscription Money to Unsuccessful Applicants ............................................................................... 32 3.6 Credit and Transfer of Share Certificates under Book Entry System .................................................................. 33 3.7 Shares Issued in Preceding Years ....................................................................................................................... 33 3.8 Principal Purpose for the Offer for Sale of Shares ............................................................................................. 33 3.9 Interest of Shareholders .................................................................................................................................... 34 3.10 Dividends ........................................................................................................................................................... 34 3.11 Eligibility for Dividend ........................................................................................................................................ 34 3.12 Deduction of Zakat ............................................................................................................................................. 34 3.13 CDC Transfer Charges......................................................................................................................................... 34 3.14 Capital Gains Tax ................................................................................................................................................ 35 3.15 Withholding Tax on Dividends ........................................................................................................................... 35 3.16 Income Tax ......................................................................................................................................................... 35 3.17 Deferred Taxation .............................................................................................................................................. 35


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3.18 Sales Tax on Sale/Purchase of Shares ................................................................................................................ 36 3.19 Capital Value Tax (“CVT”) On Purchase of Shares .............................................................................................. 36 3.20 Tax Credit for Investment in Shares Acquired Through Privatisation ................................................................ 36 3.21 Justification for the Premium ............................................................................................................................. 37 3.22 Peer Comparison ................................................................................................................................................ 39

4 Underwriting, Commissions, Brokerage and Other Expenses .............................................. 40

4.1 Underwriting ...................................................................................................................................................... 40 4.2 Buy back/repurchase agreement ....................................................................................................................... 40 4.3 Commission to the Banker(s) to the Offer ......................................................................................................... 40 4.4 Brokerage ........................................................................................................................................................... 40 4.5 Expenses of the Offer ......................................................................................................................................... 40

5 History and Prospects ....................................................................................................... 41

5.1 The Bank ............................................................................................................................................................ 41 5.2 The Sponsors ...................................................................................................................................................... 42 5.3 Products, Services, Demand Outlook & Future Prospects ................................................................................. 42 5.4 Risk Factors ........................................................................................................................................................ 53

6 Financial Information ........................................................................................................ 58

6.1 Auditors Report .................................................................................................................................................. 58 6.2 Share Break-Up Value Certificate ....................................................................................................................... 76 6.3 Auditors Certificate on Issued, Subscribed, And Paid-Up-Capital of the Bank ................................................... 78 6.4 Significant Financial Information ....................................................................................................................... 79

7 Board and Management .................................................................................................... 81

7.1 Board of Directors of the Bank ........................................................................................................................... 81 7.2 Overdue Loans ................................................................................................................................................... 82 7.3 Dividend Record of Associated Companies - Listed On Stock Exchange(s) ........................................................ 82 7.4 Dividend Payout by Listed Companies in which the Bank’s Directors hold Directorship ................................... 83 7.5 Profiles of Directors ........................................................................................................................................... 84 7.6 Management Profiles ......................................................................................................................................... 87 7.7 Number of Directors .......................................................................................................................................... 90 7.8 Qualification of Directors ................................................................................................................................... 90 7.9 Remuneration of the Directors .......................................................................................................................... 90 7.10 Remuneration for Extra Service ......................................................................................................................... 90 7.11 Benefits to the Promoters and Officers ............................................................................................................. 91 7.12 Interest of Directors ........................................................................................................................................... 91 7.13 Interest of Directors in Property Acquired By the Bank ..................................................................................... 91 7.14 Appointment of Chief Executive/President ....................................................................................................... 91 7.15 Remuneration of President/Chief Executive ...................................................................................................... 92 7.16 Appointment/Election of Directors .................................................................................................................... 92 7.17 Voting Rights ...................................................................................................................................................... 92 7.18 Board Audit Committee, Board Human Resources & Compensation Committee and Board Risk Management

Committee ......................................................................................................................................................... 92 7.19 Internal Audit ..................................................................................................................................................... 93 7.20 Borrowing Powers .............................................................................................................................................. 93 7.21 Powers of Directors............................................................................................................................................ 93 7.22 Indemnity ........................................................................................................................................................... 93 7.23 Investment in Associated Companies and Joint Ventures ................................................................................. 94 7.24 Investment in Subsidiaries and Affiliated Companies ........................................................................................ 94

8 Miscellaneous Information ................................................................................................ 96

8.1 Registered Office................................................................................................................................................ 96 8.2 Head Office/Corporate Office ............................................................................................................................ 96


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8.3 Company Secretary ............................................................................................................................................ 96 8.4 Auditors of the Bank .......................................................................................................................................... 96 8.5 Legal Advisor of the Bank ................................................................................................................................... 96 8.6 Legal Counsel to the Offer ................................................................................................................................. 97 8.7 Legal Counsel of the Offerors ............................................................................................................................ 97 8.8 Share Registrar ................................................................................................................................................... 97 8.9 Bankers to the Offer........................................................................................................................................... 97 8.10 Joint Domestic Lead Managers & Co-Bookrunners ............................................................................................ 97 8.11 Material Contracts / Documents ........................................................................................................................ 98 8.12 Inspection of Documents and Contracts ............................................................................................................ 98 8.13 Legal Proceedings .............................................................................................................................................. 98 8.14 Memorandum of Association............................................................................................................................. 98 8.15 Particulars of Surplus from Revaluation of Assets of the Bank or any of its subsidiaries .................................. 98 8.16 Financial Year of the Bank .................................................................................................................................. 99 8.17 Capitalization of Reserves and/or Profits of the Bank ....................................................................................... 99 8.18 Dividend History................................................................................................................................................. 99

9 Bid Application and Allocation Instructions ...................................................................... 100

10 Signatories to the OFSD ................................................................................................... 104

11 Memorandum of Association of Habib Bank Limited ........................................................ 105

12 Bid Application Forms / Bidding Forms ............................................................................ 112

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1. Approvals of the Stock Exchanges and Securities & Exchange Commission of Pakistan

1.1 Approval of the Securities & Exchange Commission of Pakistan

Approval of the Securities & Exchange Commission of Pakistan (the "Commission" or "SECP") as required under Section 62 read with sections 61 and 57 of the Companies Ordinance, 1984 (the "Ordinance") has been obtained for the issue, circulation and publication of this Offer for Sale Document (“OFSD”). DISCLAIMER It must be distinctly understood that in giving this approval, the SECP does not take any responsibility for the financial soundness of the Bank and any of its schemes stated herein or for the correctness of any of the statements made or opinions expressed herein. SECP has not evaluated the quality of the Offer and its approval for issue, circulation and publication of the OFSD should not be construed as any commitment of the same. The public/investors should conduct their own independent investigation and analysis regarding the quality of the Offer before subscribing.

1.2 Clearance of the Offer for Sale Document by the Stock Exchanges

The OFSD has been cleared by the Karachi Stock Exchange Limited (“KSE”), Islamabad Stock Exchange Limited (“ISE”) and the Lahore Stock Exchange Limited (“LSE”), in accordance with the requirements of the Rule Book titled Listing of Companies and Securities Regulation of KSE and the Listing Regulations of LSE and ISE respectively.

The Stock Exchanges have not evaluated the quality of the Offer including the justification of premium, and their clearance of the OFSD should not be construed as any commitment in respect of the same. The public/investors should conduct their own independent investigation and analysis regarding the quality of the Offer before subscribing. The publication of this OFSD does not represent solicitation by the Stock Exchanges. The contents of this OFSD do not constitute an invitation to invest in shares or subscribe for any securities or other financial instrument by the Stock Exchanges, nor should it or any part of it form the basis of, or be relied upon in any connection with any contract or commitment whatsoever of the Stock Exchanges. It is clarified that information in this OFSD should not be construed as advice on any particular matter by the Stock Exchanges and must not be treated as a substitute for specific advice. The Stock Exchanges disclaim any liability whatsoever for any loss however arising from or in reliance upon this OFSD to any one, arising from any reason, including, but not limited to, inaccuracies, incompleteness and / or mistakes and for decisions and / or actions taken, based on this OFSD.

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The Stock Exchanges neither take responsibility for the correctness of the contents of this OFSD nor the ability of the Bank to fulfill its obligations hereunder. Advice from a suitably qualified professional should always be sought by investors in relation to any particular investment.

1.3 Filing of the OFSD and Other Documents with the Registrar of Companies

The Bank has filed with the Registrar, Companies Registration Office, as required under Section 57(3) and (4) of the Companies Ordinance 1984, a copy of this OFSD signed on behalf of the Offerors, along with the following documents attached thereto:

a) Letter dated March 27, 2015 from the Auditors of the Bank, Ernst & Young Ford Rhodes Sidat

Hyder Chartered Accountants providing consent for publication of its name in the OFSD. Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants has issued certain statements contained in Part 6 of the OFSD as required under section 57 (5) of the Ordinance (for which consent has not been withdrawn).

b) Written confirmations of the Legal Advisor to this Offer and Bankers to this Offer, Habib Bank Limited and MCB Bank Limited, consenting to act in their respective capacities, as required under Section 57(5) of the Ordinance.

c) Consents of Directors, Chief Executive and the Company Secretary of the Bank with regards to their respective appointments and publication of their names and roles such as Directors, Chief Executive and the Company Secretary in this OFSD, as required under Section 57(3) of the Ordinance, read with sub-clause (1) of clause (4) of Section 1 of Part 1 of the Second Schedule to the Ordinance.

1.4 Listing on the Stock Exchanges

The Bank is already listed on all the three Stock Exchanges of the country namely KSE, LSE and ISE. The closing price of the Bank’s share as on April 02, 2015 was PKR 187.66 per share. The maximum price during last one year from March 2014 to March 2015 was PKR 224.8 per share (on 23 December, 2014).

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1.5 Statement by the Offerors

The General Manager, Karachi Stock Exchange Limited, Stock Exchange Building, Stock Exchange Road, Karachi.

The General Manager, Lahore Stock Exchange Limited, Lahore Stock Exchange Building, 19, Khayaban-e-Aiwan-e-Iqbal, Lahore. The General Manager, Islamabad Stock Exchange Limited, ISE Towers, 55-B, Jinnah Avenue, Islamabad.

On behalf of the Offerors, I confirm that all material information as required, unless exempted, under the Companies Ordinance, 1984 and the Rule Book/Listing Regulations (as the case may be) of the Stock Exchanges has been disclosed in the Offer for Sale Document and that whatever is stated in the Offer for Sale Document and the supporting documents is true and correct to the best of our knowledge and belief and that nothing has been concealed.

For and on behalf of the Offerors

-sd- ____________________________ Sardar Ahmad Nawaz Sukhera Additional Secretary (In-charge) Privatisation Division Ministry of Finance, Revenue, Economic Affairs, Statistics & Privatisation Government of Pakistan Islamabad

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1.6 Statement by the Bank


The General Manager, Lahore Stock Exchange Limited, Lahore Stock Exchange Building, 19, Khayaban-e-Aiwan-e-Iqbal, Lahore. The General Manager, Islamabad Stock Exchange Limited, ISE Towers, 55-B, Jinnah Avenue, Islamabad.

We, the undersigned Chief Executive Officer and Chief Financial Officer of Habib Bank Limited, a banking company incorporated under the Companies Ordinance, 1984, having its registered office at Habib Bank Limited 4th Floor, Habib Bank Tower, Jinnah Avenue, Blue Area, Islamabad, Pakistan (“HBL” or the “Bank”), hereby attest and confirm, in our capacity as the Chief Executive Officer and Chief Financial Officer, respectively, that all statements and disclosures made by the Bank in this Offer for Sale Document, are materially true and accurate, to the best of our knowledge.

-sd- -sd-

___________________ Nauman K. Dar President & Chief Executive Officer

___________________ Rayomond Kotwal Chief Financial Officer

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2 Book Building Procedure

2.1 Brief Offer Structure The Offerors are divesting their existing 41.5% equity interest in HBL representing 609,317,135 Ordinary Shares through a domestic (in Pakistan) and international documented offering. The present Offer consists of a Base Offer of 250,000,000 Ordinary Shares (representing 17% of the total paid up capital of the Bank) in the capital of HBL and, in case the demand received through the Book Building process shows that the demand is higher than the Base Offer, the Offerors may exercise an Upsize Option to increase the Offer by up to an additional 359,317,135 Ordinary Shares (representing 24.5% of the total paid up capital of the Bank) in the capital of HBL.

2.2 Book Building Procedure

Book Building is a process whereby Eligible Investors may bid for a specific number of shares at various prices. The Offerors shall set a Price Range after approval from PC Board and CCOP, which shall contain the lowest and highest prices Eligible Investor(s) can bid at, and which will be notified through Stock Exchanges and/or DLMs. An order book of bids from investors is maintained, which is then used to determine the Strike Price. GoP, subject to the approval of the PC Board and the CCOP shall decide the final offer size which may be less than, equal to or greater than the Base Offer size and the corresponding Strike Price based on Allocable Demand received through the Book Building Process. As DLMs, AHL and Elixir will accept bids from Eligible Investors and forward the same to the JGCs . The Book Building will be run as is customary in such transactions internationally. The book will be run jointly by the JLMs, and will be maintained internationally by the JGCs. The live book of demand shall not be displayed to investors, however, feedback on the book will be provided to investors at multiple times through messages that will be relayed on the websites of the DLMs and the Exchanges.

Eligible Investors may place their respective orders (including demand at various price points/levels via Limit Bid or Step Bid) with anyone of the DLMs. The procedure for participation for such Eligible Investors is set forth below:

DLMs will receive orders from Eligible Investors and forward them via email to the JGCs to enter in to the central Book Building system being run and managed by the JGCs internationally.

All these individual orders will be put in a central Book Building system maintained internationally which tallies all orders across the price range until the close of book. Nonetheless, it is clarified that the Book Building will be integrated for all investors and the Strike Price will be determined on the basis of Allocable Demand, subject to approval by the PC Board and CCOP.

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At multiple times during the Book Building, the investors will be provided feedback with regards to the position of the Book at that time. There would be at least two messages relayed for the first three days of the Book Building and at least one message every hour on the last day of the Book Building. The messages will be relayed through the websites of the DLMs and the Exchanges. Sample messages may be along the following lines (actual messages may differ depending on the situation):

Base Offer is comfortably covered with strong participation from international long only investors and domestic investors

Offer will be fully upsized on the back of strong interest from global long only and domestic investors

Price sensitivity at the mid end of the price range, investors will miss the transaction at below share price of PKR -xx

Book was multiple times covered allowing the JLMs to fully upsize (subject to approval of PC Board and CCOP) the transaction raising USD xx million

There was strong participation from global long only, domestic investors as well as investors with frontier funds

There were approximately xx lines in the book Shares will be allocated to successful Bidders at the Offer Price. A Bid by a potential investor can be a “Limit Bid” or “Step Bid”. The Minimum Bid Amount is PKR 500,000/- for Limit Bids, while for Step Bids, the Minimum Bid Amount for each step is PKR 100,000/-. The payment mechanism for each Bid type is explained below.

a) Payment for Limit Bids

If investors are placing their bids through “Limit Bid” then they shall deposit the Margin Money based on the number of shares they are bidding for at their stated bid price.

For instance, if an investor is applying for 5 million shares at a price of PKR 250 per share, then the Bid Amount would be PKR 1,250,000,000/- plus CDC transfer charges at 0.004% (1,250,000,000 x 0.004% = PKR 50,000). The Application Money will amount to PKR 1,250,050,000/-. In such case, (i) HNWIs shall deposit PKR 1,250,050,000/- as the Application Money which is 100% of PKR 1,250,050,000/-; and (ii) Institutional Investors shall deposit at least PKR 312,512,500/- in the Book Building Account as the Margin Money which is at least 25% of PKR 1,250,050,000.

b) Payment for Step Bids

If investors are placing a “Step Bid”, which is a series of Limit Bids at increasing prices, then they shall deposit the Margin Money based on the total number of shares they are bidding for at their stated bid prices. For instance, if the investor bids for 0.5 million shares at PKR 250 per share, 0.4 million shares at PKR 255 per share and 0.3 million shares at PKR 260 per share, then in essence the investor

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has placed one “Step Bid” comprising three limit bids at increasing prices. The Bid Amount would be PKR 305,000,000/- plus CDC transfer charges of 0.004% (305,000,000*0.004% = PKR 12,200/-). The Application Money will amount to PKR 305,012,200/-. In such case, (i) HNWIs shall deposit PKR 305,012,200/- as the Application Money which is 100% of PKR 305,012,200/-; and (ii) Institutional Investors shall deposit at least PKR 76,253,050/- in the Book Building Account as the Margin Money which is at least 25% of PKR 305,012,200/-.

A single Eligible Investor shall not place more than one bid; however, investors/Bidders can revise their bid in the time period specified in para 2.11. The Eligible Investors shall not place consolidated bids. A bid application which is fully or partially beneficially owned by persons other than the one named therein is to be considered as a consolidated bid.

. Successful Bidders shall be intimated, within two (2) working days of the closing of the Bidding Period, about the Offer Price and the number of Shares provisionally allocated to each of them. The successful institutional Bidders shall within two (2) working days of the intimation of their provisional allocation deposit the balance of the Application Money as consideration against allocation of shares. Where a successful Bidder defaults in payment of shares allotted to him/her/it, in any manner whatsoever, the Margin Money deposited by such Bidder shall be forfeited to the Offerors.

The successful Bidders shall be issued shares in the form of book-entry securities to be credited in their respective CDS accounts. All the Eligible Investors shall, therefore, duly provide their CDS account numbers in the Bidding Form.

2.3 Role and Functions of DLMs

The Domestic Lead Managers and Book Runners to the Offer shall:

Conduct awareness campaigns through presentations, meetings, road shows etc.;

Ensure that all disclosures, unless exempted, as required under the Companies Ordinance 1984; the Rule Book / Listing Regulations, as the case may be, of the Stock Exchanges have been made in the OFSD;

Ensure that necessary infrastructure is available to collect Bids and to carry out Book Building process in a fair and efficient manner;

Publish an advertisement, approved by the Commission, in at least one Urdu and one English daily newspaper having wide circulation in the Federal and all the Provincial Capitals, to invite Eligible Investors to participate in the Bidding process;

Ensure that the OFSD, after approval of the Commission, is uploaded on the DLMs’ and Privatisation Commission’s website;

Collect Bid Applications, Bid Amount and Margin Money as the case may be from Eligible Investors in the manner as specified in the Offer for Sale Document;

Put serial number, date and time on each Bid at the time of collection from the Bidders;

Vet the Bidding Applications;

Maintain record of the Bids received for subscription of the Shares;

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Ensure that each Bidding Application contains CDC account number of the Bidder maintained with CDC wherein shares shall be credited in case the Bid is successful;

Not accept multiple Bids i.e. more than one Bid Applications by the same person;

Circulate copies of the OFSD cleared by the Stock Exchanges and approved by the Commission, along with the Bidding Forms to Eligible Investors; and

DLMs have established Bid Collection Centers at the following addresses:

Bid Collection Centers

Karachi

Person Syed Saquib Ali Person Waqar Ali

Number +92 21 3246 2597 +92 21 3246 5891 +92 21 3246 0718

Number +92 21 3568 0756 +92 21 3569 4662 +92 21 3568 0753

Email [email protected] Email [email protected]

Website www.arifhabibltd.com Website www.elixirsec.com

2nd Floor, Arif Habib Centre, 23 M.T. Khan Road, Karachi

Islamabad

Person Saad Khan Person Najeeb Altaf

Number +92 308 233 1916 Number +92 51 227 2341 +92 51 227 2342 +92 300 522 2241



House # 68,Main Margalla Road, F-6/2, Islamabad

Lahore

Person Tahir Abbas Person Tahir Maqbool

Number +92 336 000 4896 Number +92 42 3577 2643 +92 42 3587 8238 +92 300 847 3258



Office # 2, Ground Floor, Rehman Business Centre, 32-B-III, Lahore

2.4 Opening and Closing of the Bidding Period

The Book Building process will open at 9:00AM PST on April 7, 2015 and close at 5:00PM PST on April 10, 2015, both days inclusive. Investors can place and revise their bids up till 5:00 PM on the final day of the Bidding Period i.e. April 10, 2015 as explained in para 2.11.

2.5 Eligibility to Participate In Bidding



http://www.arifhabibltd.com/

http://www.elixirsec.com/









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Eligible Investors, both Institutional Investor and HNWI as mentioned in definitions on Page No. 11 above can participate.

2.6 Information for Bidders

The OFSD has been duly cleared by the Stock Exchanges and approved by the Commission. The OFSD and the Bidding Form can be obtained from the Registered Offices of AHL, ES and the Bid Collection Centers. The OFSD and Bidding Forms can also be downloaded from the following websites: http://www.privatisation.gov.pk http://www.arifhabibltd.com http://www.elixirsec.com Eligible Investors who are interested in subscribing to the Ordinary Shares should approach the DLMs at the addresses provided in paragraph 2.3 to register the Bids.

The Bids should be submitted on the prescribed Bidding Form in person given in paragraph 2.3.

2.7 Bidding Form and Procedure for Bidding

a) A standard Bidding Form has been prescribed by the DLMs. Bids shall be submitted at the Bid Collection Centers, in person, at the addresses given in paragraph 2.3 on the standard Bidding Form duly filled in and signed in duplicate. The Bidding Form shall be serially numbered at the Bid Collection Centers and date and time stamped, at the time of collection from the Bidders.

b) The bidding procedure under the Book Building Process is outlined below:

Copy of approved OFSD shall be circulated by the DLMs to a maximum number of the

Institutional Investors and HNWI, but not less than ten in each of the two categories, inviting them for participation in the bidding process. Copy of the OFSD will also be placed on the websites of the Offerors and the DLMs.

An advertisement, approved by the Commission, shall be published at least in one Urdu and one English daily newspaper having wide circulation in the Federal and all the Provincial Capitals, inviting the Eligible Investors for participation in the Bidding.

A Book Building Account shall be opened by the Offerors for collection of Bid Amounts. The Bidding Form shall be issued in duplicate signed by the Bidder and countersigned by

the DLMs, with first copy for the DLMs, and the second copy for the Bidder. Bids shall be submitted through the Bid Collection Centers only at the addresses as

provided in paragraph 2.3 and on the standard Bidding Form duly filled in and signed in duplicate. Eligible Investors residing outside the city of the Bid Collection centers may submit their Bids through the Designated Branches identified in paragraph 2.3. Bids can be placed as “Limit Bid” or “Step Bid”.

Bid Amount/Margin Money shall be deposited through demand draft or pay order only in favor of “Offer for Sale of Shares of HBL”.

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DLMs shall collect an amount of 100% of the application money as Bid Amount in respect of Bids placed by HNWI’s.

DLMs shall collect an amount of 25% of the application money as Bid Amount in respect of Bids placed by Institutional Investors. The remaining 75% to be deposited within two (2) working days of intimation of the Offer Price and the allocation to successful Bidders.

DLMs may reject a Bid placed by an Eligible Investor for reasons to be recorded in writing and the reasons should be disclosed to such Bidder forthwith. Decision of DLMs shall not be challengeable by the Bidder or its associates.

DLMs shall not accept the Bids made at a price lower than or higher than the Price Range. The option for upward revision of the Price Range will be available to the Offeror

The Bidders will receive back the duplicate form upon submission of their Bids which will be proof of their Bid submission. The Bidders shall not be provided with any receipt if a duly filled duplicate form is not submitted along with the Bid application.

Bidders can revise or withdraw their Bids during the Bidding Period (for details please refer to paragraphs 2.11 and 2.13).

DLMs shall maintain a record of the Bids received/rejected/revised/withdrawn along with identities of the Bidder and evidence of amount received.

DLMs shall ensure that all the Bids received and accepted by the Bid Collection Centers are immediately forwarded via email to JGCs to be entered into the Book Building system maintained internationally by them.

At the close of the Bidding Period, the Strike Price shall be determined by the GoP on the basis of Allocable Demand generated through the Book Building process. However, the Strike Price shall be finalized after due approvals from the PC Board and CCOP.

Successful Bidders shall be intimated, within two (2) working days of the closing of the Bidding Period, the Offer Price and the number of shares provisionally allocated to each of them.

The successful Institutional Investors shall within two (2) working days from the intimation of successful provisional allocation, deposit the balance Application Money as consideration against allocation of shares.

Where a successful Bidder defaults in payment for shares allocated to it, in any manner whatsoever, the Margin Money/Bid Amount deposited by such bidder shall be forfeited to the Offerors.

Margin Money/Bid Amount of unsuccessful Bidders will be refunded within seven (07) working days of the close of the Bidding Period.

Final allocation of shares out of the Offer shall be made after receipt of Application Money from the successful Bidders. Shares to successful Bidders, subject to requisite clearances, if any, shall be transferred/credited within seven (07) working days of the Book Building process.

2.8 Bank Account for Book Building

The Offerors have opened bank accounts for collection of money for the Offer.

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The Bidders shall draw demand draft or a pay order in favor of “Offer for Sale of Shares of HBL” which has been opened at Habib Bank Limited and MCB Bank Limited (“Collection Banks”). The Collection Bank shall keep and maintain the Bid Money in the said account. Once the Strike Price is determined and allocation list is finalized, the DLMs, after obtaining the requisite approval from PC, will request in writing to the Collection Bank for transfer of the money of successful and accepted applications to the Offerors’ account(s) and advise for refund of the Bid Money/ Margin Money to unsuccessful Bidders without any applicable markup / interest on such refund.

2.9 Payment into the Book Building Account

The Bidders shall draw a demand draft or a pay order favoring “Offer for Sale of Shares of HBL” and submit it at the designated Bid Collection Center along with the duly filled Bid forms. CASH MUST NOT BE SUBMITTED WITH THE BIDDING FORM AT THE BID COLLECTION CENTER. BID AMOUNT MUST BE PAID THROUGH A DEMAND DRAFT OR A PAY ORDER ONLY OR ONLINE TRANSFER TO ACCOUNT NUMBER “07867902204103” TITLED “OFFER FOR SALE OF SHARES OF HBL” MAINTAINED AT HBL PLAZA BRANCH, KARACHI AND ACCOUNT NUMBER “0762539361007484” TITLED “OFFER FOR SALE OF SHARES OF HBL ” MAINTAINED AT MCB BANK LIMITED, SHAHEEN COMPLEX BRANCH, KARACHI. Eligible Investors can place bid for shares based on the procedure as explained earlier in paragraph 2.2

2.10 Payment by Foreign Investors Foreign investors may subscribe using their Special Convertible Rupee Accounts (“SCRA”), as set out under Chapter 20 of the State Bank of Pakistan’s Foreign Exchange Manual.

Payment in respect of investment in the shares of the Bank has to be made in foreign currency through an inward remittance or through surplus balances in SCRA. Local currency cash account(s) opened for the purpose of Foreign Portfolio Investment (FPI) is classified as SCRA. Underlying client names/beneficial owners are required to be disclosed at depository level. Key Documents required for opening SCRA by individual(s) are:

1. Account opening request 2. Passport / ID

General documentation required for opening of SCRA account by corporate are:

1. Account opening request 2. Board resolution & signatories list 3. Passport / ID of Board of Directors 4. Passport / ID of all authorized signatories 5. Certificate of Incorporation (COI) Equivalent / supporting documents: Trade Registry

Certificate, Business Registration Certificate, Certificate of Commencement of Business 6. Memorandum & Articles of Association

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7. Withholding tax registration certificate / Certificate of country of domicile of client 8. Latest Annual Report 9. List of Board of Directors 10. List of Shareholders (>10% holdings) and key officers

It is however pertinent to note that the procedure and requirements of each institution differs, hence it is advised to request the procedure from each relative institution. Payments made by foreign investors shall be supported by proof of receipt of foreign currency through normal banking channels. Such a proof shall be submitted along with the Bidding Application by the foreign investors.

2.11 Revision of Bids by the Bidder

The Bidders shall have the right to revise their Bids any time throughout the Bidding Period. The Bidders will only be able to revise their Bids through physical delivery of Bid Revision Form along with the pay order/ demand draft for additional money at one of the Bid Collection Centers or scanned copy of the signed Bid Revision Form along with the scanned copy of the pay order/ demand draft and deposit slip for additional money duly emailed to [email protected] and [email protected] with copy marked to [email protected]. The Bidding Form Number should be clearly mentioned on the Bid Revision email including mention of the name of the Bid Collection Center where the Bid was initially placed. In case of bid revision through an email, the email should be sent from the email address mentioned on the Bid Form.

2.12 Rejection of Bids by the Book Runner

DLMs may reject a Bid placed by an Eligible Investor for reasons to be recorded in writing and the reasons should be disclosed to such Bidder forthwith. Decision of DLMs shall not be challengeable by the Bidder or its associates.

2.13 Withdrawal of Bids by the Bidder

A Bidder has the right to withdraw placed bid from the bidding system any time during the Bidding Period. The Bids can be withdrawn by sending an email to [email protected] and [email protected] with copy marked to [email protected]. The Bidding Form Number should be clearly mentioned in the Bid Withdrawal email including mention of the name of the Bid Collection Center where the Bid was initially placed. No Bid shall stand Withdrawn until a confirmation is received from the DLMs. The email for withdrawal of Bid should be sent from the email address mentioned on the Bid Form.

2.14 Withdrawal of Offer by the Offerors

In case the Offerors do not receive bids at or within the Price Range for the Base Offer of shares offered, it may withdraw the Offer. The decision of withdrawal shall be taken within a period of not more than three (3) working days of the closing of bidding period.

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a) The withdrawal shall be immediately intimated to the Commission and the Exchanges. b) In case the offer is withdrawn the Margin Money/Bid Amount will be refunded to the

Bidders within seven (7) working days of the decision of withdrawal without any markup, interest etc.

2.15 Mechanism for Determination of Strike Price

A combined Book Building process for the domestic and international investors will be conducted. Eligible Investors may place their respective orders (including demand at various price points/levels via Limit Bid or Step Bid) with DLMs. The procedure for participation for such Eligible Investors is set forth in the OFSD. DLMs will receive orders from Eligible Investors and forward them via email to JGCs to enter in to the central Book Build system being run and managed by JGCs internationally. Foreign investors may choose to participate through the International Offering Memorandum. Foreign investors may place their respective orders with their respective syndicate/sales representatives through such medium as Bloomberg messages, email and recorded telephone calls. All these individual orders will be put in a central Book Building system maintained internationally which tallies all orders until the close of the book. Nonetheless, it is clarified that the Book Building will be integrated for all investors and the Strike Price will be determined on the basis of Allocable Demand, subject to approval by the PC Board and CCOP. At multiple times during the Book Building, the investors will be provided feedback with regards to the position of the Book. The messages will be relayed through the websites of the DLMs and the Stock Exchanges At the close of the Bidding Period, the Strike Price will be determined by the Offerors, as approved by the PC Board and CCOP, on the basis of Allocable Demand discovered through the Book Building process and recommendations of JLMs.

The demand will be the summation of the total Bids received locally and internationally. The Strike Price shall be determined through available demand at different price levels within the Price Range. GoP shall decide the final offer size which may be less than, equal to or greater than the Base Offer size based on the demand received (keeping in view the GoP’s objectives to maximize proceeds and that HBL share price is well supported in the after-market). The final Strike Price is thus determined by the PC Board and CCOP based on Allocable Demand at final offer size. A combined Book Building process for the domestic and international investors will be conducted. Eligible Investors may place their respective orders (including demand at various price points/levels within the Price Range via Limit Bids or Step Bids) with DLMs. The procedure for participation for such Eligible Investors is set forth in this OFSD in para 2.2.

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2.16 Basis of Allocation of Shares

The final allocation of Shares will be determined by the Offerors, as approved by PC Board and CCOP, based on Allocable Demand. Final allocation of Shares shall be made after receipt of full Application Money from the successful Bidders. Shares to successful Bidders shall be transferred within seven (07) working days of the Book Building process.

2.17 Refund of Margin Money

Investors who have bid lower than the Strike Price are not eligible for allocation of Shares. Margin Money of the unsuccessful Bidders and any excess Margin Money of successful Bidders shall be refunded within seven (07) working days of the close of the Bidding Period.

2.18 Bid Collection Centers

Bid Collection Centers have been established at Karachi, Lahore and Islamabad to collect the bids for the Offer. Addresses, details of contact persons and the Bid Collection Centers are given in paragraph 2.3.

2.19 Exemptions On the request of the Offerors, the stock exchanges and SECP has approved the following relaxations: A relaxation from the requirements of regulation No.5.4.1(b) of the Listing of Companies and Securities Regulations of KSE under regulation 5.4.4 thereof, regulation 6(A)(1) of the Listing Regulations of LSE under clause 6(6) thereof and regulation No.6(1)(b) of the Listing Regulations of ISE under clause 6(5) thereof to enable the Offerors to proceed with the proposed divestment without any allocation of shares to retail investors. A relaxation from the requirements of Appendix-2 of chapter 5 of the KSE’s Rule Book under clause 11 thereof and the requirements of Appendix-4 of the Listing Regulations of LSE and ISE under clause 11 thereof to enable the Offerors to divest their shareholding without compliance with the requirements of the said Appendix-2 of KSE and Appendix-4 of LSE and ISE.

A relaxation from the requirements of rule 9 (iii) & (iv) of the Companies (Issue of Capital) Rule, 1996 under Rule 10 thereof has been given by the SECP vide letter No. SMD/Co.62/06/2015 dated February 18, 2015 enabling the Offerors to offer these shares without an underwriting arrangement.

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2.20 Statement by Joint Domestic Lead Managers & Co-Bookrunners

March 30, 2015


The General Manager, Lahore Stock Exchange Limited, Lahore Stock Exchange Building, 19, Khayaban-e-Aiwan-e-Iqbal, Lahore.

The General Manager, Islamabad Stock Exchange Limited, ISE Towers, 55-B, Jinnah Avenue, Islamabad.

Being mandated as Joint Domestic Lead Managers & Co-Bookrunners to this Offer for Sale of Shares of Habib Bank Limited through the Book Building process, we confirm that all material information as required, unless exempted, under the Companies Ordinance, 1984 and the Rule Book/Listing Regulations (as the case may be) of the Stock Exchanges has been disclosed in this Offer for Sale Document and that whatever is stated in the Offer for Sale Document and in the supporting documents is true and correct to the best of our knowledge and belief and that nothing has been concealed.

-sd- -sd- ___________________ Shahid Ali Habib Chief Executive Officer Arif Habib Limited

___________________ Babur Rais SVP, Head of Corporate Finance Elixir Securities Pakistan (Pvt.) Ltd

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3 Share Capital and Related Matters

3.1 Share Capital as at 17th March 2015

No. of shares Total(PKR ‘000)

3,000,000,000 AUTHORIZED CAPITAL 30,000,000

Ordinary shares of PKR 10/- each

ISSUED, SUBSCRIBED, & PAID UP CAPITAL

690,000,000 Issued for Cash: Ordinary shares of PKR 10/- each 6,900,000

776,852,508 Issued as Bonus Shares: Ordinary Shares of PKR 10/- each 7,768,525

1,466,852,508 Total 14,668,525

No. of shares Percentage Held

THE ISSUED, SUBSCRIBED & PAID-UP CAPITAL OF THE BANK IS HELD AS FOLLOWS:

Shares held by Directors of the Bank

- Mr. Sultan Ali Allana - 1,000 Mr. Agha Sher Shah 0.0001 - Mr. Moeez Ahamed Jamal - 18,500 Dr. Najeeb Samie 0.0013 - Mr. Shaffiq Dharamshi - - Mr. Sajid Zahid - 1,114,419 Mr. Nauman Dar 0.0760

1,133,919 Sub-total 0.0773

Shareholders

748,094,778 Aga Khan Fund for Economic Development 51.0000 609,317,135 State Bank of Pakistan 41.5391 4,002 Government of Pakistan 0.0003 1,396,116 Jubilee General Insurance Company Limited 0.0952 1,733,377 CDC – Trustee - HBL Stock Fund 0.1182 2,685,950 Jubilee Life Insurance Company Limited 0.1831 247,043 CDC – Trustee - HBL Multi Asset Fund 0.0168 2,255,000 Trustee - HBL Employees Pensions Fund Trust 0.1537 605,000 Trustee - HBL Employees Gratuity Fund Trust 0.0412 3,822,500 Trustee - Habib Bank Limited Employees Provident

Fund 0.2606

635,496 The Aga Khan University Foundation 0.0433 546,090 Executives 0.0372 5,959,659 Public Sector Companies and Corporations 0.4063

5,683,983 Banks, DFIs, NBFCs, Insurance Companies, Takaful, Modarabas & Pension Funds

0.3875

3,760,938 Mutual Funds 0.2564 32,399,148 General Public – Local 2.2088 6,576 General Public – Foreign 0.0004 34,788,973 Others 2.3717 11,776,825 Foreign Companies 0.8029

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1,465,718,589 Sub-Total 99.9227

1,466,852,508 Total 100

3.2 Offerors The Shares of the Bank constituting this Offer are held by SBP pursuant to specific directives of the GoP.

The Offerors are also undertaking an international offering of the Shares through the JGCs to international institutions and investors, conducted under rule 144A and Regulation S of the United States Securities Act of 1933, as amended. The following shareholders are divesting up to 41.5% of their shareholding in HBL, the details of which are given below:

No. of shares Offerors Percentage holding

609,317,135 Islamic Republic of Pakistan, Privatisation Division of the Ministry of Finance, Revenue, Economic Affairs, Statistics and Privatisation, acting through the Privatisation Commission; and the State Bank of Pakistan 41.5%

609,317,135 Total 41.5%

3.3 Offer for Sale through Book Building

No. of shares Face value(PKR)

Base offer consisting of 250,000,000 Ordinary Shares (i.e. 17% of paid-up capital) having par value of PKR 10/- each, together with an Upsize Option of up to 359,317,135 Ordinary Shares (i.e. 24.5% of paid up capital) having par value of PKR 10/- each at a Price Range which shall be at a premium to the Par Value of PKR 10/- per share

10

3.4 Opening and Closing of the Book Building

The Bidding Period shall remain open for four (04) working days from 9:00 am PST to 5:00 pm PST. The Book Building process will open at 9:00 AM PST on April 7, 2015 and close at 5:00 PM PST on April 10, 2015.

3.5 Refund of Subscription Money to Unsuccessful Applicants

On behalf of the Offerors, the DLMs shall take a decision within 2 days of the closure of the Book Building process as to which applications have been accepted or are successful and refund the Bid Amount in cases of unaccepted or unsuccessful Bids without interest or mark up within seven (07) days of the closure of the Book Building. If refund as required under the above paragraph is not made within the time specified therein, the Offerors shall be liable to repay that money with surcharge at the rate of one and a half percent (1.5%) for every month or part thereof from the expiration of the 15th day following the close of

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the Book Building process and, in addition, to a fine not exceeding five thousand rupees and, in case of continuing offense, to a further fine not exceeding one hundred rupees for every day after the said 15th day on which the default continues. Provided that the Offerors shall not be liable if the Offeror proves that the default in making the refund was not due to any misconduct or negligence on the Offeror’s part.

3.6 Credit and Transfer of Share Certificates under Book Entry System

Shares acquired through Book Building shall be transferred in scrip-less form by crediting the respective Central Depository System ("CDS") of the Central Depositary Company of Pakistan Limited (“CDC” or “CDCPL”) accounts of the successful applicants. The Shares will be transferred within seven (07) days of the close of the Offer, subject to fulfillment of requisite clearances, if any, in accordance with the provisions of the Central Depositories Act, 1997 and the CDC Regulations. The applicants/Bidders should fill in the relevant columns of the Bidding Form for transfer of shares and should have a CDS account in their name at the time of subscription.

3.7 Shares Issued in Preceding Years

An aggregate of 1,466,852,508 fully paid ordinary shares of the face value of PKR 10/- each have been issued including a total of 776,852,508 ordinary shares which have been issued since the Initial Public Offering in 2007

No of shares Par value

(PKR) Amount

(PKR) Premium

(PKR) Consideration

Date of issue

69,000,000 10 690,000,000 - Bonus 26-4-2008

151,800,000 10 1,518,000,000 - Bonus 24-4-2009

91,080,000 10 910,800,000 - Bonus 24-4-2010

100,188,000 10 1,001,880,000 - Bonus 25-4-2011

110,206,800 10 1,102,068,000 - Bonus 21-4-2012

121,227,480 10 1,212,274,800 - Bonus 18-4-2013

133,350,228 10 1,333,502,280 - Bonus 23-4-2014

776,852,508 - 7,768,525,080 - - -

3.8 Principal Purpose for the Offer for Sale of Shares

The primary purpose of the Offer includes:

Mobilize savings of individuals, households and institutions of Pakistan and allow them to take ownership in the successful businesses of the economy

Improving standing of domestic capital markets by attracting Foreign Portfolio and Institutional Investment (“FPI”), and investment from overseas Pakistanis and other foreign investors

Strengthen the domestic capital markets Generate sale proceeds for GoP

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3.9 Interest of Shareholders

Save for any interests possessed, in the normal course of business, by any employees, suppliers and customers of the Bank who also happen to be shareholders of the Bank, none of the holders of the issued shares of the Bank have any special or other interest in the property or profits of the Bank other than as holders of the ordinary shares in the capital of the Bank.

3.10 Dividends The rights in respect of capital and dividends attached to each share are and will be the same. The Bank, in its general meeting, may declare dividends but no dividends shall exceed the amount recommended by the Directors. A dividend, if declared in the general meeting, shall be paid according to the terms of the provisions of the Ordinance. The Directors may, from time to time, pay to the shareholders such interim dividends as appear to the Directors to be justified by the profits of the Bank. No dividends shall be paid otherwise than out of the accumulated profits of the Bank for the year or any other undistributed profits. No unpaid dividends shall bear interest or mark-up against the Bank. The dividends shall be paid within the period laid down in the Ordinance. Those investors who intend that their cash dividend, if any, is directly credited in their Bank Account, must fill-in the relevant part of the Bidding Form under the heading “Dividend Mandate Option”.

3.11 Eligibility for Dividend

The Bank in this matter will follow the provisions of Section 92 (2) of the Companies Ordinance, 1984 and the dis-invested Shares shall rank pari-passu with all other existing shares in all matters, including the right to such bonus or rights issue and dividends as may be declared by the Bank subsequent to the transfer of shares. Successful investors of the Offer will not be entitled to receive the final dividend for the year ended December 31, 2014 as entitlement for the aforementioned dividend was determined through the book closure from March 17, 2015 to March 27, 2015.

3.12 Deduction of Zakat

Income distribution will be subject to deduction of Zakat at source, pursuant to the provisions of the Zakat and Ushr Ordinance, 1980. (XVIII of 1980) and applicable law from time to time.

3.13 CDC Transfer Charges

CDC transfer charges at 0.004% will be levied on the total amount of the Bid which is equivalent to the product of the Strike Price and the number of shares Bid for.

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3.14 Capital Gains Tax

Capital gains derived from the sale of listed securities are taxable under section 37A of the Income Tax Ordinance, 2001

Through the Finance Act, 2014, amendments have been made in the Income Tax Ordinance, 2001 to the effect that gains resulting from sale of securities held for a period between 12 to 24 months (previously exempt from tax) shall also be taxable under the said Ordinance and are only exempt from tax where the holding period of securities exceeds 24 months. Accordingly, as per currently enacted tax laws, gains on disposal of listed securities are chargeable to tax at the rate of 12.5% for listed securities held for a period of less than 12 months, 10% for listed securities held between 12 to 24 months and 0% for listed securities held for a period of 24 months or more.

Banks are liable to capital gains tax at separate rates. Under the Seventh Schedule to the said Ordinance, Banks are subject to capital gains tax on the disposal of shares of a listed company at the rate of 12.5% where shares are held for a period of more than one year whereas tax is payable at the rate of 35% if shares are held for a period of less than one year. In addition, allocation of expenses will also be made as per the requirements contained in the Seventh Schedule. Please refer to relevant laws and regulations for detailed provisions that are applicable.

Please note that a shareholder who is a non-resident person of Pakistan can avail concessions as per the provisions of relevant laws, in respect of capital gains, if any, provided in the respective Double Tax Treaty which Pakistan has signed with the country of the shareholders’ residence.

3.15 Withholding Tax on Dividends

Dividend distribution to shareholders will be subject to withholding tax under Section 150 of the Income Tax Ordinance, 2001 as specified in Part III, Division I of the First Schedule to the said Ordinance except for shareholders who are exempt from withholding tax; or subject to concession, if any, provided in the Double Tax Treaty, if applicable. The applicable rates, as laid out in the Finance Act, 2014, are as follows:

1. Rate of Tax Deduction for Filers 10%

2. Rate of Tax Deduction for Non-Filers 15%

Moreover, tax at the rate of 5% of the value of ‘bonus shares’ determined on the basis of the day end price on the first day of book closure shall be collected by the company issuing the ‘bonus shares’, which will be the final tax liability on such income of the shareholder.

3.16 Income Tax

The income of the Bank is subject to Income Tax under the Income Tax Ordinance 2001.

3.17 Deferred Taxation

Deferred tax is recognized using the liability method on all major temporary differences between the amounts attributed to assets and liabilities for financial reporting purposes and amounts used

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for taxation purposes. Deferred tax is calculated at the rates that are expected to apply to the period when the difference are expected to reverse, based on tax rates that have been enacted or substantively enacted at the statement of financial position date. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that is no longer probable that the related tax benefit will be realized. The Bank also recognizes deferred tax asset/liability on surplus/deficit on revaluation of fixed assets and securities which is adjusted against the related surplus/deficit in accordance with the requirements of International Accounting Standards (IAS 12) dealing with Income Taxes.

3.18 Sales Tax on Sale/Purchase of Shares

Under the Constitution of Pakistan and Articles 49 of the 7th NFC Award the Government of Sindh, Government of Punjab and the Government of Khyber Pakhtunkhwa have promulgated the Sindh Sales Tax on Services Act, 2011, the Punjab Sales Tax on Services Act, 2012 and the Khyber Pakhtunkhwa Sales Tax on Khyber Pakhtunkhwa Finance Act, 2013 respectively. The Sindh Revenue Board, the Punjab Revenue Authority and the Khyber Pakhtunkhwa Revenue Authority administer and regulate the levy and collection of the Sindh Sales Tax (“SST”), Punjab Sales Tax (“PST”) and Khyber Pakhtunkhwa Sales Tax (“KST”) respectively on taxable services provided or rendered in Sindh, Punjab or Khyber Pakhtunkhwa respectively. The value of taxable services for the purpose of levy of sales tax is the gross commission charged from clients in respect of purchase or sale of shares in a Stock Exchange. The Second Schedule of the above mentioned Acts levies a sales tax on Brokerage at the rate of 15% in Sindh and 16% in Punjab and KPK.

3.19 Capital Value Tax (“CVT”) On Purchase of Shares

Pursuant to amendments made in the (Finance Act 1989) through Finance (Amendments) Ordinance, 2012 promulgated on April 24, 2012, 0.01% Capital Value Tax will be applicable on the purchase value of shares.

3.20 Tax Credit for Investment in Shares Acquired Through Privatisation

Under Section 62 of the Income tax Ordinance, 2001, a resident person other than a company, shall be entitled to a tax credit for a tax year in respect of the cost of acquiring in the year new shares offered to the public by a public company listed on a stock exchange in Pakistan, provided the resident person is the original allottee of the shares or the shares are acquired from the Privatisation Commission of Pakistan. The tax credit allowed is lesser of (i) total value of the shares acquired, (ii) 20% of person’s taxable income for the year or (ii) up to PKR 1,000,000 (Rupees one million only) whichever is lower. Where a person makes a disposal of the share within 24 months of the date of acquisition, the investment amount allowed under section 62 will be added back to his taxable income in the year of disposal.

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3.21 Justification for the Premium

The Offerors have, inter alia, decided to offer 250,000,000 Ordinary Shares (17% of paid-up capital) together with an Upsize Option of an additional up to 359,317,135 Ordinary Shares (24.5% of paid-up capital) having par value of PKR 10/- each, at a premium to their par value, which premium shall be determined by the Offerors subject to the approval of the PC Board and the CCOP as a result of the Book Building process. The premium on Shares of HBL is adequately justified, based on the following competitive strengths:

Leading bank with strong brand recognition and largest domestic network

Founded in 1941, the Bank played an instrumental role in the development of financial services in Pakistan. As of December 31, 2014, the Bank had the largest domestic network in Pakistan with 1596 branches, 1592 ATMs and more than 8 million customers globally.

The Bank enjoys very strong brand recognition in Pakistan and maintains a deposit market share of approximately 14.8%. In 2014, 42.6% of current accounts opened in Pakistan were with the Bank. The Bank also had a 22.5% market share in the growing remittance market. The Bank’s corporate client base includes most of the international corporates and financial institutions operating in Pakistan.

The Bank’s consistent high growth and overall operating efficiency have resulted in a consistently strong profitability with an average return-on-equity of 19% over the period from 2011 to 2014. This strong performance has been achieved despite a declining interest rate environment, as a result of the Bank’s continuous investments in people, IT and infrastructure and its commitment to increasing financial inclusion.

The Bank has won numerous awards in recent years, some of which are highlighted below

2014

“Best Bank in Pakistan”, Euromoney “Bank of the Year – Pakistan”, The Banker “Safest Bank in Pakistan”, Global Finance “Best Trade Finance Provider in Pakistan”,

Global Finance “Best Trade Finance Bank in Pakistan”,

Global Trade Review

2013

“Best Bank in Pakistan”, Euromoney “No. 1 FX Bank in Pakistan”, Euromoney “Best Retail Bank in Pakistan”, Asian Banker “Best Trade Finance Bank in Pakistan”,

Global Trade Review “Best Trade Finance Bank in Pakistan”,

Global Financial Market Review “Best Islamic Window”, CFA Pakistan

2012

“Best Emerging Market Bank” in Pakistan, Global Finance

“Award for Trade Finance Excellence”, Trade Finance

“Best Retail Bank in Pakistan”, Asian Banker “Strongest Bank in Pakistan”, Asian Banker “Leading Bank in Home Remittances”, Pakistan Remittance Initiative, SBP

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Diversified international presence

The Bank has developed a large international network, accounting for 15% of its total assets as of December 31, 2014, and with a presence in 25 markets. The Bank’s overall network comprises 59 branches (including branches of subsidiaries) and a presence in key financial hubs, including London, New York, Brussels, Singapore, Dubai and Hong Kong. The Bank’s ambition is to become a regional player, focused on South and Central Asian countries, the Gulf and East Africa.

Universal business model and expansion into alternative distribution channels

The Bank has a universal model covering all regions in Pakistan, all customer types and all financial products. This includes branch banking, corporate and investment banking, treasury, international banking, payment services, financial institutions and global trade services, Islamic banking and other businesses including global remittances, asset management and insurance. The Bank also has a proven track record of successful expansion via alternative distribution channels. It has strong brand recognition in rural areas with 200 branches in under-banked regions and started branchless banking in 2013 with an expanding workforce of agents.

Strong balance sheet

The Bank’s balance sheet demonstrates strong liquidity with a 39% loans-to-deposits ratio as of December 31, 2014, compared to 40 % and 41% as of December 31, 2013 and 2012, respectively, with the Bank’s total deposit base more than doubling since 2009.

First class management with substantial experience at top domestic and international banks

The Bank’s senior management team has on average around 30 years’ experience in the banking sector and on average around nine years’ experience with the Bank. Most of the members of the Bank’s senior management have experience in several countries and/or with multiple financial institutions.

A dynamic and well-articulated strategy

In recent years, the Bank has adopted a dynamic strategy that has evolved to continuously address changing customer needs. The Bank’s network has been strengthened over time by continued focus on the customer experience, improving branch infrastructure and broadening its product offering. In addition, the Bank aims for improvements in the level of service and in building a sales culture through extensive training and the implementation of a robust KPI regime. This strategy has resulted in unprecedented growth and market leadership in deposits, debit card issuance, and bancassurance. The key elements of HBL’s strategy are as follows:

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Maintain market leading position in domestic markets and reduce funding costs Use technology to drive speed, efficiency and growth Achieve scale through organic expansion and selective acquisition Manage controlled growth in the loan portfolio, in particular, rural finance, Consumer

lending and SMEs Continue to enhance risk management practices Keep investing in and developing human capital

3.22 Peer Comparison

Pakistan’s banking industry comprises 44 banks catering to a population of approximately 188 million as of June 30, 2014, through less than 40 million deposit accounts. The five largest banks in Pakistan by assets are HBL, National Bank of Pakistan (“NBP”), United Bank Limited (“UBL”), MCB Bank Limited (“MCB”), and Allied Bank Limited (“ABL”). The following table presents certain information about the five largest banks in Pakistan, as of December 31, 2014:

As of December 31, 2014

Assets

Net assets

Advances

Investments

Deposits

Profit before

tax

Bonus

Dividends

Cash

Dividend

(PKR billions) PKR per share

HBL 1,867.0 170.1 595.3 924.3 1,524.5 48.5 - 12.0

UBL 1,182.5 137.5 467.4 519.6 951.9 35.6 - 11.5

MCB 934.6 130.1 322.3 511.1 688.3 36.7 - 14.0

ABL 842.3 80.9 306.0 428.8 667.9 22.2 - 6.5

NBP 1,549.7 182.6 630.2 561.8 1,234.4 23.1 - 5.5

Source: Company Annual Reports

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4 Underwriting, Commissions, Brokerage and Other Expenses 4.1 Underwriting

Underwriting is required for public offering where a premium is being charged under the provisions of rule 9(iii) of the Companies (Issue of Capital) Rules, 1996. This Offer for Sale has not been underwritten. A relaxation from the requirements of the said rule has been obtained by the Offerors from the SECP vide letter no. SMD/CO.62/06/2015, dated February 18, 2015.

4.2 Buy back/repurchase agreement

The DLMs have not entered into any buy back/re-purchase agreement with the Offerors or any other person in respect of this offer.

4.3 Commission to the Banker(s) to the Offer

Commission at the rate of 0.1% of the amount collected on allocation in respect of successful applicants will be paid by the Offerors to the Bankers to the Offer for services to be rendered by them in connection with this Offer.

4.4 Brokerage

For this Issue, brokerage shall be paid to the TREC Holders of KSE, LSE and ISE at the rate of 0.25%* on the value of Shares actually sold through them.

4.5 Expenses of the Offer

The breakup of expenses of this offer is given in the table below and these expenses will be borne by the Privatisation Commission:

Expense Rate Amount (Rupees)

Commission to Bankers to the Offer 0.1%

Financial Advisor & Arranger fees 1.00%

Brokerage to the members of KSE, LSE & ISE 0.25%*

Printing, publication etc. 10,500,000

KSE, ISE & LSE Service Charges 110,000

SECP Application and processing fees 250,000

The expenses quoted above are estimated figures and the actual amount will determined after determination of the Offer Size and the Strike Price

*Inclusive of all applicable taxes, duties and levies (including sales tax, if any).

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5 History and Prospects

5.1 The Bank Brief History

The history of HBL is inextricably linked with the history of Pakistan. HBL was incorporated on 25 August 1941. At the time of incorporation the Bank had a paid up capital of Rs 2.5 million. Following the creation of Pakistan, the Head Office of the Bank was shifted to Karachi in 1947. The Bank entered into the international market in 1951 and opened its first overseas branch in Colombo, Sri Lanka. Habib Bank Plaza, which had been commissioned to commemorate the bank’s 25th Anniversary, was built in 1972. The Bank has a direct presence in 16 other countries (Afghanistan, Bahrain, Bangladesh, Belgium, France, Kenya, Lebanon, Maldives, Mauritius, Oman, Seychelles, Singapore, Sri Lanka, Turkey, the UAE and the United States). The Bank also has a presence in four additional countries (Hong Kong, Netherlands, Switzerland and the U.K.) through its subsidiaries and five further countries through its associated companies, related entities and joint ventures (Burundi, Kyrgyz Republic, Nepal, Tanzania and Uganda). On January 1, 1974, the Bank was placed under Government control as part of the nationalization of the entire banking sector in Pakistan, following which the Bank operated as a wholly Government-owned entity. On June 13, 2002, the Privatisation Commission announced that the Government would sell a majority stake in the Bank to the Aga Khan Fund for Economic Development S.A. (“AKFED”), a part of the Aga Khan Development Network. On December 29, 2003, the Government granted to AKFED rights to a 51% shareholding in the Bank, and on February 26, 2004, the Government handed over management control of the Bank to AKFED. In August 2007, the Government offered a 7.5% stake in the Bank through an Initial Public Offering. In September 2007, the Ordinary Shares were listed on the three Pakistani Stock Exchanges. Overview of the Bank The Bank is a leading full-service commercial and retail banking group based in Pakistan, providing a broad range products and services to more than 8 million retail, SME, commercial and corporate customers across Pakistan and select international markets. The Bank has the largest overseas coverage amongst domestic banks, with a network of 59 international branches in 25 countries, including subsidiaries in Hong Kong and the UK, affiliates in Nepal, Kenya and Kyrgyzstan and representative offices in Iran and China.

As of December 31, 2014, the Bank was the largest bank in Pakistan in terms of total assets (PKR 1,867.0 billion), total deposits (PKR 1,525.5 billion), number of domestic branches (1,596) and number of ATMs (1,592).

HBL has recently, entered into an agreement with Barclays Bank PLC (“Barclays”) in relation to HBL’s proposed acquisition of Barclays’ Pakistan business and operations (“Barclays Pakistan Business”) by way of amalgamation, pursuant to Section 48 of the Banking Companies Ordinance, 1962 (the “Amalgamation”)

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The Amalgamation is subject to regulatory (including from the State Bank of Pakistan and the Competition Commission of Pakistan) and other approvals (including approval of the shareholders of HBL in a general meeting).

Barclays Pakistan Business comprises of seven branches in three cities across Pakistan, whereas HBL which is the largest bank in Pakistan serves a customer base of over 7.5 million with the largest branch network of nearly 1,600 branches globally. Upon the completion of the proposed transaction the Barclays Pakistan Business will be amalgamated within and into HBL, whilst ensuring that the transition of the business is smooth and seamless so as to provide continuous and uninterrupted services to customers.

5.2 The Sponsors The Aga Khan Fund for Economic Development (AKFED) is an international development agency dedicated to promoting entrepreneurship and building economically sound enterprises in the developing world. AKFED focuses on building enterprises in parts of the world that lack sufficient foreign direct investment. AKFED operates as a network of affiliates with more than 90 separate project companies employing over 47,000 people. The Fund is active in 17 countries in the developing world: Afghanistan, Bangladesh, Burkina Faso, Burundi, the Democratic Republic of the Congo, India, Ivory Coast, Kenya, Kyrgyz Republic, Mali, Mozambique, Pakistan, Senegal, Syria, Tajikistan, Tanzania and Uganda.

5.3 Products, Services, Demand Outlook & Future Prospects

The Bank sees the HBL brand as an intrinsic part of the nation’s fabric. The Bank’s vision of ‘enabling people to advance with confidence and success’ is embedded in every communication platform and is central to building the Bank’s brand across its global network. The Bank conducts its business operations through the following core business/product groups: (i) Branch Banking; (ii) Corporate and Investment Banking; (iii) Financial Institutions-Global Trade Services; (iv) Islamic Banking; (v) Global Treasury; (vi)Payments Services; (vii) International Banking; and (viii) Global Remittances. The function of each of these business/product groups is summarized below. i. Branch Banking

Through its Branch Banking Group, the Bank provides the following services: (i) deposits and investment product sales (primarily Bancassurance); (ii) retail banking, which includes, amongst other things, retail lending and trade business, as well as finance for small businesses; (iii) rural banking, through which the Bank provides banking solutions to Pakistan’s rural population; (iv) commercial banking, through which the Bank handles the financing needs of medium-sized businesses; and (v) consumer banking, through which the Bank provides services such as personal loans, credit cards and vehicle loans.

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The Branch Banking Group focuses on customers for whom the branch is the principal point of contact. This business manages the largest branch network in Pakistan, comprising 1,542 retail branches (excluding Corporate and Islamic branches) as of December 31, 2014, which represents approximately 14% of the total number of bank branches in the country. The Bank has a presence in all areas of the country from the rural areas to the major cities. The Bank’s footprint is fundamental to its strength with respect to outreach and recognition as a trusted household name. The Bank serves a customer base of over 7 million accounts, which represents about 20% of the total number of bank accounts in Pakistan as of December 31, 2014.

Deposits and Investment Products Sales

The Branch Banking group offers a variety of liability products and transactional banking services to retail customers, including SMEs. Liability products include current accounts, savings accounts, term deposits and foreign currency accounts. Such liability products are also offered to the Bank’s corporate clients. Branch Banking accounts for over Rs.1,030 billion of deposits, which represents over 82% of the Bank’s domestic deposits. This loyal and rapidly growing deposit base is unrivalled in Pakistan and is a competitive strength of the Bank, allowing for a market share of approximately 15% of total bank deposits as of December 31, 2014.

Bancassurance

Bancassurance, is a business which assists the Branch Banking group in generating additional non-funded income (“NFI”) and improving the Bank’s profitability. Bancassurance involves the partnership between the Bank and insurance companies, which use the Bank’s sales channel in order to sell insurance products. The Bank has market share of 46% in Pakistan for new business booking. There is specific focus on service levels, awareness and engagement to further drive NFI and to increase market share by tapping into new segments.

Commercial Banking

The Commercial Banking division focuses on generating deposits, originating risk assets and developing trade-related business through the Bank’s branch network. On the non-deposit side, the Commercial Banking division primarily caters to the financing needs of medium-sized businesses with annual sales revenue of between Rs.500 million and Rs.2,500 million (particularly traders, vendors and suppliers to large corporates, medium sized manufacturers and intermediate commodity suppliers), by facilitating transfers of funds and satisfying fixed and working capital requirements. Focus is placed on booking and managing good assets with a focus on operating and collection accounts. Commercial Banking is planning to expand its footprint across the country by adding new locations/markets to its existing network, thereby aggressively increasing assets and profitability.

Consumer Banking

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The Consumer Banking division offers personal loans, credit cards, and vehicle loans. The primary target market for the Consumer Banking division are existing Branch Banking customers, while also selectively targeting new bank customers.

In 2013, the Bank acquired the consumer business of Citibank in Pakistan, which included its credit card portfolio. The cards business has a customer retention rate of over 85%.

The sales model for the Consumer Banking division is facilitated by the Bank’s extensive branch network. The Bank aims for its Consumer Banking division to become the leading consumer bank in Pakistan in terms of profitability and size within the next two years.

Retail Lending

The Retail Lending division is focused on the small (non-rural) enterprise sector. The target market for Retail Lending is businesses with annual sales turnover of up to Rs.500 million per annum for small enterprises with a maximum exposure of Rs.40 million.

Rural Banking

Agriculture remains a major component of the Pakistani economy. The Bank’s rural banking operations are targeted towards providing banking solutions to the rural population of Pakistan. It is involved in providing access to finance to the rural economy and increasing financial inclusion. Finance is provided to farmers for crop, dairy, livestock with an average loan size of approximately Rs.500,000. During the last three financial years, the Bank’s rural lending portfolio has grown at a compounded rate of more than 15% per annum, making the Bank the leading provider of rural credit amongst private commercial banks, with well-managed credit quality.

Rural Banking has also initiated a financial inclusion campaign through its rural liabilities arm that aims to establish new rural deposit customers. The basic objectives are to create banking awareness and promote saving culture amongst the rural communities, to provide banking solution to the rural customers as per their needs and financial aspirations, and to establish mutually beneficial banking relationship with rural customers.

Branch Banking Initiatives Women Market Programme. Since early 2014, the Bank has been working on a value proposition for the women’s market, which has largely been underserved by the financial sector. The goal of the programme is to increase female inclusion in the economy and for the Bank to become the national champion for women in Pakistan, both internally and from a customer perspective. The Bank is an active member of the Global Banking Alliance, which fosters building of a women’s market programme among banks as a profitable and sustainable business. The Bank is conducting research in order to better gauge market needs prior to rolling out a complete proposition for this segment in collaboration with the IFC. Wealth Management Services. In continuation to the Bank’s customer segmentation approach, wealth management services were rolled-out in 2014, which are intended to be the first of a set of services to meet the investment expectations of the Bank’s upper income customers.

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“Branch of the Future” Project. In line with the objective of offering enhanced service experience to customers, this project is aimed at creating process efficiencies, quicker turnaround times, and seamless operations in selected Bank branches. The focus will be on driving marketing strategy and optimising interface with the Bank’s customers. The key objective of this is to create branches that will meet the needs of customers in the future as they move away from transaction banking in a branch to other channels.

ii. Corporate and Investment Banking

The CIB group provides the Bank’s customers with a wide range of products and services, including lending products, access to debt and equity markets, project finance and advisory services, cash management and payment services, treasury products and custom risk management solution tailored to meet client needs. The CIB group is divided into four key areas: (i) Corporate Banking; (ii) Project Finance & Infrastructure Advisory (“PF&IA”); (iii) Advisory & Equity Capital Markets (“ECM”); and (iv) Syndication & Debt Capital Markets (“DCM”).

Corporate Banking

The target markets for the Corporate Banking group are large local companies, multinational corporations, and public sector entities which have revenues of over Rs.2.5 billion. The Bank also provides corporate banking services to these entities’ sponsors, directors, smaller subsidiaries and group companies. The Bank’s corporate clients are diversified across a wide range of industries, including textiles, oil and gas, power and utilities, sugar, telecommunications, food and agricultural commodities, building materials and automobiles. The risk diversification strategy of the bank has allocated limits on exposure for each industry segment, as well as players within each segment. Internally developed risk assessment criteria (“RACs”) ensure that the existing and potential client base of the Bank remains within the defined strategic target market of the Corporate Banking group.

The Bank offers a wide variety of financial services to its corporate clients in each of Pakistan’s key business centers. The credit products offered by the Bank to its corporate banking customers include funded products, such as working capital loans and term loans, and non-funded products, such as documentary credits and collections, stand-by letters of credit and guarantees. The Corporate Banking group also offers treasury and cash management services. Corporate Banking teams are available in the major industrial and commercial centers of the country, and are made up of experienced, professionally qualified relationship managers who provide day-to-day advice to customers, as well as offer product solutions that enhance and improve customer profitability and efficiency. The main products which are marketed by the Corporate Banking group can be divided into funded products and non-funded products.

Investment Banking

The Investment Banking group has been involved in some of the largest transactions in the Pakistan market in recent years. The Investment Banking group aims to provide innovative and unique solutions to its clients, focusing on three specialist investment banking areas: (i)

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Advisory & Equity Capital Markets (“ECM”); (ii) Project Finance & Infrastructure Advisory (“PF&IA”); and (iii) Syndications & Debt Capital Markets (“DCM”).

1. Advisory & ECM

The Advisory & ECM division was established in 2010, and is primarily involved in structuring, marketing and pricing public offerings and private placements of equity. In addition to ECM, the division is also actively engaged in advisory services including mergers and acquisitions (“M&A”), corporate restructuring and underwriting.

In 2013, the Advisory & ECM division successfully led the initial public offering (“IPO”) of a blue chip fertiliser company, which was the largest IPO of 2013 in Pakistan. The Bank was also appointed as Joint Lead Manager and Financial Adviser in connection with the secondary offering of one of Pakistan’s largest oil & gas companies, which was Pakistan’s largest domestic secondary public offering in 2014. The Advisory & ECM division’s success is reflected in various accolades and top tier financial services awards including “Lead Manager & Financial Adviser of the year 2013 for IPO Market” by South Asian Federation of Exchanges (SAFE). In addition to its involvement in capital markets transactions, the Bank was mandated as the exclusive financial adviser to a multinational firm for acquisition in Pakistan which resulted in the largest M&A deal in Pakistan for 2013.

2. Project Finance & Infrastructure Advisory

The specialised PF&IA division has significant experience in the power, oil and gas, cement, fertiliser and telecommunications sectors in Pakistan, and is widely recognised as the market leader in Pakistan for project financing transactions. Due to Pakistan’s energy deficit, the key focus of the PF&IA division has remained the power sector in Pakistan. The Bank has structured, advised and successfully led project financing deals in almost all the power projects that have achieved financial close under various power policies of the Government. The PF&IA division has been and is part of many firsts in the power sector of Pakistan, including its involvement in the first private sector hydroelectricity project, the first wind power project, the first power project to be developed under the 2002 power policy of the Government, the largest coal mine mouth power project, the largest Islamic syndication for a power project, the largest conventional syndication for a power project, the first private to private (P2P) power project and the largest wind power project in Pakistan. The PF&IA division has gained international recognition as the Bank is the only bank in Pakistan which has been appointed as a Lead Arranger by a financing consortium comprising international financial institutions, for a cement project being developed in the Democratic Republic of Congo.

As the Government aims to solve the ongoing power crisis in Pakistan, its key focus is to produce enough electricity and to produce affordable electricity, which, in each case, will require the development of coal-fired power projects in Pakistan. Having anticipated these requirements and placed itself in contention for the relevant projects, the PF&IA division has ensured that the Bank is the only bank in Pakistan which is actively working on multiple coal-based power projects in Pakistan. The Bank also

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anticipates that China will play a vital role in development of such large-scale coal power projects and has been working to leverage its presence in China by developing relationships with Chinese financial institutions, export credit agencies, Chinese contractors and other large Chinese investors. This key strength provides the Bank with a unique competitive edge over other local banks in Pakistan.

3. Syndication & DCM

The Syndications & DCM division is responsible for all fixed income capital-raising activities undertaken by the Bank’s clients, both domestically and globally. The range of products and services offered by the Syndications & DCM division include Shari’a-compliant debt instruments, new issues of both public and private debt including commercial paper, term finance certificates, Sukuk and syndicated term finance facilities.

The Bank plans to continue to build its advisory services for clients looking for innovative solutions to meet their financial needs. The Bank’s recent success in this market was demonstrated through the design and subsequent placement of Pakistan’s first retail listed Sukuk, which was sold out within twelve working hours of its launch.

iii. Financial Institutions & Global Trade Services

The FI-GTS Group is responsible for all aspects of the Bank’s relationships with a wide range of domestic and international financial institutions (including NBFIs), including commercial banks, investment banks, insurance companies, leasing companies, development financial institutions, Modaraba companies, asset management companies and brokerage houses. The FI-GTS Group provides products and services such as trade finance, cash management, treasury, bilateral loans, and nostro accounts to these institutions. The FI-GTS Group is a strategically-aligned partner for local and international banks, handling trade flows between counterparties from around the globe.

iv. Global Treasury

Through its Global Treasury group, the Bank offers multi-product support to customers, including access to local debt markets in the Bank’s capacity as a primary dealer, providing liquidity for foreign exchange needs, hedging of foreign exchange and interest rate exposures through structured solutions.

As a result of the Bank’s leading position in the market, the Global Treasury group has access to a significant portion of the market’s deposit base. Structuring of money markets and equity portfolios is therefore critical to the function of the Global Treasury group. The Global Treasury group also aims to anticipate macroeconomic and market trends in order to maximize return on its portfolios, and is active in the foreign exchange (“FX”) market. The Global Treasury group has an active interbank trading desk whereby it acts as a market maker for US$-PKR spot and forward markets. The Bank is one of the six Authorized Derivatives Dealers in the market, offering customized hedging solutions to its clients in line with regulatory guidelines.

Foreign Exchange

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Through the Global Treasury group, the Bank provides its clients with a comprehensive range of FX products and services as well as FX execution. The Bank’s extensive network of branches and correspondents globally, as well as its considerable trade volume in most of the active global currencies enables it to provide highly competitive exchange rates and smooth delivery of FX transactions.

Money Market Desk

The Global Treasury group aims to provide the most competitive rates in the market for deposits. This liquidity is utilized to meet both the advances requirements and investment opportunities offered by the Bank. Investment opportunities drawn on by the money markets team includes the purchase of securities issued by the Government. These securities include longer maturity Pakistan investment bonds and shorter maturity market treasury bills. By consistently evaluating the interest rate environment in Pakistan and strategically pricing and positioning fixed income instruments in a dynamic portfolio, the Bank’s money market team ensures efficient employment of funds. More immediate funding and gapping needs are met through the availing of the SBP’s open market operations as well as repo/reverse repo and clean borrowing and lending facilities available in the interbank market.

Fixed Income and Derivatives

As a result of the Bank’s relatively large balance sheet and the Global Treasury group’s extensive customer reach, the Bank is one of the leading providers of option and interest rate derivatives in the market. Through the expertise and experience of its Fixed Income team, the Bank has been able to generate and structure derivative transactions tailored to the specific hedging needs of its clients. In structuring client specific FX options, the Fixed Income team enables the Bank’s clients to capitalize on global exchange rate volatility, as well as to protect their existing positions on account of substantial import payments or export bills.

The Fixed Income team also has the capability to construct more complex FX currency options. These instruments allow for further specialization in the features of the specific derivative transaction. The Fixed Income team is also able to tailor transactions to hedge interest rate volatility for clients through interest rate swaps.

Equity Trading Desk

The Bank has established a devoted Equity Desk as part of the Global Treasury group, which is responsible for managing the Bank’s equity portfolio as per SBP regulations. The principal objective of the Equity Trading Desk is to handle and manage the Bank’s trading and long-term investment portfolio. The Equity Trading Desk’s aim is to identify and invest in value and growth stocks with a medium- to long-term investment view. Its strategy is based on total return – i.e., capital gain plus dividend yield. The Equity Trading Desk works closely

For both 2013 and 2014, the Bank was named “number one FX Bank for non-financial corporate clients” by Euromoney.

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with the Bank’s in-house research team to identify lucrative investment opportunities in the domestic equity market.

v. Islamic Banking

Through its Islamic Banking Group, the Bank provides Shari’a-compliant banking services to retail customers in Pakistan. The Islamic Banking Group was established pursuant to the Bank’s broader aim of financial inclusion as a large section of the population has migrated to Shari’a-compliant banking in recent years. As of December 31, 2014, the Islamic Banking Group was the second largest Islamic finance provider in Pakistan in terms of balance sheet size.

The Bank’s Islamic Banking business is a relatively new entrant to the Pakistani market. The strategy of the Bank is to work closely with other business groups to offer Shari’a-compliant products as a complimentary range to faith-based customers. The Bank aims to increase the market share of the Islamic Banking business to become the leading player in this segment. The Bank’s management believes that it is well-positioned to realise this vision due to the Islamic Banking business’s large distribution network comprising 45 branches (including two sub-branches) and 488 windows, strong base of low cost deposits and strong Shari’a structuring capability. The Bank’s Islamic banking branches co-exist with conventional branches in chosen geographic territories allowing inclusion to the faith based customers.

The Bank offers a variety of deposit products as well as funded facilities under its Islamic banking operations.

During last three years, the Islamic Banking Group has been involved in a number of major Islamic banking transactions.

vi. Payments Services

The Payments Services Group (“PSG”) provides the following services: (i) branchless banking; (ii) employee banking; (iii) alternative delivery channels (ATM and CDM); (iv) internet banking; (v) cash management; (vi) debit cards; and (vii) card acquiring. The key aim of the PSG is to promote inclusive banking in Pakistan and to develop innovative solutions that anticipate and meet the needs of the Bank’s clients.

Since its establishment in 2011, the Bank has made significant investment in the PSG’s infrastructure, integrating it into the business and strengthening the PSG’s product offering. As part of the Bank’s continued growth strategy, it is focused on incorporating sustainable business practices into its mainstream operations. The Bank strives to deliver sustainable economic growth that is profitable, environmentally responsible and socially relevant, in the expectation that the Bank’s customers will quickly adopt and adapt to new technology. .

Branchless Banking

Pakistan is one of the fastest developing markets for branchless banking in the world, according to the Consultative Group to Assist the Poor (CGAP). The Bank’s branchless banking initiative is a large-scale deployment in the region, which will create opportunities to bring those segments of society into the financial network that do not currently have access to banking. HBL Express has been established to facilitate the Bank’s vision of

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supporting financial inclusion in Pakistan. HBL Express is expected to provide convenient and reliable banking services to the people of Pakistan, particularly those who did not previously have access to banking services. HBL Express was launched in April 2013 with domestic remittances and utility bill payment services.

In June 2013, HBL Express received a mandate to disburse social security benefits from the Government via the Benazir Income Support Fund. The Bank is one of the principal banking institutions handling Government to Person volumes in Pakistan for internally displaced persons and individuals affected by disasters. These channels are transparent, secure and reliable. The vision of HBL is to be the industry leader in all branchless banking products and services in two business years.

Employee Banking

The Bank has established the “HBL at Work” program, an employee banking program that offers benefits such as current accounts with no transaction fee, discounts on consumer banking products, online and mobile banking, on-site ATMs and financial education seminars. In turn, the employer will receive benefits such as seamless online transfer of payroll to its employee’s accounts. Other benefits of the HBL at Work program include the use of debit cards, internet banking, SMS alerts, mobile/phone banking, consumer leading (mortgages, auto financing, personal loans and credit cards) on preferential terms. The Bank plans to launch an Islamic variant of HBL At Work during 2015, in order to cater for growing Islamic banking needs in Pakistan.

Alternative Delivery Channels

The Bank believes that the wide array of alternative delivery channels that it offers provides customers with additional convenience and bolsters its reputation as a technologically advanced bank compared to its competitors. Increased use of alternative delivery channels can also contribute to improved efficiency and reduced overhead costs at the Bank’s branches. These alternative delivery channels include ATMs, Internet Banking (see below) and Call Centers.

As of December 31, 2014, the Bank had installed 1,592 ATMs across Pakistan. Since 2012, the Bank has deployed 1,093 ATMs across Pakistan, with the purpose of bringing access to financial services to the bankable and the unbanked population of Pakistan. The Bank was recognised as the top ATM deployer in 2012 and 2013. These ATMs are located at the Bank’s online branches or at strategic locations selected for high traffic and potential use. The Bank’s ATMs allow for traditional cash withdrawals, but are also equipped for a variety of other services, including deposits and bill payments. In 2014, the Bank became the first bank in Pakistan to allow biometric-enabled ATM transactions, and continues to invest in its ATM network, including the biometric conversion of 1,600 ATMs to allow for payments through CDMs, cash collection through CDMs for corporate entities and the planned deployment of approximately 500 ATMs in 2015.

1. Internet Banking

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The Bank offers internet services to its customers through HBL Internet Banking. Corporate and retail customers can use the Bank’s internet services to enquire about their balances, view their statements, transfer funds and order checkbooks. Retail customers can also use internet banking for utility and mobile bill payments. Transactions conducted through internet banking are updated on a real-time basis. In November 2014, the Bank launched a new internet banking service, providing customers with an enhanced experience, including a comprehensive new range of features and functionalities.

2. Call Centre

The Bank has a call centre in Karachi offering inbound telephone banking to customers. In addition, trained phone banking officers offer personalised services for customers in providing account-related information as well as answering queries and providing an outlet for customer feedback. The call centre operates 24 hours a day and is available through a domestic toll-free number.

Cash Management

Through the Bank’s cash management operations, corporate and SME customers are offered customized solutions such as collection, payment and remittance services through the Bank’s network of branches. Cash management products include local and remote collections with the pooling of funds in a central account, along with a customized management information system. In addition to collections, the Bank also offers local and remote payments through customer checks and bulk demand drafts with the facility of centralized or remote printing, electronic clearing services, disbursement of dividends and interest and remittance services. Customers are charged a fee for these services based on the number and size of transactions, the location for check collection and the expected date of credit to the customer accounts. Apart from fees, the Bank also benefits from holding the funds for a period of time before they are required to be deposited in customers’ current accounts.

In 2014, the Bank’s cash management unit successfully launched three new major products, including bulk payments, allowing customers to execute bulk payments in respect of either funds transfer or bank instruments. The Bank also launched PayCol, in order to cater to the growing need of the consumer-to-business segment for electronic invoicing and internet payments. For the Bank’s cash management operations, mobile banking serves as part of its core strategy to allow clients’ counterparties to make payments. On this basis, the Bank launched mobile payments, which gives clients the ability to track payments by dealer and franchise ID and order number. This has enabled the Bank’s clients to strengthen their supply chains due to easier 24/7 access to their counterparties to make payments.

Debit Cards

The Bank is the largest issuer of debit cards in Pakistan, having issued 5.3 million debit cards as of December 31, 2014. The Bank is also the largest issuer of Visa cards in Pakistan. The Bank has introduced a number of innovative features on its debit cards, such as functionality to use the debit card for online e-commerce payments, SMS alerts on all ATM or POS debit

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card transactions, and card activation on ATM using activation codes received via SMS. The Bank is also the only bank in Pakistan to offer debit cards for foreign currency accounts.

The Bank won the “Top Union Pay Issuer” award for Pakistan and the MENA region for two consecutive years in 2013 and 2014.

Card Acquiring

The Bank entered the card acquiring space in 2014, with the introduction of POS machines for acceptance of Visa, MasterCard and UnionPay cards at various retail outlets. The Bank has also collaborated with CyberSource, a group company of Visa International, to offer internet payment gateway services in order to facilitate e-businesses in Pakistan and abroad to accept card payments online. As a result of this collaboration, e-businesses are able to accept payments online in a secured fashion, which the Bank expects will promote the adoption of e-commerce in Pakistan. A number of leading businesses have signed up with the Bank for this service, including Warid Telecom, the National University of Science and Technology and Askari General Insurance Corporation.

vii International Banking

The International Banking Group provides a range of banking services, including trade finance and treasury, to customers throughout the Bank’s network of 59 international branches, including in the UAE, the U.K. and other locations with growing middle-market segments, South Asian origin businesses, high-net-worth individuals (“HNWIs”) and migrant workers using home remittance services.

Although the majority of the Bank’s business, assets and operations are located in Pakistan, the Bank has a direct presence in 16 other countries (Afghanistan, Bahrain, Bangladesh, Belgium, France, Kenya (where the Bank also has an affiliate), Lebanon, Maldives, Mauritius, Oman, Seychelles, Singapore, Sri Lanka, Turkey, the UAE and the United States). The Bank also has a presence in four additional countries through its subsidiaries (Hong Kong, Netherlands, Switzerland and the U.K.) and a presence in five additional countries through its affiliates (Burundi, Kyrgyz Republic, Nepal, Tanzania and Uganda).

The Bank divides its operations into seven geographic segments: Pakistan, the Gulf, the Far East, South Asia, Europe and the U.K., the United States and Africa.

viii Global Remittances

In November 2013, the Bank introduced global remittance services for Pakistanis who work abroad, with the objective of establishing the Bank as the leading bank in Pakistan for home remittances. As of December 31, 2014, the Bank’s global remittances service held a market share of 22.5%, compared to 20.7% as of December 31, 2013, according to the SBP. Customers can remit funds to their account with the Bank from any country to Pakistan through the SWIFT system or through the Bank’s network of correspondent banks. The Bank receives fees for providing these remittance services, which include international banking tariff rates. The Bank has established a dedicated call centre for swift resolution of customers’ queries and 450 exclusive telephone lines

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in high remittance volume receiving branches for facilitation of beneficiaries. The Bank has also streamlined its various remittance processes, entering into service level agreements with the Centralised Inward Remittances Department and the Remittance Service Centre in Pakistan.

Overseas Associated Companies and Joint Venture

The Bank has strategic interests in banks in Kenya, Nepal and the Kyrgyz Republic. The Bank owns 11.97% of Diamond Trust Bank Kenya Limited (“DTB Kenya”), 20% of Himalayan Bank Limited, Nepal (“Himalayan Bank”) and 18% of Kyrgyz Investment and Credit Bank CJSC (“KICB”).

5.4 Risk Factors

The Bank is exposed to the following risks in general: Credit Risk Credit risk is defined as the risk of loss of principal or loss of a financial reward stemming from a borrower's failure to repay a loan or otherwise meet a contractual obligation. While loans are the largest and most obvious source of credit risk; it also stems from activities both on and off balance sheet. The credit process at HBL is governed by well-defined and documented credit policies and procedures. Beside core documents, separate policies are in place for consumer loans, rural banking and SME financing. These policy and procedure documents lay down the basic underwriting standards. Certain types of exposures/ product programs that contain their own detailed credit criteria, regulatory, compliance and documentation requirements. Credit risk appetite i.e. tolerance for credit risk, is defined through the Overall Risk Appetite document that is also approved by the board of directors. It also covers the concentration risk the bank is willing to carry on its books with reference to risk ratings, sectors and large exposures. The core pillars of credit risk management at HBL are: An independent risk management function; Approval rules based on three-initial system and joint business/risk sign-offs; and An independent audit and business risk review function.

Credit approval authorities are designated to individuals based on their qualifications and experience. Proactive monitoring is ensured through an early warning mechanism for assets under stress. This enables the bank to put in place viable solutions before further deterioration in credit quality. A special Structured Credits function has been established to handle stressed assets to ensure a focused remedial strategy. The Bank follows the guidelines of SBP for domestic operations and the local regulators for international operations for classification/ provisioning/ write-off of problem advances. However, subjective judgment is also applied to recognize credit losses earlier than the regulations warrant. Disbursement authorization as well as collateral and security management, documentation and monitoring are managed by Credit Administration Department (CAD) that operates as part of Risk Management.

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Stress testing on the credit portfolio is performed according to the guidelines issued by SBP at defined frequency. The scope of stress testing is being expanded to include optional scenarios. Business Risk Review performs the function of which reports to the Board Audit Committee and is independent of Risk Management and the business functions. It provides independent assessment of the quality of credit portfolio, efficacy of processes for acquisition of risk assets, regulatory/policy compliance and appropriate classification and risk rating of assets to the Board and the senior management of the bank. Market Risk It is the risk of loss due to adverse movements in market rates or prices, such as foreign exchange risks, interest rates and equity prices. It emanates from the trading activities mainly carried out by Treasury and investments/ structural positions housed in banking book. Market risk at the Bank level is managed by the Risk Management Group (“RMG”) under the supervision of Asset-Liability Committee (“ALCO”) supported by the Treasury Middle Office (“TMO”). The Bank carries a limited amount of market risk the bulk of which is located in the banking book stemming from the mismatches in structural assets and liabilities positions.

Interest Rate Risk Interest rate risk is the uncertainty about the change in an investment's value due to changes in interest rates, including changes in the shape of the yield curve. Interest rate risk is inherent in the business of a financial institution and results due to the mismatches in the contractual maturities or repricing of assets and liabilities on its balance sheet. Substantial part of the Bank's assets and liabilities are subject to floating rates which significantly reduces the exposure to changes in interest rates. The Bank is exposed to interest rate risk as a result of mismatches on a relatively small part of major portion related to this risk is reflected in the banking book owing to the retail activities and investments qualifying for statutory reserve requirements. The overall potential impact of the mismatches on the earnings in short term and economic value of the portfolio in the long term is not material and is being managed with in the tolerance limits approved by the Board. The Bank uses simulation and duration gap models to measure and monitor the interest rate sensitivity on the potential earnings and the Bank’s economic value of equity. Foreign Exchange Risk The Bank’s assets are typically funded in the same currency as that of the business transacted to eliminate foreign exchange exposure. However, the Bank is obliged to maintain a reasonable open position in various currencies resulting from the sizeable trade related transactions handled across the Bank. Foreign exchange risks are controlled and monitored through the limits approved by ALCO within the overall limit advised by SBP. The regulatory limit for foreign exchange is relatively small compared to the size of the Bank; which restricts the risk generated through the foreign exchange activities of the Bank. End-of-the-day positions are marked to market daily according to the guidelines of SBP and sensitivity is conducted in line with the internal market risk policy of the Bank. The intra-day positions are managed by treasury through stop loss/dealers limits.

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Equity position risk Equity position risk is the risk that the fair value of a financial instrument will fluctuate due to changes in the prices of individual stocks or the levels of equity indices. The Bank’s equity book comprises of held for trading (“HFT”) and available for sale (“AFS”) portfolios. The objective of the HFT portfolio is to make short-term capital gains, whilst the AFS portfolio is maintained with a medium term view of earning both capital gains and dividend income. Product program manuals have been developed to provide guidelines on the objectives and policies, risks and mitigants, limits and controls for the equity portfolios of the Bank. Liquidity Risk Liquidity risk is the risk that the Bank will be unable to meet its cash flow obligations as they become due, at a reasonable cost, because of an inability to liquidate assets, or to obtain adequate funding. ALCO has the responsibility for the formulation of overall strategy and oversight of the asset liability management. The Bank follows a comprehensive liquidity risk management policy duly approved by ALCO and the Board. The policy stipulates maintenance of various ratios, funding preferences, and evaluation of Bank’s liquidity under normal and crisis situation (stress testing). To comply with the policy, the Bank also conducts a behavioral study on its demand deposits to evaluate the ability of the Bank to retain its core deposits, which may not reflect in their maturity profile. Such evaluation forms part of the liquidity management process to realistically project the reliance on such funding sources. As a result of close monitoring and strict policy towards reliance on core deposit, the Bank has been able to avoid concentration/reliance on volatile deposit in its books. A comprehensive contingency plan to deal with crisis situation is also in place. Operational Risk Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. In line with the approved Operational Risk Management Policy, Bank has instituted an Operational Risk Management Division (ORMD). Operational Risk Management Policy and a detailed ORM Framework has been prepared and implemented. Operational Risk Coordinators have been assigned from more than 20 departments of the Bank and are responsible for implementation of the ORM Framework in coordination with ORMD. The Bank’s ORM framework and practices address all the significant areas of ORM within the Bank including Risk Control Self Assessment (RCSA), Key Risk Indicators, Operational Loss Data Management, Operational Risk Reporting, Capital Calculation etc. Detailed RCSA exercises are conducted at regular intervals across the Bank, the results of which are continually evaluated against the losses. Operational loss data collection and evaluation has been underway since 2009. The Bank has also established Key Risk Indicators (KRI) and is monitoring them at regular intervals. Operational risk reports are regularly submitted to the senior management.

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Business Risks The major risks that are relevant to the business of the Bank include: Risk of lower margins The risk that the Bank’s margins may reduce in future due to changes in economic and market conditions and/or change in regulatory regime. This risk is mitigated on the cost side, by continued focus on acquisition of low cost deposits and building up a stable deposit base. This helps to contain funding cost and also to increase the overall size of the Balance Sheet, resulting in volumetric growth compensating to some extent for lower margins. Also, the recent linking of the savings rate to the repo rate has limited the downside in the case of falling interest rates. On the asset side, the Bank mitigates the risk of lower margins through prudent management of the Balance Sheet and building an appropriate mix of short and long term Government securities. As economic conditions improve, the Bank has sufficient capital and risk appetite to increase its lending to the private sector which will also result in an improvement in margins as assets shift from lower yielding T-Bills into advances. In addition to the above specific actions to contain margin compression, the Bank also continues to focus on existing and new fee based income sources to mitigate the risk of lower margins. Risk of reduced credit demand The economic growth in the previous few years has been adversely affected due to the ongoing power crisis, law and order conditions and a general downturn in the economy with high budget deficits and falling reserves. This has reduced investor confidence and resulted in reduced credit demand. While economic indicators and investor confidence are currently on the upswing, this could reverse due to failure to resolve the above issues. The current momentum of developments taking place and the business friendly stance of the government indicate that improvements in the macroeconomic landscape should be sustainable. Energy has been the Government’s top priority and new projects are being launched along with plans to privatize existing power generation and distribution companies. International confidence has been renewed with strong interest in conventional and Islamic Bond issues by the Government, receipt of aid from multilateral agencies, foreign currency proceeds from privatization, and a strengthening of reserves, all leading to an unprecedented appreciation in the currency. All these measures should result in further investment, both domestic and international and stimulate the demand for credit. Risk of lower government borrowing requirements Due to slow economic growth in the past few years along with no major attempt at increasing the tax net, the government has run sizeable budget deficits which are heavily funded by the banking system. In the absence of private credit demand in recent years, higher government borrowing has helped the banking industry in deploying its excess liquidity. An improving macroeconomic outlook with higher revenue collection and a curtailed fiscal deficit under the IMF regime could

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gradually reduce government’s credit demand from the banking system. If this is not offset by faster private sector credit growth, deployment of surplus liquidity could become a major business risk on banks’ balance sheets. Improving investors’ confidence in the economy coupled with the government’s focus on resolving key structural issues, should improve private credit demand going forward, which should mitigate the risk arising from lower government borrowing requirements. Also, the very issues that would lead to lower Government borrowing should themselves create a climate that is conducive to private sector credit growth. Competition The major competitors for HBL continue to be its peers. Additionally, National Savings Schemes have always been a major competitor for banks’ deposits. The government’s focus on bringing in more schemes in the near term and rejuvenating existing schemes for individuals’ direct participation in government paper could serve as a risk for deposit growth in the medium term.

Competition risk is mitigated through HBL’s branch network which is the largest in the country, its strong brand recognition, its highly professional and experienced management team and continuing enhancement and deployment of technology as part of its business.

Regulatory Risk There is a risk that unanticipated changes in regulations could have an adverse impact on the Bank. However, such regulatory changes could reasonably be expected to affect all players within the sector and would therefore not affect HBL’s position or business in isolation.

Capital Market Risk Prices of shares depend on the behavior of stock markets and the performance of the Bank. Hence, prices of shares may increase/ decrease based on market movement. The increase/ decrease in prices is mainly governed by market forces. However, from a fundamental point of view, the investor sentiment is mainly driven by strong financial performance. The Bank has strong fundamentals based on its asset size (i.e. the largest private sector Bank in Pakistan), and experienced management with proven track record. In making the investment decision, the investor may also take into consideration any variation in the quoted price of the Shares as a consequence of this Offer or publication of the OFSD or otherwise.

It is stated that all material risk factors have been disclosed and that nothing has been concealed in this respect. However, there may be additional risk factors, which are not disclosed herein, that are not presently known to us or that we currently deem to be less significant, which may materially and adversely affect HBL’s business, financial condition, results of operations and prospects.

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6 Financial Information

6.1 Auditors Report

Auditors Report under Section 53(1) Read With Clause 28(1) and 28(2) of Section 2 of Part I of the Second Schedule To The Companies Ordinance, 1984 for the Purpose of Inclusion In The OFSD of Habib Bank Limited.

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6.2 Share Break-Up Value Certificate

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6.3 Auditors Certificate on Issued, Subscribed, And Paid-Up-Capital of the Bank

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6.4 Significant Financial Information As of and for year ended December 31,

2014 2013 2012

(percentages, except employees, branches and ATMs) Profitability Ratios: Yield(1) .......................................................................................................... 8.98 8.66 9.84 Net interest margin(2) ................................................................................... 4.49 3.96 4.82 Net interest spread(3) ................................................................................... 5.17 5.22 6.24 Cost to income ratio(4) ................................................................................. 45 49 41 Non-interest income to total income(5) ....................................................... 25 25 22 Operating expenses to total average assets ratio(6) ..................................... 2.3 2.2 2.2 Return on average total assets(7) ................................................................. 1.8 1.4 1.7 Return on average shareholders’ equity(8) ................................................... 23 18 21 Dividend pay-out ratio(9) .............................................................................. 55 47 40 Balance Sheet Ratios: Loans to deposits(10) ..................................................................................... 39 40 41 Loans to total assets(11) ................................................................................ 32 33 31 Investments to total assets(12)...................................................................... 50 48 49 Deposits to total liabilities(13) ....................................................................... 90 89 82 Cost of risk(14) ............................................................................................... 0.3 0.3 1.4 CASA deposit Ratio(15) .................................................................................. 78 73 67 Credit Quality Ratios: Non-performing loans to total gross loans(16) .............................................. 12.0 12.7 13.9 Loan losses reserves to non-performing loans(17) ........................................ 83.2 83.5 82.6 Capital Adequacy Ratios: Tier I regulatory capital to risk-weighted assets .......................................... 13.34 12.94 12.59 Total regulatory capital to risk-weighted assets .......................................... 16.21 15.39 15.31 Other Information: Total income (PKR in millions)(18) ................................................................. 92,599 74,339 73,720 Employees(19) ............................................................................................... 14,123 13,842 13,978 Domestic branches(20) .................................................................................. 1,596 1,546 1,497 Domestic ATMs(21) ........................................................................................ 1,592 1,303 750

Notes:

(1) Yield represents interest income as a percentage of average interest-earning assets. Averages are taken on the basis of daily balances for domestic operations and monthly balances for international operations.

(2) Net interest margin represents difference between the average rate of interest earned on interest-earning assets and the average rate of interest accrued on interest-bearing liabilities. Averages are taken on the basis of daily balances for domestic operations and monthly balances for international operations.

(3) Net interest spread represents the difference between the average rate of interest earned on advances and the average rate of interest accrued on deposits. Averages are taken on the basis of daily balances for domestic operations and monthly balances for international operations.

(4) Cost to income ratio represents total administrative expenses divided by total income (as defined in note 18 below). (5) Non-interest income to total income represents total non-mark-up/interest income divided by total income (as defined in note 18 below). (6) Operating expenses to total average assets ratio represents total administrative expenses divided by total average assets (the average of the

opening and closing balances for the applicable period). (7) Return on average total assets represents profit after tax for the period as a percentage of average total assets (the average of the opening and

closing balances for the applicable period). (8) Return on average shareholders’ equity represents profit after tax for the period as a percentage of average shareholders’ equity excluding surplus

on revaluation of fixed assets and investments (the average of the opening and closing balances for the applicable period). (9) Dividend pay-out ratio represents dividends paid in respect of the financial year divided by profit after tax for the period. (10) Loans to deposits ratio represents advances divided by deposits. (11) Loans to total assets ratio represents advances divided by total assets. (12) Investments to total assets ratio represents investments divided by total assets. (13) Deposits to total liabilities ratio represents deposits divided by total liabilities. (14) Cost of risk represents the impairment charge for the period minus recoveries and reversals for the period, divided by average net loans (the average

of the opening and closing balances for the applicable period). (15) CASA deposit ratio represents current and savings deposits as a percentage of total deposits. (16) Non-performing loans to total gross loans ratio represents non-performing loans divided by total gross loans. (17) Loan losses reserves to non-performing loans ratio represents loan losses reserves divided by non-performing loans. (18) Total income represents the sum of the Bank’s net mark-up/profit/interest income and the non-mark-up/interest income.

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(19) Employees represent the total number of employees of the Bank. (20) Domestic branches represent the total number of branches of the Bank in Pakistan. (21) Domestic ATMs represent the total number of ATMs of the Bank in Pakistan.

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7 Board and Management

The Bank’s affairs are governed by the Board of Directors (the “Board”), which comprises seven directors, including the Chairman and the President & CEO. The Board is responsible for policy-related issues and is headed by the Chairman. The President & CEO has overall responsibility for the Bank’s strategic direction and government relations, and to manage the Bank’s business and its functions.

7.1 Board of Directors of the Bank

Name Designation Directorships in other companies

Mr. Sultan Ali Allana

Chairman Industrial Promotion Services (Pakistan) Limited

Jubilee Holdings Limited (East Africa), Kenya

Jubilee Life Insurance Company Limited, Pakistan

Tourism Promotion Services (Pakistan ) Limited

Aga Khan Fund for Economics Development, S.A., Switzerland

Mr. Nauman K. Dar

President & CEO Habib Bank Financial Services (Pvt.) Limited, Pakistan

Habib Finance International Limited, Hong Kong

Habibsons Bank Limited, UK Habib Allied International Bank

Mr. Sajid Zahid

Director Orr, Dignam & Co. Advocates, Pakistan

Mr. Moez Ahamed Jamal

Director Diamond Trust Bank, Kenya Marcuard Family Office,

Switzerland Jubilee Holdings Limited (East

Africa), Kenya JAAM AG , Switzerland Global Finanz Agency, AG,

Switzerland

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Mr. Shaffiq Dharamshi Director Diamond Trust Bank Limited, Tanzania

Diamond Trust Bank Limited, Uganda

Industrial Promotion and Development Company of Bangladesh Limited

DCB Bank Limited, India

Mr. Agha Sher Shah

Director Bandhi Sugar Mills

Attock Refinery Mills Limited

Attock Cement Limited

Sui Southern Gas Company Limited

Thatta Cement Company Limited

Newport Containers Terminal (Private) Limited

Triton LPG (Private) Limited

Dr. Najeeb Samie

Director Roosevelt Hotel Corporation, Netherlands

PIA Investments Limited, British Virgin Islands

Minhal France, S.A Minhal Incorporated, UK, British

Virgin Islands Parisien Management Company

Limited, Netherlands Roosevelt Hotel Corporation LLC,

USA RHC Equity LLC, USA RHC Equity II LLC, USA RHC Equity III LLC, USA Avant Hotels (Pvt) Limited,

Pakistan

7.2 Overdue Loans

There are no overdue loans (local or foreign currency) payable by the Bank or its Directors.

7.3 Dividend Record of Associated Companies - Listed On Stock Exchange(s)

Jubilee General Insurance Company Limited

Year Cash Bonus Total

2005 30% 20% 50% 2006 40% 25% 65% 2007 30% 20% 50%

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2008 15% - 15% 2009 30% 20% 50% 2010 20% 25% 45% 2011 30% 20% 50% 2012 30% 15% 45% 2013 30% 15% 45% 2014 40% - 40%

Jubilee Life Insurance Company Limited


2005 - - 0% 2006 5% - 5% 2007 5% - 5% 2008 - - 0% 2009 10% - 10% 2010 15% - 15% 2011 30% - 30% 2012 45% - 45% 2013 60% 15% 75% 2014 95% - 95%

7.4 Dividend Payout by Listed Companies in which the Bank’s Directors hold Directorship Thatta Cement Company Limited


2008 - - 0% 2009 - - 0% 2010 - - 0% 2011 - - 0% 2012 - - 0% 2013 5% - 5% 2014 11% - 11% 1H 2015 - - 0%

Attock Cement Company


2005 12.5% - 13% 2006 50% - 50% 2007 45% - 45% 2008 15% - 15% 2009 50% 20% 70% 2010 50% - 50%

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2011 45% - 45% 2012 85% 15% 100% 2013 130% 15% 145% 2014 130% - 130% 1H 2015 45% - 45%

Attock Refinery


2005 - 50% 50% 2006 - 25% 25% 2007 40% 25% 65% 2008 80% 20% 100% 2009 - - 0% 2010 - - 0% 2011 20% - 20% 2012 75% - 75% 2013 50% - 50% 2014 - - 0% 1H 2015 - - 0%

Sui Southern Gas Company Limited


2005 15% - 15% 2006 13% - 13% 2007 5% - 5% 2008 12.5% - 13% 2009 - - 0% 2010 15% 25% 40% 2011 - - 0% 2012 22.5% - 23% 2013 na na na 2014 na na na

7.5 Profiles of Directors

Mr. Sultan Ali Allana, Chairman Mr. Sultan Ali Allana was appointed as the Chairman of the Board in 2004, as a nominee of AKFED. Mr. Allana is a career banking professional with over 30 years of experience in retail, corporate and investment banking. Mr. Allana is a member of the board of directors of AKFED and is the head of AKFED’s Financial Institutions Group, which is responsible for the oversight of AKFED’s investments in commercial banks, non-banking financial institutions and insurance companies. On behalf of AKFED, Mr. Allana was involved in leading the successful privatisation bid for the Bank in

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2004. Mr. Allana is committed to the cause of financial inclusion in order to reach out to the unbanked population of Pakistan, and has been extensively involved in promoting sustainable microfinance in Pakistan. In 2000, he worked with the Government to promulgate the Microfinance Bank Ordinance, along with leading the establishment of The First Micro Finance Bank Limited in 2002, of which he served as Chairman until 2006. Since 2009, he has been a Member of the Executive Committee of the Aga Khan Agency of Microfinance, which provides oversight control to all of the microfinance programmes within the Aga Khan Development Network. In 2006, in recognition of his services to the strengthening of the business and social sector in Pakistan, the Government awarded him the Sitara-e-Imtiaz. Mr. Allana holds undergraduate and postgraduate degrees in Engineering and Management from McGill University, Canada and the University of Wisconsin, USA

Mr. Nauman K. Dar, President & CEO

Mr. Nauman K. Dar was appointed as the President & CEO of the Bank in 2012. Mr. Dar joined the Bank in March 2003 as Chief Executive Officer of its UK subsidiary, Habib Allied International Bank plc. Prior to being appointed as President & CEO he was Head of International Banking since January 2006 and Head of Corporate and Investment Banking since December 2010. Mr. Dar is a Director of Habib Allied, Chairman of Habib Finance International, Chairman of HBFSL and Chairman of Habibsons Bank. He is also a Council Member of the Institute of Bankers, Pakistan and a Member of the Pakistan Banks Association, Pakistan Business Council and the Bretton Woods Committee. Before joining the Bank, Mr. Dar was with Citibank and prior to that, he spent 18 years with Bank of America. Mr. Dar holds a Bachelor of Science from the University of Engineering & Technology, Lahore and an MBA in Finance from The University of California at Berkeley, USA. He holds a Certificate in Company Direction from The Institute of Directors, London, U.K.

Mr. Sajid Zahid, Director

Mr. Sajid Zahid was appointed to the Board in 2000. Mr. Zahid is a practising lawyer with over 39 years’ experience in corporate and commercial law, on behalf of leading local and foreign organisations, which include leading banks and financial institutions on national and cross-border transactions. He has acted as counsel in national and international arbitrations, contributed articles in leading international journals and presented papers at international conferences. He is a joint Senior Partner of Orr, Dignam & Co., a leading firm of corporate lawyers, and a former Director of Pakistan Petroleum Limited. He has also been a Director of Sui Southern Gas Company Limited, the Chairman of the First Micro Finance Bank Limited and a member of the Banking Laws Review Commission of Pakistan. Mr. Zahid is a Barrister-at-Law from Lincolns Inn, London, U.K.

Mr. Moez Ahamed Jamal, Director

Mr. Moez Ahamed Jamal was appointed to the Board in 2009. Mr. Jamal also serves on the Board of DTB Kenya, Jubilee Holdings Limited and Marcuard Family Office in Switzerland. He is a Partner of JAAM AG, an investment advisory company in Switzerland. Mr. Jamal began his career in 1980 at Lloyds Bank International in New York and then moved to Credit Suisse in London in 1985. In 1993, he moved to New York as Treasurer of Credit Suisse in the Americas and Member of the Global Treasury Strategy Committee. In 1996, he moved to Credit Suisse First Boston, where he was a Managing Director and Member of the Operating Committee in charge of Global Money

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Markets, Funding and Forward Foreign Exchange. Mr. Jamal moved to Zurich in 2000 and joined the Executive Board of Credit Suisse Private Banking (2000-2002). In 2002, he became a member of the Executive Board of Credit Suisse Financial Services. From 2004 until 2006, he held the position of Global Treasurer of Credit Suisse & Credit Suisse Group and was Chairman of the Board of Swiss American Securities in New York. He was also a Member of the Investment Committee during this period. Mr. Jamal holds an MBA in Finance and International Business from New York University and a BA (Hons) from Manchester University, U.K.

Mr. Shaffiq Dharamshi, Director

Mr. Shaffiq Dharamshi was appointed to the Board in 2015. Mr. Dharamshi is a banker with over 23 years of banking experience in the Middle East and Africa. He currently holds the position of Head of Banking at AKFED, and is responsible for overseeing the operations of banks in AKFED’s portfolio across Asia and Africa. He also currently serves on the Boards of Diamond Trust Bank Limited, Tanzania, Diamond Trust Bank Limited, Uganda, Industrial Promotion and Development Company of Bangladesh Limited and DCB Bank Limited, India. Mr. Dharamshi began his career in 1991 at Citibank, N.A., Kenya and held various positions across different areas of the bank. In 2001, he moved to Citibank N.A., Bahrain and then to Citibank N.A., Kuwait in 2006, as the Country Risk Head. Mr. Dharamshi held the position of Senior Vice President, Wholesale Credit Risk Management at Mashreqbank, UAE from 2008 to 2013. Mr. Dharamshi holds a B.Sc degree in Economics from Trent University, Canada and an M.Sc degree in Economics and Management of Information from the London School of Economics, U.K.

Mr. Agha Sher Shah, Director

Mr. Agha Sher Shah was appointed to the Board in March 2013. Mr. Shah is currently Chairman and Chief Executive of Bandhi Sugar Mills. He is also Director of Attock Refinery Limited, Attock Cement Limited, Sui Southern Gas Company Limited, Thatta Cement Company Limited, Newport Containers Terminal (Private) Limited and Triton LPG (Private) Limited. Mr. Shah commenced his career as an investment analyst covering consumer, energy and finance sectors of the S&P 500 in the U.S. equity market. In his investment career of 24 years he has held senior portfolio management positions in U.S. and global equities. Prior to joining the Bank, he was Senior Portfolio Manager of a multi-billion dollar portfolio in Abu Dhabi Investment Authority, UAE, one of the largest sovereign wealth funds in the world. Mr. Shah holds a Bachelor of Science in Engineering from Rice University, USA and holds a Master of Business Administration from Cornell University, USA.

Dr. Najeeb Samie, Director

Dr. Najeeb Samie was appointed to the Board in August 2013. Dr. Samie has over 34 years’ experience in the corporate and financial sectors, during which he has served as the Chairman of State Life Insurance Corporation of Pakistan, Pakistan Industrial Credit & Investments Corporation Limited (PICIC) and Alpha Insurance Company Limited. He is currently the Managing Director of PIA Investments Limited and is a Director of a number of tourism-linked entities in France and the United States, including the Roosevelt Hotel Corporation and Minhal France, S.A. Dr. Samie holds an LLB from Punjab University Law College, Lahore, Pakistan, an LLM from New York University, USA and Ph.D in law from the University of Cambridge, U.K.

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7.6 Management Profiles

Senior Management The members of the Bank’s senior management, excluding the President, Mr. Nauman K. Dar whose profile is set out in Clause 7.5 above, are:

Ms. Nausheen Ahmad, Company Secretary and Head of Legal

Ms. Nausheen Ahmad was appointed as Company Secretary and Head of Legal in 2006. Prior to joining the Bank, she spent 10 years with ICI Pakistan Limited as Company Secretary & General Manager Legal. She has spent over 30 years in legal practice and has worked with Unilever Pakistan, Pakistan Petroleum Ltd and Surridge & Beecheno. She holds an LLM from the University of London, U.K. and an LLB (Hons) from King’s College London, U.K., and is a qualified Barrister-at-Law from Gray’s Inn, London. She is an Advocate of the Sindh High Court and is also a member of the High Court Bar Association and Karachi Bar Association. She is a trained mediator and master trainer of the Centre for Effective Dispute Resolution, U.K.

Mr Ayaz Ahmed, Head of Acquisitions & Investments

Mr. Ayaz Ahmed was appointed as Head of Acquisitions & Investments in 2015. Since joining the Bank in 2000, Mr. Ahmed has held various senior management positions, including Chief Financial Officer and Chief Information Officer. Before joining the Bank, Mr. Ahmed worked for HSBC, where heheld the position ofChief Financial Officer of HSBC Pakistan and later on moved to Hong Kong with their international operations in the Asia Pacific region. Prior to HSBC, he held positions with Unilever Pakistan and Morgan Grenfell & Co. Mr. Ahmed holds a Bachelor of Science in Technology from the University of Strathclyde, U.K. and is a member of Institute of Chartered Accountants of Scotland.

Mr. Tariq M. Akbar, Head of Global Operations

Mr. Tariq M. Akbar was appointed as Head of Global Operations in 2013. He previously served as Group Head of U.K. Operations for 12 years. Prior to joining the Bank, he was with Bank of America Pakistan and Mashreqbank. He holds an Honours degree in Commerce from the University of Punjab, Pakistan and is an associate of the Institute of Bankers, Pakistan.

Mr. Salim Amlani, Chief Internal Auditor

Mr. Salim Amlani was appointed as Chief Internal Auditor in 2005. Prior to joining the Bank, he held senior management positions in Allied Bank Limited, United Bank Limited and Citibank, and has more than 35 years of diverse experience in international and domestic banking. He holds a Bachelor’s degree from the University of Karachi, Pakistan.

Mr. Faisal Anwar, Chief Compliance Officer

Mr. Faisal Anwar was appointed as Chief Compliance Officer and Head of Global Compliance in 2013. Prior to joining the Bank, he was with ECO Trade & Development Bank in Istanbul, Turkey and previously served in various positions at Bank of America, ABN AMRO Bank and the Royal Bank of Scotland, where his last assignment was Chief Operating Officer Pakistan. He holds a

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B.Com (Gold Medalist) degree from University of the Punjab, Pakistan, a BBA from University of Oklahoma, USA, and an MBA from University of Texas, USA.

Mr. Mirza Saleem Baig, Head of Islamic Banking

Mr. Mirza Saleem Baig was appointed as Head of Islamic Banking in 2011. He joined the Bank in 2000 and has previously served as Head, Commercial Banking and Head, Learning & Development. Prior to joining the Bank, he worked with Standard Chartered Bank and Mashreqbank. He holds an MBA degree from the Institute of Business Administration, Karachi and an MS in Civil Engineering from the University of Nebraska, USA.

Mr. Rizwan Haider, Chief Risk Officer

Mr. Rizwan Haider was appointed as Chief Risk Officer in 2012. He previously served as Regional General Manager – Far East, Africa and Head of International & Market Risks at the Bank. Prior to joining the Bank he was with Credit Agricole, where he held senior management positions in corporate and investment banking and risk management. He holds a degree in Commerce from the University of Karachi, Pakistan.

Mr. Fareed Hosain, Chief Information Officer

Mr. Fareed Hosain was appointed as Chief Information Officer in 2014. Prior to joining the Bank, he held the position of VP Wealth Management Technology at Morgan Stanley in New York. He holds a Master’s degree from Ohio State University, USA.

Mr. Aamir Irshad, Head of Corporate & Investment Banking

Mr. Aamir Irshad was appointed as Head of Corporate & Investment Banking in 2014. He had previously served as Head of Corporate Banking from 2011 to 2014, overseeing the Bank’s corporate portfolio throughout Pakistan, comprising customer relationships in the Central, Northern and Southern Regions. Prior to joining the Bank, he had worked in various multinational financial institutions in Pakistan, including Orix, Standard Chartered Bank and Credit Agricole. Mr. Irshad holds an MBA from the Canterbury Business School, University of Kent, U.K.

Ms. Sima Kamil, Head of Branch Banking

Ms. Sima Kamil was appointed as Head of Branch Banking in 2013. She previously served as Head of Retail & Consumer Banking and Head of Corporate & Investment Banking. Prior to joining the Bank she was with Standard Chartered Bank and ANZ Grindlays Bank. She holds a degree from City University London, U.K.

Mr. Rayomond Kotwal, Chief Financial Officer

Mr. Rayomond Kotwal was appointed as Chief Financial Officer in 2015. Prior to joining the Bank, he was the Chief Financial Officer at United Bank Limited. He holds a Bachelor’s and Master’s degree in Electrical Engineering and Computer Science from the Massachusetts Institute of Technology, USA and an MBA in Finance from the Institute of Business Administration, University of Karachi, Pakistan.

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Mr. Salahuddin Manzoor, Global Treasurer

Mr. Salahuddin Manzoor was appointed as Global Treasurer in 2011.Prior to joining the Bank he was with BNP Paribas and Chemical Bank in New York, London and Singapore for an aggregate of 24 years. He holds an MBA from the Wharton School, University of Pennsylvania, USA.

Mr. Jamal Nasir, Global Head of Human and Organisational Development

Mr. Jamal Nasir was appointed as Global Head of Human and Organisational Development in 2015. He has previously served as Senior Manager – HR, Asia and Regional Head of HR, South East Asia, for Standard Chartered Bank, Singapore and as Head of HR at Standard Chartered Bank Pakistan and ABN Amro Bank, Pakistan. Prior to joining the Bank he was with United Bank Limited as Group Executive – HR and Corporate Affairs. He holds an Engineering degree from the University of Texas, USA, and an MBA from the Institute of Business Administration, Karachi.

Mr. Hassan Raza, Head of Structured Credits

Mr. Hassan Raza was appointed as Head of Structured Credits in 2013. Prior to joining the Bank, he held the position of Head of Corporate Banking and Home Remittances at United Bank Limited. Mr. Raza has a total of more than 23 years’ banking experience. Mr. Raza holds an MBA from International University, Missouri, USA and an M.A. in Economics from the University of Karachi, Pakistan. He is also a graduate of the Advanced Leadership Programme from Judge Business School, University of Cambridge, U.K.

Mr. Faiq Sadiq, Head of Payment Services

Mr. Faiq Sadiq was appointed as Head of Payment Services in 2011. He has previously served as Country Manager – USA from 2005 to 2011, Country Operations Head – USA from 2000 to 2005 and Country Relationship Head – Sri Lanka and Maldives from 1999 to 2000. Prior to joining the Bank, he was working in the Corporate team of First International Investment Bank of Pakistan. He holds a Master’s degree from Columbia University, USA, and a Master’s degree from Punjab University, Pakistan.

Mr. Aman Aziz Siddiqui, Head of Strategy & Investments

Mr. Aman Aziz Siddiqui was appointed as Head of Strategy & Investments in 2013, with oversight of Human Resources, Marketing & Branding and Learning & Development. He previously served as Regional General Manager for the Gulf region from 2004 to 2013. Prior to joining the Bank, he held the position of Head of International for United Bank Limited, having previously served for 16 years with Bank of America. He holds an MBA in Finance & Marketing from Rutgers University, USA.

Mr. Anwar Zaidi, Head of Financial Institutions & Global Trade Services

Mr. Anwar Zaidi was appointed as Head of Financial Institutions & Global Trade Services in 2014. He has previously served as CEO and Director of Habib Bank U.K. and Director of Habibsons Bank from 2012 to May 2014. Prior to joining the Bank, he held the position of Country Manager – USA for United Bank Limited and General Manager – U.K. for Mashreqbank. He is also the President and Founding Member of the Pakistani Bankers’ Association, U.K. Mr. Zaidi holds an MBA from the

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University of Karachi, Pakistan and a Master of Science in Computer Science from the University of London, U.K. He has also completed the Advanced Management Program at Harvard Business School, USA and the Leadership and Management Programme at INSEAD, France.

7.7 Number of Directors

Pursuant to section 174 of the Companies Ordinance, 1984, the number of Directors of the Bank shall not be less than seven. At present, the Board consists of seven Directors including the President & CEO.

7.8 Qualification of Directors

According to Article 61 of the Articles of Association of the Bank, a director must be a member holding at least one (1) share in the Company, in his own name at least two months prior to the election or within two months after the co-option of such member on the Board. The requirement to hold qualifying shares shall not apply in the case of (i) a person representing the Government, or an institution, or an authority which is a member; (ii) a whole time Director who is an employee of the Company; (iii) the chief executive; (iv) a person representing a creditor or any multinational corporation.

7.9 Remuneration of the Directors

According to Article 60 of the Articles of Association of the Bank, the remuneration of Directors for attending the meetings of the Board or a Committee shall from time to time be determined by the Board and approved by the shareholders on a pre or post facto basis at the Annual General Meeting in accordance with the provisions of the Ordinance, and the Banking Companies Ordinance, 1962. Each Non-Executive Director is entitled to a fee of PKR 400,000 for attending each meeting of the Board or a Committee. This fee is set by the Board from time to time in accordance with limitations prescribed by the Companies Ordinance, Prudential Regulations and Articles of Association. The Bank reimburses Directors for travel and related expenses under the applicable policy for (i) out of station Board and/or Committee Meetings in Pakistan or (ii) attendance of Board and/or Committee Meetings overseas or (iii) for any other travel in connection with the work of the Bank within or outside Pakistan. Other than the President & CEO, no Director has a service contract with the Bank. There are no conflicts of interest or potential conflicts of interest between the duties that any Director owes to the Bank and such Director’s private interest or duties. No Director has a contract with the Bank providing for further benefits upon termination of his Board membership.

7.10 Remuneration for Extra Service

According to Article 79 of the Articles of Association of the Bank, if any Director (including an alternate Director) being willing, shall be called upon to perform extra services (which expression shall include the work done by a Director as a member of any Committee formed by the Board or in relation to signing share certificates) or for any of the purposes of the Bank, the Bank may

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(subject to the terms and conditions of his appointment as determined by the General Meeting of the Company and subject to the requirements of the Prudential Regulations and/or other circulars and directives of the State Bank) remunerate the Director so doing by a fixed sum or by monthly salary or remuneration as may be determined by the Board provided that such remuneration for extra services shall not be paid in the form of percentage of profits.

7.11 Benefits to the Promoters and Officers

No benefit has been given or is intended to be given by the Bank to the promoters and officers of the Bank other than remuneration for services rendered by them as full time executives of the Bank.

7.12 Interest of Directors

The directors may be deemed to be interested to the extent of fees payable to them for attending Board and Committee meetings. The Directors performing whole time services in the Bank may also be deemed interested to the extent of the remuneration payable to them by the Bank.

The nominee directors have interest in the Bank to the extent of representing the shareholders in the capital of the Bank.

7.13 Interest of Directors in Property Acquired By the Bank

None of the Directors of the Bank had or has any interest in any property acquired by the Bank.

7.14 Appointment of Chief Executive/President

According to Article 67 of the Articles of Association of the Bank

a. Within fourteen (14) days from the date of an election of Directors or within fourteen (14) days from the date on which the office of the President falls vacant for whatsoever reason, the Board shall appoint from amongst the Directors representing AKFED or any other person representing AKFED who shall be deemed to be a Director, to be the Chief Executive of the Bank designated as President, but such appointment shall not be for a period exceeding three (3) years from the date of appointment.

b. Upon the expiry of his term of appointment under clause (a) above a President shall be eligible for re-appointment.

c. The President shall, if he is not already a Director of the Bank, be deemed to be a Director and

be entitled to all the rights and privileges and subject to all the liabilities of the office of Director of the Bank.

d. The Directors may, by a resolution passed by not less than three-fourths of the total number

of Directors for the time being, or the Bank may by Special Resolution, remove a President

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before the expiration of his term of office notwithstanding anything contained (if any) in these Articles or in any agreement between the Bank and the President.

e. The terms and conditions of appointment of the President / Chief Executive shall be

determined by the Board.

f. The President shall act in accordance with the policies, criteria and guidelines determined by the Board from time to time.

7.15 Remuneration of President/Chief Executive

According to Article 67 of the Articles of Association of the Bank, the terms and conditions including the remuneration of the President / Chief Executive shall be determined and approved by the Directors.

7.16 Appointment/Election of Directors

The Directors of the Bank are elected for a term of three years in accordance with the procedure laid down in section 178 of the Ordinance. The Directors shall comply with the provisions of Sections 174 to 178 and Sections 180 and 184 relating to the election of Directors and matters ancillary thereto. The number of directors is determined accordance with Article 57 of the Articles of Association. According to Article 62 of the Articles of Association, the Directors may, at any time, appoint any person to be a Director to fill a casual vacancy in the Board. Any Director so appointed shall hold office for the remainder of the term of the Director in whose place he is appointed. The Bank may remove a Director in accordance with the provisions of the Ordinance.

7.17 Voting Rights

The rights and privileges, including voting rights, attached to the Ordinary Shares of the Bank are equal.

7.18 Board Audit Committee, Board Human Resources & Remuneration Committee and Board Risk

Management Committee

The Board Audit Committee and the Board Human Resources & Compensation Committee have been formed to comply with the Code of Corporate Governance 2012 in accordance with the Listing Regulations of KSE, LSE & ISE. The Board Audit Committee of the Bank comprises of the following individuals:

Mr. Moez Ahamed Jamal Chairman

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Mr. Sajid Zahid Member Dr. Najeeb Samie Member Mr. Salim Amlani Secretary

Human Resources & Remuneration Committee comprises of following individuals:

Mr. Sultan Ali Allana Chairman Mr. Nauman K. Dar Member Mr. Sajid Zahid Member Mr. Moez Ahamed Jamal Member Dr. Razi Azmat Secretary

The Board Risk Management Committee comprises of following individuals:

Mr. Shaffiq Dharamshi Chairman Mr. Nauman K. Dar Member Mr. Agha Sher Shah Member Mr. Rizwan Haider Secretary

7.19 Internal Audit

The Board of Directors has set up an effective internal audit function managed by suitable qualified and experienced personnel who are conversant with the policies and procedures of the Bank and are involved in the internal audit function on a full time basis.

7.20 Borrowing Powers Subject to any restrictions contained in the Banking Ordinance, 1962 or any circulars or directives of SBP, the Board may, from time to time, at its discretion, raise or borrow or secure the payment of any sum or sums of money (for the purposes of the Bank) in such manner and upon such terms and conditions, the Board deems fit and in particular by issue of debentures or debenture stock of the company charged upon all or any part of the property of the company (both present and future).

7.21 Powers of Directors As required under section 196 of the Companies Ordinance, 1984, and the Articles of Association of the Bank, the authority to conduct the business of the Bank is vested with its Board of Directors and they may exercise all such powers of the Bank as are not required by the Companies Ordinance, 1984 or the Articles of Association of the Bank or by a special resolution, to be exercised by the Bank in the general meeting of the shareholders.

7.22 Indemnity Every Director, manager, auditor, Secretary and other officer of the Bank shall be indemnified by the Bank and it shall be the duty of the Directors out of funds of the Bank to pay all costs, losses

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and expenses which any such officer may incur or become liable to by reason of any contract entered into, or act thing done by him as such officer or any way in the discharge of his duties and the amount for which such indemnity is provided shall immediately attach as between the members over all other claims.

7.23 Investment in Associated Companies and Joint Ventures As of December 31, 2014, the value of the Bank’s investments in associates and joint venture amounted to PKR 11,615.8 million. As of December 31, 2014, the Bank’s percentage ownership in its key associates was as follows:

Name of Associate Principal Activity Place of

Incorporation Proportion of

ownership interest

DTB Kenya .............................................................................................................. Retail and commercial banking Kenya 11.97%

Himalayan Bank .............................................................................................................. Commercial banking Nepal 20.00%

KICB ......................................................................................................................... Commercial banking Kyrgyz Republic 18.00%

Jubilee General Insurance Company Limited ......................................................... General insurance provider Pakistan 17.84%

Jubilee Life Insurance Company Limited ................................................................ Life insurance provider Pakistan 17.95%

7.24 Investment in Subsidiaries and Affiliated Companies

The Bank has a portfolio comprising six subsidiaries and five affiliated companies, through which it offers, among other things, insurance, brokerage, and financial and trade services. Through its affiliate portfolio, the Bank aims to create a well-coordinated financial services group that can increase cross-selling opportunities and product diversity and maximize the value of the Bank’s services in Pakistan and abroad.

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The following table sets out the Bank’s percentage ownership in its six key subsidiariesas of December 31, 2014:

Name of Subsidiary Principal Activity Place of

Incorporation

Proportion of ownership

interest

Habib Finance International ........................................................................................... Trade finance Hong Kong 100% Habib Bank Financial Services (Pvt.) Limited (“HBFSL”)

Modaraba Services Pakistan 100%

HBL Currency Exchange (Pvt.) Limited

Currency exchange Pakistan 100%

HBL Asset Management Limited (“HBL Asset Management”)

Asset management Pakistan 100%

Habib Allied .................................................................................................................... Commercial banking and wealth management U.K. 88.59%

Habibsons Bank ............................................................................................................... Commercial banking and wealth management U.K. 88.59%

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8 Miscellaneous Information

8.1 Registered Office

Habib Bank Limited 4th Floor, Habib Bank Tower, Jinnah Avenue, Blue Area, Islamabad, Pakistan

8.2 Head Office/Corporate Office

Habib Bank Limited Habib Bank Plaza I.I. Chundrigar Road Karachi, 75650, Pakistan UAN: 111 825 111 Phone: (92-21) 32418000 [50 lines] Website: www.hbl.com Email: [email protected]

8.3 Company Secretary

Ms. Nausheen Ahmad Company Secretary

Habib Bank Limited Habib Bank Plaza I.I. Chundrigar Road Karachi, 75650, Pakistan

8.4 Auditors of the Bank

M/s. Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants 601, Progressive Plaza Beaumont Road Karachi - 75530 Phone: +92 21 35650007

8.5 Legal Advisor of the Bank

M/s. Mandviwala and Zafar Legal Consultants and Advocates C-15, Block 2, Clifton Karachi

http://www.hbl.com/


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Phone: +92 21 3586 7041

8.6 Legal Counsel to the Offer

Akhund Forbes Corporate and Commercial Law Firm D-21, Block 4, Scheme 5, Clifton, Karachi 75600, Pakistan

8.7 Legal Counsel of the Offerors

Liaquat Merchant Associates C-2-C/ C-4-C, Khayaban-e-Tanzeem, DHA Phase V, Karachi

8.8 Share Registrar

Central Depository Company Limited CDC House 99-B, Block ‘B’, S.M.C.H.S. Main Shahra-e-Faisal Karachi - 74400

8.9 Bankers to the Offer

Habib Bank Limited MCB Bank Limited

8.10 Joint Domestic Lead Managers & Co-Bookrunners

ARIF HABIB LIMITED Arif Habib Centre 23, M.T. Khan Road Karachi, Pakistan 74000 +92 21 32460717 www.arifhabibltd.com ELIXIR SECURITIES PAKISTAN (PRIVATE) LIMITED The Dawood Center 8th Floor M.T. Khan Road Karachi, Pakistan 75530 +92 21 111 354 947


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www.elixirsec.com

8.11 Material Contracts / Documents

The Bank has no material contracts executed or outstanding with respect to the Offer

8.12 Inspection of Documents and Contracts

Copies of Memorandum and Articles of Association of the Bank, service contract of the Bank’s President, the Auditors’ Certificate, Credit Rating Report and copies of agreements referred to in the OFSD may be inspected during usual business hours on any working day at the registered office of the Bank from the date of publication of the OFSD until the close of the subscription list.

8.13 Legal Proceedings

The Bank is a party to various legal proceedings which arise in the ordinary course of its operations. No such legal proceedings, either individually or in the aggregate, are expected to have a material adverse effect on the Bank’s financial condition.

8.14 Memorandum of Association

The Memorandum of Association, inter alia, contains the objects for which the Bank was incorporated and the business which the Bank is authorized to undertake. A copy of the Memorandum of Association is annexed to this Offer for Sale and is being published with all issues thereof except those released as newspaper advertisements.

8.15 Particulars of Surplus from Revaluation of Assets of the Bank or any of its subsidiaries

HBL’s domestic properties were revalued by independent professional valuers as on June 30, 2012. These properties were revalued by Iqbal A. Nanjee & Co., professional valuers on the basis of market value. The revaluation had resulted in increasing the surplus on revaluation of fixed assets by PKR 1,695.9 million. HBL’s property of its Lebanon branch was revalued as on November 23, 2012 by the Banking Control Commission of Lebanon and resulted in a surplus of PKR 15.7 million. HBL’s property of its KEPZ branch was revalued on July 27, 2012 by J & M Associates, licensed valuer, on a market value basis and resulted in a surplus of PKR 8.3 million. Moreover, properties of Habib Allied International Bank Plc., United Kingdom (subsidiary) were revalued by Walker Fraser Steele, Chartered Surveyors and Property Link Professional Surveys Limited as on December 11, 2012 and December 03, 2012 respectively. During the year, HBL’s properties of its Sri Lanka and Singapore branches were revalued as on December 04, 2014 and December 10, 2014 by G.A. Gunasegaram and United Valuers (Pte) Ltd. These revaluations resulted in a surplus of PKR 16.5 million and a deficit of PKR 8.0 million respectively. Had there been no revaluation, the carrying amount of revalued assets would have been as follows:


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PKR (million) Domestic Sri Lanka Singapore Lebanon KEPZ UK Land 9,280.6 41.4 390.6 - - - Building 3,952.1 34.3 33.8 11.7 2.0 128.3

8.16 Financial Year of the Bank

The financial year of the Bank commences from the 1st day of January and ends on the 31st day of December each year.

8.17 Capitalization of Reserves and/or Profits of the Bank

The Bank has issued a total of 776,852,508 bonus shares amounting to PKR 7,768.5 million

8.18 Dividend History

Dividends Paid Year Cash Bonus Total 2005 10% - 10% 2006 20% - 20% 2007 40% 10% 50% 2008 55% 20% 75% 2009 60% 10% 70% 2010 65% 10% 75% 2011 70% 10% 80% 2012 75% 10% 85% 2013 80% 10% 90% 2014 120% - 120%

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9 Bid Application and Allocation Instructions Instructions for Filling the Bidding Form

1. The Bidding Period shall remain open for four (4) working day during business hours. The Book Building process will open at 9:00AM PST and close at 5:00PM PST on April 07, 2015 to April 10, 2015.

2. Fill in all the particulars of the form accurately in BLOCK LETTERS.

3. Kindly provide a copy of CNIC or passport (in case of HNWI) or NTN Certificate (in case of financial institution) or Certificate of Incorporation (in case of companies) along with the Bidding Form.

4. Applicants are requested to provide accurate contact details. Please provide accurate address,

landline number(s), mobile number(s) and email address(es).

5. Submit complete Bidding Form along with the Margin Money via Demand Drafts or Pay Orders only.

Please Note:

1. For deposit of Margin Money/Bid Amount, only Pay Orders or Demand Draft will be accepted or online transfer to Account Number “07867902204103” titled “Offer for Sale of Shares of HBL” maintained at HBL Plaza branch, Karachi and Account number ”0762539361007484” titled “Offer for Sale of Shares of HBL maintained at MCB Bank Limited, Shaheen Complex Branch, Karachi.

2. Receiving will only be provided on duplicate Bidding Form. Please ensure that a duly filled duplicate Bidding Form is submitted with at the time of placement of Bid.

3. The Bidder is required to duly fill Additional Payment Form for depositing additional funds for

enhancement of deposit amount.

4. Investors can revise and withdraw their Bids by notifying either of the DLMs. Bid revisions and withdrawal facility will be available throughout the entirety of the Book Building process.

5. All payments to be made in favor of “Offer for Sale of Shares of HBL” at any of the following bidding centers:


Karachi


Number +92 21 3246 2597 +92 21 3246 5891 +92 21 3246 0718

Number +92 21 3568 0756 +92 21 3569 4662 +92 21 3568 0753




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Islamabad


Number +92 308 233 1916 Number +92 51 227 2341 +92 51 227 2342 +92 300 522 2241




Lahore


Number +92 336 000 4896 Number +92 42 3577 2643 +92 42 3587 8238 +92 300 847 3258




6. CASH SHOULD NOT BE SUBMITTED WITH BIDDING FORM AT THE BID COLLECTION CENTER.

7. THE BID SHOULD BE SUBMITTED ON THE PRESCRIBED BIDDING FORM IN PERSON at the

addresses mentioned in note 5 above.

8. The Bidders are requested to fill in both the original and duplicate copy of bidding forms completely. Upon submission, they will receive back the duly singed and stamped duplicate form of their bids which will be proof of their bid submission. The Bidder will not be provided with any receiving if a duly filled duplicate form is not submitted along with the Bid.

9. Bids can be placed as “Limit Bid” or “Step Bid”.

a) Payment for Limit Bids If investors are placing their bids through “Limit Bid” then they shall deposit the Margin Money based on the number of shares they are bidding for at their stated bid price.

For instance, if an investor is applying for 5 million shares at a price of PKR 200 per share, then the total Application Money would amount to PKR 1,000,000,000 /- plus CDC transfer charges of 0.004% (1,000,000,000*0.004% = PKR 40,000). The Bid Amount will be PKR 1,000,040,000/-. In such a case, (i) a HNWI investor shall deposit PKR 1,000,040,000 in the specified Book Building account as the Margin Money which is 100% of PKR 1,000,040,000, and (ii) an Institutional Investor shall deposit at least PKR 250,010,000 in the specified Book Building account as the Margin Money, which is 25% of PKR 1,000,040,000.











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If investors are placing a “Step Bid”, which is a series of limit bids at increasing prices, then they shall deposit the Margin Money/Bid Amount based on the total number of shares they are bidding for at their stated bid prices. For instance, if the investor bids for 0.5 million shares at PKR 200 per share, 0.4 million shares at PKR 205 per share and 0.3 million shares at PKR 210 per share, then in essence the investor has placed one “Step Bid” comprising three limit bids at increasing prices. The total Application Money in this instance would be PKR. 245,000,000/- plus CDC transfer charges of 0.004% (245,000,000*0.004% = PKR 9,800). The Bid Amount will be PKR 245,009,800/-. In such a case, (i) a HNWI investor shall deposit PKR 245,009,800/- in the specified Book Building account as the Margin Money which is 100% of PKR 245,009,800/-, and (ii) an Institutional Investor shall deposit at least PKR 61,252,450/- in the specified Book Building account as the Margin Money, which is 25% of PKR 245,009,800/-.

10. DLM shall collect amount of 100% of the application money plus a CDC charges of 0.004% as a

Bid Amount in respect of Bids placed by HNWI’s.

11. DLM shall collect amount of 25% of the application money plus a CDC charges of 0.004% as a Bid Amount in respect of Bids placed by Institutional Investors.


13. Bidders can revise and withdraw their bids by notifying either of the DLMs. Bid revisions and withdrawal facility will be available throughout the entirety of the Book Building process. For details, please refer to Para 2.11 and 2.13 of the Offer for Sale Document.

14. The Price Range after approval by the PC Board & CCOP will be notified through announcement

by Stock Exchanges and/or placed on their websites and/or on the websites of Arif Habib Limited and Elixir Securities Pakistan (Pvt.) Limited after close of market hours on April 06, 2015

15. Successful Bidders shall be intimated, within two (2) working days of the closing of the bidding period, the Strike Price and the number of shares provisionally allotted to each of them.

16. Successful institutional investors would be required to deposit the remaining balance within two

(2) working days from the intimation of successful provisional allocation.

17. Where a successful Bidder defaults in payment of shares allotted to him, in any manner whatsoever, the margin money deposited by such bidder shall be forfeited to the Offerors.

18. Final allotment of shares out of the Book Building Issue shall be made after receipt of full

subscription money from the successful Bidders. Shares to successful Bidders shall be transferred within seven (07) working days of the Book Building process.

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19. Unsuccessful bid shall be refunded within seven (07) working days of the close of the bidding

period, through courier, to the address submitted on the Bidding Form.

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10 Signatories to the OFSD

Signed, as required by Section 57(3) read with Section 62(3) of the Companies Ordinance, 1984 by

-sd- -sd- _________________________ Sardar Ahmad Nawaz Sukhera Additional Secretary (In-charge) Privatisation Division Ministry of Finance, Revenue, Economic Affairs, Statistics and Privatisation Government of Pakistan, Islamabad

_________________________ Anwar Malik Director (A&F) Privatisation Commission Government of Pakistan Islamabad

Witnesses:

-sd- -sd- ____________________ Fazal Elahi Senior Private Secretary Privatisation Division Ministry of Finance Islamabad

____________________ Engr. Khurram Bhatti Deputy Director Privatisation Commission Islamabad

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11 Memorandum of Association of Habib Bank Limited

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12 Bid Application Forms / Bidding Forms

INSTRUCTIONS FOR BIDDING OFFER FOR SALE OF RESIDUAL SHAREHOLDING OF GOVERNEMT OF PAKISTAN IN HABIB BANK LIMITED

THROUGH PRIVATISATION AT A PRICE RANGE The Base Offer consists of 250,000,000 Ordinary Shares representing 17% of the total paid up share capital of Habib Bank Limited with an Upsize Option of up to an additional 359,317,135 Ordinary Shares representing 24.5% of the total paid up share capital of Habib Bank Limited at a Price Range which shall be at a premium to the Par Value of PKR 10/- per share (the “Offer”). Instructions for Filling the Bidding Form


2. Fill in all the particulars of the form accurately in BLOCK LETTERS.

3. Kindly provide a copy of CNIC or passport (in case of HNWI) or NTN Certificate (in case of financial institution) or Certificate of Incorporation (in case of companies) along with the bidding form.

4. Applicants are requested to provide accurate contact details. Please provide accurate address,

landline number(s), mobile number(s) and email address(es).

5. Submit complete bidding form along with the margin money via Demand Drafts or Pay Orders only.

Please Note:

1. For deposit of Margin Money/Bid Amount, only Pay Orders or Demand Draft will be accepted or online transfer to Account Number “07867902204103” titled “Offer for Sale of Shares of HBL” maintained at HBL Plaza branch, Karachi and Account number “0762539361007484” titled “Offer for Sale of Shares of HBL” maintained at MCB Bank Limited, Shaheen Complex Branch, Karachi.

2. Receiving will only be provided on duplicate bidding form. Please ensure that a duly filled duplicate bidding form is submitted with at the time of placement of bid.

3. The Bidder is required to duly fill Additional Payment Form for depositing additional funds for enhancement of deposit amount.

4. Investors can revise and withdraw their bids by notifying either of the DLMs. Bid revisions and withdrawal facility will be available throughout the entirety of the Book Building process.

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5. All payments to be made in favor of “Offer for Sale of Shares of HBL” at any of the following bidding centers:


Karachi


Number +92 21 3246 2597 +92 21 3246 5891 +92 21 3246 0718

Number +92 21 3568 0756 +92 21 3569 4662 +92 21 3568 0753




Islamabad


Number +92 308 233 1916 Number +92 51 227 2341 +92 51 227 2342 +92 300 522 2241




Lahore


Number +92 336 000 4896 Number +92 42 3577 2643 +92 42 3587 8238 +92 300 847 3258




6. CASH SHOULD NOT BE SUBMITTED WITH BIDDING FORM AT THE BID COLLECTION CENTER.

7. THE BID SHOULD BE SUBMITTED ON THE PRESCRIBED BIDDING FORM, IN PERSON, through the

Bid Collection Centers at the addresses as mentioned in note 5 above.

8. The Bidders are requested to fill in both the original and duplicate copy of Bidding Forms completely. Upon submission, they will receive back the duly singed and stamped duplicate form of their bids which will be proof of their bid submission. The Bidder will not be provided with any receiving if a duly filled duplicate form is not submitted along with the bid.

9. Bids can be placed at “Limit Bid” or “Step Bid”.

a) Payment for Limit Bids If investors are placing their bids through “Limit Bid” then they shall deposit the Margin Money based on the number of shares they are bidding for at their stated bid price.













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For instance, if an investor is applying for 5 million shares at a price of PKR 200 per share, then the total Application Money would amount to PKR 1,000,000,000 /- plus CDC transfer charges of 0.004% (1,000,000,000*0.004% = PKR 40,000). The Bid Amount will be PKR 1,000,040,000/-. In such a case, (i) a HNWI investor shall deposit PKR 1,000,040,000 in the specified Book Building account as the Margin Money which is 100% of PKR 1,000,040,000, and (ii) an Institutional Investor shall deposit at least PKR 250,010,000 in the specified Book Building account as the Margin Money, which is 25% of PKR 1,000,040,000


If investors are placing a “Step Bid”, which is a series of limit bids at increasing prices, then they shall deposit the Margin Money/Bid Amount based on the total number of shares they are bidding for at their stated bid prices. For instance, if the investor bids for 0.5 million shares at PKR 200 per share, 0.4 million shares at PKR 205 per share and 0.3 million shares at PKR 210 per share, then in essence the investor has placed one “Step Bid” comprising three limit bids at increasing prices. The total Application Money in this instance would be PKR. 245,000,000/- plus CDC transfer charges of 0.004% (245,000,000*0.004% = PKR 9,800). The Bid Amount will be PKR 245,009,800/-. In such a case, (i) a HNWI investor shall deposit PKR 245,009,800/- in the specified Book Building account as the Margin Money which is 100% of PKR 245,009,800/-, and (ii) an Institutional Investor shall deposit at least PKR 61,252,450/- in the specified Book Building account as the Margin Money, which is 25% of PKR 245,009,800/-.

10. DLMs shall collect amount of 100% of the application money plus a CDC charges of 0.004% as a

Bid Amount in respect of Bids placed by HNWI’s.

11. DLMs shall collect amount of 25% of the application money plus a CDC charges of 0.004% as a Bid Amount in respect of Bids placed by Institutional Investors.


13. Bidders can revise and withdraw their bids by notifying either of the DLMs. Bid revisions and withdrawal facility will be available throughout the entirety of the Book Building process. For details, please refer to Para 2.11 and 2.13 of the Offer for Sale Document.

14. The Price Range after approval by the PC Board & CCOP will be notified through announcement by Stock Exchanges and/or placed on their websites and/or on the websites of Arif Habib Limited and Elixir Securities Pakistan (Pvt.) Limited after close of market hours on April 06, 2015

15. Successful Bidders shall be intimated, within two (2) working days of the closing of the bidding

period, the Strike Price and the number of shares provisionally allotted to each of them.

16. Successful institutional investors would be required to deposit the remaining balance within two (2) working days from the intimation of successful provisional allocation.

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17. Where a successful Bidder defaults in payment of shares allotted to him, in any manner whatsoever, the margin money deposited by such bidder shall be forfeited to the Offerors.

18. Final allotment of shares out of the Book Building Issue shall be made after receipt of full

subscription money from the successful Bidders. Shares to successful Bidders shall be transferred within seven (07) working days of the Book Building process.

19. Unsuccessful bid shall be refunded within seven (07) working days of the close of the bidding

period, through courier, to the address submitted on the Bidding Form.

DRAFT

Bidding Form

HABIB BANK LIMITED

Joint Domestic Lead Managers & Co-Bookrunners

Tick One KHI LHR ISB Others

Bidding starts on Apr 07, 2015

Bidding ends on Apr 10, 2015

Bidding Form No.

The Islamic Republic of Pakistan, Privatisation Division of the Ministry of Finance, Revenue, Economic Affairs, Statistics and Privatisation, acting through the Privatisation Commission; and the State Bank of Pakistan are offering 250,000,000 Ordinary Shares representing 17% of the Total Paid Up Share Capital of Habib Bank Limited with a Upsize Option of up to an additional 359,317,135 Ordinary Shares representing 24.5% of the Total Paid Up Share Capital of Habib Bank Limited at a Price Range which shall be at a premium to the par value of PKR 10/-

PLEASE FILL THE FORM IN BLOCK LETTERS. PLEASE MAKE SURE TO PROVIDE ACCURATE DETAILS TO AVOID ANY INCONVENIENCE

Name

Please Tick the appropriate box

Local Institutional Investor

Foreign Institutional Investor

High Net Worth Individuals

Address

Cell # Resident Nationality

Land Line#

Non Resident

Foreigner Fax #

Email: CNIC/Passport No.

NTN Number*

Payment Details Payments to be made in favor of: “Offer for Sale of Shares of HBL”

*Investors are encouraged to disclose their NTN Number for deduction of Tax at the reduced rate of 10% instead of 15% on Dividends

Amount in Figures

Instrument No.

Instrument Date

Margin %age

Banker’s Name, Address & Branch

CDC Details for Sub A/C and House A/C

CDC Participant Name CDC Participant ID No

Sub House A/C No House A/C No.

CDC Details for Investor A/C

CDC Investor Service A/C ID CDC Investor A/C No

DIVIDEND MANDATE (Optional): Mark tick [ ] in the appropriate boxes: Yes [ ] No [ ] Incase the Applicant intends that if shares applied for are issued to him/it and the dividend declared by the company, if any, is credited directly in his/it bank account, instead of issue of dividend warrants, then please fill in the following boxes:

Title of Account Account Number

Bank Name & Address

The Privatisation Division, Ministry of Finance, Revenue, Economic Affairs, Statistics and Privatization 5-A Constitution Avenue, EDB Building, Islamabad, Pakistan

Dear Sir, On the basis of Offer for Sale Document by the Islamic Republic of Pakistan and State Bank of Pakistan for the sale of their residual shareholding in Habib Bank Limited dated April 03, 2015, I/we hereby bid for subscription of shares of the company as under:

Bid Details

No. of Shares Bid for Bid price per share Bid Amount 0.004% CDC Fee Total Amount

Bid Option (Please tick) (In figures) (In figures) (In figures) (In figures) (In figures)

Limit Order

Step Order:

Option (1)

Option (2)

Option (3)

Option (4)

Option (5)

Total (Shares and Bid) Important Instructions: 1) Bids should be placed for a minimum amount of PKR 500,000. It should also be noted that the number of shares bid for should be rounded &

fractional shares will not be acceptable. Please ensure that after rounding the No. of shares multiplied by your bid price is at least PKR 500,000.

______________________________________ Signature of Bidder

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In terms of the Rule Book of the Karachi Stock Exchange (“KSE”), and the Listing Regulations of the Lahore Stock Exchange (“LSE”) and Islamabad Stock Exchange (“ISE”) together collectively referred to as (the “Stock Exchanges”), I/we am/are eligible to bid in this Offer For Sale. The amount payable on biding is remitted herewith which is the applicable margin amount. I/We agree to pay the balance amount of application money, if any, upon successful allocation of shares. In case no shares are allotted to me/us you are hereby authorized to return to me/us by demand draft/pay order/cheque application money, within seven (07) working days of the close of the bidding period, through courier, to the first address written below or to the bank through which I/we tender this application. I/We agree that this is a binding agreement to accept the number of shares as may be allocated to me/us subject to the terms of the Offer for Sale Document, the bidding form and other applicable laws. I/ we undertake that I/we will sign all such other documents and do all such acts, if necessary on my/our part to enable me/us to be allocated/allotted/transferred the shares and to pay for the same. I/we authorize you to place my/our name(s) on the register of the members of the Bank as holder(s) of the Ordinary Shares that will be allocated/allotted/transferred to me/us and to register my/our address as given below. I/ We noted that the Joint Domestic Lead Managers & Co-Bookrunners are entitled, in their absolute discretion to accept or reject this Bidding Application for reason(s) to be recorded in writing and the reason(s) should be disclosed to us forthwith. I/We have no objection if there are necessary changes made in the Offer for Sale Document for filling of the same with the Securities and Exchange Commission of Pakistan (“SECP”). I understand that the Privatisation Commission, the Joint Domestic Lead Managers & Co-Bookrunners, SECP and the Stock Exchanges reserve the right of legal action against me under the law of Pakistan, if I submit a fictitious bid and/or my the instrument deposited by me for margin money is bounced and I submit to the jurisdiction of the courts of Karachi in case of any dispute in relation to this bidding form or related matters. I DECLARE THAT: i) I AM/WE ARE NATIONAL(S) AND RESIDENT(S) OF PAKISTAN; ii) FORIEGNER; iii) I AM/WE ARE NOT MINOR(S); iv) I/ WE HAVE NOT MADE NOR HAVE I/WE INSTRUCTED ANY OTHER PERSON(S)/INSTITUTION(S) TO MAKE ANY OTHER APPLICATION(S) IN MY/OUR NAME(S) OR IN THE NAME OF ANY OTHER PERSON ON MY/OUR BEHALF OR IN ANY FICTITOUS NAME, IN CASE OF ANY INFORMATION GIVEN HEREIN BEING INCORRECT I/WE UNDERSTAND THAT I/WE SHALL NOT BE ENTITLED FOR ALLOCATION/ALLOTMENT/TRANSFER OF SHARES. Important Instructions: Receiving will only be provided on duplicate bidding form. Please ensure that a duly filled duplicate bidding form is submitted with at the time of placement of bid. For deposit of margin money, only Pay Orders or Demand Draft will be accepted. Investors can revise and withdraw their bids by notifying either of the Joint Domestic Lead Managers & Co-Bookrunners. Bid revisions and withdrawal facility will be available throughout the entirety of the Book Building process. Yours Faithfully, Signature:________________________________________________________

To be filled in by the Joint Domestic Lead Managers & Co-Bookrunners Time of Receipt Date Location Amount

Pay Order No./ Demand Draft No.

Stamp

DRAFT

Duplicate Bidding Form

HABIB BANK LIMITED





Bidding form No.



Name





Address


Land Line#

Non Resident

Foreigner Fax #

Email: CNIC/Passport No.

NTN Number*

Payment Details Payments to be made in favor of: “Offer for Sale of Shares of HBL”

*Investors are encouraged to disclose their NTN Number for deduction of Tax at the reduced rate of 10% instead of 15% on Dividends

Amount in Figures

Instrument No.

Instrument Date

Margin %age







DIVIDEND MANDATE (Optional): Mark tick [ ] in the appropriate boxes: Yes [ ] No [ ] Incase the Applicant intends that if shares applied for are issued to him/it and the dividend declared by the company, if any, is credited directly in his/it bank account, instead of issue of dividend warrants, then please fill in the following boxes:

Title of Account Account Number

Bank Name & Address The Privatisation Division, Ministry of Finance, Revenue, Economic Affairs, Statistics and Privatization 5-A Constitution Avenue, EDB Building, Islamabad, Pakistan

Dear Sir, On the basis of Offer for Sale Document by the Islamic Republic of Pakistan and State Bank of Pakistan for the sale of their residual shareholding in Habib Bank Limited dated April 03, 2015, I/we hereby bid for subscription of shares of the company as under:

Bid Details


Bid Option (Please tick) (In figures) (In figures) (In figures) (In figures) (In figures)

Limit Order

Step Order:

Option (1)

Option (2)

Option (3)

Option (4)

Option (5)

Total (Shares and Bid) Important Instructions: 1) Bids should be placed for a minimum amount of PKR 500,000. It should also be noted that the number of shares bid for should be rounded &

fractional shares will not be acceptable. Please ensure that after rounding the no. of shares multiplied by your bid price is at least PKR 500,000.

_____________________________________ Signature of Bidder

DRAFT

In terms of the Rule Book of the Karachi Stock Exchange (“KSE”), and the Listing Regulations of the Lahore Stock Exchange (“LSE”) and Islamabad Stock Exchange (“ISE”) together collectively referred to as (the “Stock Exchanges”), I/we am/are eligible to bid in this Offer For Sale. The amount payable on biding is remitted herewith which is the applicable margin amount. I/We agree to pay the balance amount of application money, if any, upon successful allocation of shares. In case no shares are allotted to me/us you are hereby authorized to return to me/us by demand draft/pay order/cheque application money, within seven (07) working days of the close of the bidding period, through courier, to the first address written below or to the bank through which I/we tender this application. I/We agree that this is a binding agreement to accept the number of shares as may be allocated to me/us subject to the terms of the Offer for Sale Document, the bidding form and other applicable laws. I/ we undertake that I/we will sign all such other documents and do all such acts, if necessary on my/our part to enable me/us to be allocated/allotted/transferred the shares and to pay for the same. I/we authorize you to place my/our name(s) on the register of the members of the Bank as holder(s) of the Ordinary Shares that will be allocated/allotted/transferred to me/us and to register my/our address as given below. I/ We noted that the Joint Domestic Lead Managers & Co-Bookrunners are entitled, in their absolute discretion to accept or reject this Bidding Application for reason(s) to be recorded in writing and the reason(s) should be disclosed to us forthwith. I/We have no objection if there are necessary changes made in the Offer for Sale Document for filling of the same with the Securities and Exchange Commission of Pakistan (“SECP”). I understand that the Privatisation Commission, the Joint Domestic Lead Managers & Co-Bookrunners, SECP and the Stock Exchanges reserve the right of legal action against me under the law of Pakistan, if I submit a fictitious bid and/or my the instrument deposited by me for margin money is bounced and I submit to the jurisdiction of the courts of Karachi in case of any dispute in relation to this bidding form or related matters. I DECLARE THAT: i) I AM/WE ARE NATIONAL(S) AND RESIDENT(S) OF PAKISTAN; ii) FORIEGNER; iii) I AM/WE ARE NOT MINOR(S); iv) I/ WE HAVE NOT MADE NOR HAVE I/WE INSTRUCTED ANY OTHER PERSON(S)/INSTITUTION(S) TO MAKE ANY OTHER APPLICATION(S) IN MY/OUR NAME(S) OR IN THE NAME OF ANY OTHER PERSON ON MY/OUR BEHALF OR IN ANY FICTITOUS NAME, IN CASE OF ANY INFORMATION GIVEN HEREIN BEING INCORRECT I/WE UNDERSTAND THAT I/WE SHALL NOT BE ENTITLED FOR ALLOCATION/ALLOTMENT/TRANSFER OF SHARES. Important Instructions: Receiving will only be provided on duplicate bidding form. Please ensure that a duly filled duplicate bidding form is submitted with at the time of placement of bid. For deposit of margin money, only Pay Orders or Demand Draft will be accepted. Investors can revise and withdraw their bids by notifying either of the Joint Domestic Lead Managers & Co-Bookrunners. Bid revisions and withdrawal facility will be available throughout the entirety of the Book Building process. Yours Faithfully, Signature:________________________________________________________



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DRAFT

Bid Revision Form

HABIB BANK LIMITED





Bidding Form No.



Name





Address


Land Line#

Non Resident

Foreigner Fax #

Email: CNIC/NTN/Passport No.

Payment Details: Payments to be made in favor of: “Offer for Sale of Shares of HBL”

Amount in Figures

Instrument No.

Instrument

Date

Margin

% age







The Privatisation Division, Ministry of Finance, Revenue, Economic Affairs, Statistics and Privatization 5-A Constitution Avenue, EDB Building, Islamabad, Pakistan

Dear Sir, On the basis of Offer for Sale Document by the Islamic Republic of Pakistan and State Bank of Pakistan for the sale of their residual shareholding in Habib Bank Limited dated April 03, 2015, I/we hereby bid for subscription of shares of the company as under: Bid Details


Bid Option (Please tick) (In Figures) (In figures) (In figures) (In figures) (In figures)

Limit Order

Step Order:

Option (1)

Option (2)

Option (3)

Option (4)

Option (5)

Total (Shares and Bid)

Important Instructions:

1) I DECLARE THAT I have read all the terms and conditions stated in the Offer for Sale Document and Bid Form. The same would be applicable on the Bid Revision Form.




Stamp

DRAFT

Additional Payment Form

HABIB BANK LIMITED





Bidding Form No.



Name

CNIC/NTN/

Passport No.

Cell #

Land Line #

Client ID: (ID generated at the time of Bid placement)

Resident Nationality

Non Resident

Foreigner Additional Payment Details

Payments to be made in favor of : “Offer for Sale of Shares of HBL”

Amount in Figures

Instrument No.

Instrument

Date

Margin %age


Important Instructions:

1) I DECLARE THAT I have read all the terms and conditions stated in the Offer for Sale Document and Bid Form. The same would be applicable on the additional payment form.




Stamp

Date post:	01-Jan-2022
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