The National Bank of Pakistan (NBP) has announced plans to shut down its operations in the capitals of three Central Asian countries—Bishkek (Kyrgyzstan), Baku (Azerbaijan), and Almaty (Kazakhstan)—in the coming weeks. This move is part of the bank’s broader strategy to exit loss-making operations and improve overall capital efficiency. According to NBP’s annual report, the closures are aimed at reducing compliance risks and enhancing returns by withdrawing from low-yielding international markets.
NBP established its branches in Bishkek, Baku, and Almaty in the 1990s, shortly after these countries gained independence. The bank’s initial goal was to enhance its foreign footprint and support Muslim countries in setting up banking operations in these regions. However, despite the bank’s early ambitions, the operations in these cities have failed to generate significant returns, prompting the decision to shut them down.
The closure of the three foreign branches is consistent with NBP’s strategy of streamlining its international operations and focusing on markets that offer better growth potential. This strategy was initiated in 2021, when the bank decided to shut down seven overseas franchises and branches. Although the closure plans were delayed due to regulatory processes and required approvals from banking authorities, the recent announcement signals that the restructuring efforts are moving forward.
In addition to the upcoming branch closures in Central Asia, NBP also shut down its Paris and New York branches in 2024. The decision to close the New York branch was particularly significant, as it came after the bank had faced regulatory challenges. In 2022, NBP was fined $55 million by New York authorities for violations related to regulatory compliance, and the Paris branch had previously been penalized $265,000 in 2008 for similar issues. Despite these challenges, the bank managed to ensure a structured exit from both locations, fully complying with regulatory directives.
NBP’s decision to close its overseas branches aligns with its long-term capital allocation strategy, which aims to focus on more profitable and strategic markets. By exiting non-profitable regions, the bank seeks to bolster its capital efficiency, reduce exposure to compliance risks, and improve its overall financial performance. The closures are also part of a broader restructuring effort to strengthen risk management frameworks and improve credit management. NBP is working to cultivate a stronger culture of accountability, with clearer roles for risk managers and risk-takers within the organization.
While the closures mark the end of NBP’s operations in these three Central Asian countries, the bank continues to maintain a presence in other international markets, where it aims to expand and grow its portfolio of products and services. The closure of branches in less profitable regions reflects a growing trend among banks to reassess their international strategies in response to evolving economic conditions and regulatory pressures.
As NBP continues to refine its international strategy, the closure of these branches serves as a reminder of the challenges faced by global banks operating in foreign markets. For NBP, this restructuring is an essential step toward ensuring long-term profitability and stability. The move also reflects a broader trend of banks focusing on more viable markets and enhancing compliance and risk management practices to strengthen their operations both domestically and internationally.