The State Bank of Pakistan has designated United Bank Limited, Habib Bank Limited and National Bank of Pakistan as Domestic Systemically Important Banks for 2026, placing the three major lenders under additional capital requirements and enhanced supervisory measures. The designation forms part of SBP’s framework for identifying banks whose size, interconnectedness and importance to the financial system require additional safeguards. The three banks will be required to maintain additional Common Equity Tier-1 capital buffers over and above existing regulatory requirements, with the new requirements becoming applicable from March 31, 2027.
SBP said the designation was made under its Framework for Domestic Systemically Important Banks, which was initially published in April 2018 and subsequently amended in December 2022. The framework has been developed in line with international standards while taking into account the characteristics of Pakistan’s financial sector and economy. It establishes a methodology for identifying systemically important banks and sets enhanced regulatory and supervisory requirements intended to strengthen their ability to withstand financial shocks and improve their risk management capacity.
The central bank conducts the D-SIB identification exercise annually through a two-step process. In the first stage, banks are shortlisted as potential D-SIBs using prescribed quantitative and qualitative criteria. In the second stage, the final designation is made from the shortlisted sample based on composite systemic scores. These scores assess factors including a bank’s size, interconnectedness with other financial institutions and markets, substitutability of its services and the complexity of its operations. The assessment is intended to identify institutions whose disruption could have a significant impact on the wider financial system.
For the 2026 designation, SBP assessed banks using financial statements as of December 31, 2025. Based on the resulting assessment, United Bank Limited was placed in Bucket D and assigned an additional CET-1 capital requirement of 2.5 percent. Habib Bank Limited was placed in Bucket C and will be required to maintain an additional CET-1 buffer of 1.5 percent. National Bank of Pakistan was placed in Bucket B and will face an additional CET-1 requirement of 1 percent. These capital requirements will apply from March 31, 2027, in addition to the enhanced supervisory requirements applicable under the D-SIB framework.
The additional CET-1 requirements are intended to provide greater capital protection against potential financial shocks and strengthen the resilience of the designated institutions. Common Equity Tier-1 capital represents a key component of a bank’s highest-quality capital and provides a buffer that can absorb losses while supporting continued operations. By requiring systemically important banks to maintain additional capital, SBP’s framework seeks to reduce the potential impact that financial stress at a major institution could have on the broader banking sector.
SBP also highlighted requirements applicable to branches of Global Systemically Important Banks operating in Pakistan. Such branches will be required to maintain additional CET-1 capital against their risk-weighted assets in Pakistan at the rate prescribed by the Financial Stability Board for their respective parent G-SIB. The requirement extends the broader systemic risk management approach to international banking institutions operating within the domestic financial system and links their additional capital requirements to the designation of their parent institutions at the global level.
The central bank said the D-SIB designation remains an important element of its supervisory framework and reflects its approach toward identifying and mitigating systemic risks. The framework is intended to strengthen the resilience of institutions that have a significant role in Pakistan’s financial system while supporting broader financial stability. The designation of UBL, HBL and NBP for 2026 therefore places additional capital and supervisory responsibilities on the three banks as SBP continues its focus on maintaining stability and strengthening risk management across the banking sector.
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