Habib Bank Limited (HBL) is considered one of the largest private-sector banks in Pakistan, with nearly 1,600 branches and auntomatic teller machines in Pakistan, and a presence in over 25 countries including subsidiaries in Africa, Asia and Europe. The Aga Khan Fund for Economic Development (AKFED) holds 51% of the bank’s shares. According to HBL, the remaining shares are held by individuals and domestic and international institutions and funds including CDC Group Plc which holds 4.99% and International Finance Corporation which holds 0.87%.

This IFC project includes a straight senior loan of up to US$150 million to Habib Bank Limited (HBL) targeting small and medium enterprises —project number 34365—. The loan was set up to support the bank’s domestic and international growth under specific segments including rural and agriculture finance, women ownedand operated businesses, and sustainable energy finance. IFC expects that the project will offer development impact in Pakistan through these segments including via private sector development and the promotion of environmental and social management. The objective of the loan is also to offer diversified funding sources to the bank, strengthen its capital adequacy, and to expand its lending activities.

This project also involves a related advisory services project—project number 603761—the Enabling Sustainable Banking in Pakistan project. Its goal is to increase the share and volume of bank loans screened against improved Green Banking Guidelines, improve the bank’s awareness and understanding of environmental and social risk management, and increase the number of intermediaries to provide environmental, social, and governance training to banks after IFC exits the project.

The complainant is a former employee of HBL whose position was Deputy Deputy General Manager and Head of Planning and Implementation of HBL’s Social and Environmental Management Systems (SEMS) unit.

The complaint raised concerns regarding HBL’s alleged non-compliance with national and international environmental and social (E&S) standards, including IFC’s Performance Standards. The complaint also raised concerns related to the complainant’s alleged unauthorized dismissal as Deputy General Manager and Head of Planning and Implementation of HBL’s SEMS unit. Finally, the complaint raised concerns around HBL’s alleged mismanagement of its whistleblowing mechanism.

CAO received the complaint on March 3, 2022, and found it eligible for assessment on April 22, 2022. At the request of the complainant, the complaint was referred to IFC in accordance with paragraph #39 of the CAO’s Policy.

On August 17, 2022, the complainant requested for the complaint to be referred back and end engagements with IFC. CAO’s assessment formally began on September 7, 2022.

In January 2023, CAO completed its assessment. During the assessment process, both parties expressed no interest in engaging in a CAO-facilitated dialogue process. Consequently, the case will proceed to a compliance appraisal.