), took over as chairman and president in 2000. Today foreign bankers working in Pakistan shudder at the thought of competing with NBP. Rival local banks keep a keen eye on what it is doing, and the World Bank calls it a prototype for a successful turnaround.
Modernizing NBP was no small feat. Until reform began under a $1 billion loan from the World Bank five years ago, Pakistan's big banks were characterized by politically influenced lending, ballooning bad debts, and ineffective management by bureaucrats. At NBP, bad loans amounted to 36% of total assets. "Revenues were falling, costs were rising, and nonperforming loans were out of control," says Raza, a Karachi native who has degrees from the London School of Economics and City University of London. "The financial condition was perilous."
Raza, 55, moved quickly to shake up the bank, which was burdened with 1,200 branches and 15,000 employees when he came on board. He offered voluntary retirement that cut staff by 3,500 and shuttered 250 inefficient branches. Raza also improved the talent pool by adding 100 young business graduates every year and putting some 11,000 existing employees through rigorous training. "My policy was aggressive evolution, not revolution," he says.
While the bank is still majority state-owned, the government successfully offered 25% of the shares to the public in 2002 and in two subsequent offerings. Despite continuing government control, Raza says he was given total freedom to fix NBP and bring in an independent board.
The result under-scores why Raza is a Star. Assets have risen from $6.2 billion in 2000 to $9.2 billion in 2004, and pretax profits are up from $17.2 million in 2000 to over $200 million in 2004. Bad loans have been reduced to 14% of total assets. "This is one of the most successful reform programs in emerging markets," says Abid Hasan, operations adviser at the World Bank office in Islamabad. Now that's an image NBP -- and Raza -- can live with. By Naween A. Mangi