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US banks to pull out of Pakistan

Three American banks have decided to wind up their operations in Pakistan's textile capital of Faisalabad following the freeze on foreign currency accounts ordered by the Nawaz Sharief government after the May nuclear blasts.

The three banks -- Bank of America, Citibank and American Express -- had a massive exposure in foreign currency-based accounts, corporate financing and syndicate loans. But their business had been adversely affected by the foreign currency accounts freeze, writes the daily Nation of Lahore.

Bank of America has already closed its Faisalabad branch while the other two are in the process of retrenching junior executives and high-cost officials, the daily says.

The collapse of the country's state sector corporations like Pakistan State Oil, Wapda, Sui Northern and Sui Southern Gas Oil and Gas Development Corporation, had also hit the operations of the banks since financial credibility of these corporations had steadily eroded, and in certain areas, virtually collapsed, due to their inter-linking financial obligations.

This forced the banks, the main lenders of these corporations with huge asset base, to close down.

UNI