Pakistan’s Bank Alfalah has inched closer to a long-anticipated retreat from Afghanistan after accepting a non-binding offer from Kabul-based Ghazanfar Bank to acquire its local operations. While not a completed sale, the development is Alfalah’s clearest move in years to streamline its foreign footprint and refocus on its domestic priorities.
The bank disclosed the offer in a filing to the Pakistan Stock Exchange on December 4, noting that Ghazanfar Bank’s proposal will trigger a formal due-diligence process, subject to regulatory permissions in both Pakistan and Afghanistan.
Alfalah’s exit signals a strategic homecoming
For more than a decade, Bank Alfalah has operated in Afghanistan, navigating a banking environment shaped by regulatory uncertainty, sanctions exposure, and political volatility. Over that period, the Afghan banking market has shrunk and fragmented, forcing foreign-owned institutions to continually reassess risk.
That tension has now surfaced as a business decision. Alfalah has already signalled similar intentions in Bangladesh, where it is working toward a sale of its operations to Bank Asia.
One sentence pause: the foreign divestments are not random.
Taken together, both exits reflect a long-term recalibration. Alfalah is putting more of its capital into local consumer banking, digital expansion, and domestic lending opportunities, while pruning markets where geopolitical headwinds limit scale and profitability.
A transaction that is still miles away from closure
Although the PSX filing confirms the board’s approval of Ghazanfar Bank’s non-binding offer, the language makes it clear that there is no guarantee of completion.
Short line: everyone is still kicking the tyres.
Ghazanfar Bank must first secure regulatory clearances from:
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the State Bank of Pakistan (SBP)
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Da Afghanistan Bank (DAB)
Only after these approvals can Ghazanfar begin due diligence on Alfalah’s Afghan operations. That due diligence phase could take months, given the need to analyse branch licences, customer deposits, loan books, exposure to impaired assets, operating systems, and staffing liabilities.
A standalone sentence: Afghan banking paperwork is rarely straightforward.
If both sides agree on final terms, then they will draft definitive agreements and present them for regulatory sign-off again — this time for a legal transfer of assets and obligations.
Previous sale attempts hint at how complicated things are
This is not Bank Alfalah’s first attempt to sell its Afghan business. Back in 2018, Alfalah signed a transfer agreement with Azizi Bank with similar conditions — regulatory reviews, due diligence, and local supervisory approvals.
The transaction ultimately stalled. Paperwork dragged, and the political climate grew more unpredictable as Afghanistan entered a period of transition.
One-sentence intermission: history is a reminder that interest does not equal execution.
Today’s offer from Ghazanfar Bank looks more grounded but still faces the same structural hurdles: a delicate regulatory landscape, security concerns, currency management rules, and the challenge of transferring customer assets without triggering panic or liquidity problems in local branches.
Will the price be significant?
So far, neither bank has disclosed financial terms or valuation assumptions. Analysts say pricing depends heavily on:
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asset quality
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local loan recoverability
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operational overheads
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deposit stability
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regulatory capital expectations
A short pause: Afghan banks have had to work harder to maintain liquidity over the past two years.
The absence of a quoted deal value is normal at this stage. No investor pays upfront without a detailed understanding of the underlying balance sheet and legal exposures.
A cleaner domestic profile strengthens Alfalah’s positioning
Over the past four years, Bank Alfalah has invested heavily in domestic digital offerings, consumer payments, mobile banking, and SME lending. The bank has also expanded aggressively inside Pakistan’s retail ecosystem, from cards to Islamic financing.
Short single line: it feels like Alfalah wants fewer distractions abroad.
Leaving Afghanistan and Bangladesh frees capital, reduces compliance pressure, and improves management bandwidth. Shareholders value clarity, and a leaner international footprint fits a renewed emphasis on profitability and digital adoption at home.
Domestic demand appears healthier, and Alfalah already competes fiercely with HBL, Meezan Bank and UBL in retail channels — where margins scale better than small, isolated foreign operations.
Afghanistan’s banking landscape enters a phase of localisation
If Ghazanfar Bank succeeds, Afghanistan will see another marker in a slow trend: domestically headquartered banks increasing control as foreign banks retreat or downsize.
Ghazanfar has a clearer regulatory comfort zone and deeper familiarity with currency controls, remittance patterns, and operational risks in provincial markets.
Short sentence: local banks can move faster in uncertain climates.
Regulators in Kabul may also view local ownership positively, especially at a time when geopolitical factors make cross-border transactions harder to administer.
What investors will now watch
Future updates will hinge on three questions:
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Can SBP and DAB approve due diligence without delay?
Even preliminary approval could take weeks. -
Will Ghazanfar Bank remain committed after reviewing loan books and asset quality?
Some foreign banking assets in Afghanistan carry elevated recovery risks. -
Does Alfalah negotiate a clean exit or a phased transfer of employees and liabilities?
Smooth transitions matter more than headlines.
A single-sentence segue: foreign banking exits tend to be slow, cautious and surgical.
Until the due-diligence stage is complete, there is no hard deal to evaluate. But the announcement itself tells investors that Bank Alfalah has moved from “thinking about leaving” to formally planning how to leave.
