PESHAWAR: The Board of Governors (BoG) of the Bank of Khyber (BoK) has expressed serious concerns and reservations about the 10-year agreement signed between the Bank of Khyber and Mastercard.
Board members have raised strong objections to the signing of the agreement without prior approval and termed the agreement potentially harmful for the bank. According to documents, the agreement between Mastercard Middle East Africa FZ-LLC and Bank of Khyber covers a 10-year period starting from January 1, 2026. Under the agreement, Mastercard will provide support to the bank under different categories, with the total support package mentioned at around $20 million.
Under the agreement, the Bank of Khyber has agreed to make Mastercard the exclusive card scheme for its consumer credit, debit and commercial card portfolio and will not work with competing brands.
According to the agreement, the bank will have to convert 100 percent of its debit card portfolio to Mastercard within 12 months, while failure to achieve this target may allow Mastercard to recover support payments. Another condition requires the bank to convert at least 50,000 existing consumer debit cards to Mastercard.
The agreement also sets 10-year business targets for the bank. Bank of Khyber will have to achieve domestic Gross Dollar Volume (GDV) targets of approximately $2.95 billion and international GDV targets of $659 million. In total, the bank will be required to achieve a challenging business target of around $3.6 billion over the ten-year period.
According to the agreement, if targets or conditions are not fulfilled, Mastercard reserves the right to recover or adjust certain support payments. Furthermore, if the bank breaches exclusivity conditions, portfolio share requirements, card conversion targets or other key obligations, Mastercard has the right to recover the support provided to the bank. The agreement also gives Mastercard the authority to verify relevant card records and programme information of the bank.
Sources said the Board of Governors has raised questions over key clauses of the agreement, long-term commitments and its possible impact on the future card business of the bank. One of the major concerns of the board relates to the exclusive status given to Mastercard and its impact on the bank’s future policy.
According to sources, the board has also expressed concerns about the financial consequences if the agreed targets are not achieved. According to the board’s concerns, if Bank of Khyber fails to achieve the agreed targets with Mastercard, it may lose future incentives or support. In case of certain breaches, Mastercard will also have the right to recover support amounts already provided. The Board of Governors has sought further clarification regarding the commercial benefits, risks, long-term implications and protection of the bank’s interests under the agreement.
However, the spokesperson for the Bank of Khyber told this correspondent that the Mastercard agreement was executed under the competent approving authority and in accordance with the Bank’s approved policies, governance framework and applicable regulatory requirements. The spokesperson, however, did not respond to questions regarding the board’s concerns or whether prior approval for the agreement had been obtained from the board.
