KARACHI: The United Bank Limited (UBL) on Thursday announced an intention to voluntarily liquidate its New York branch and surrender the banking licence to the regulator.
The decision has been taken as part of the bank’s global realignment strategy. “This is a commercial decision keeping in view the commercial viability of NY (New York) branch and is subject to all regulatory approvals,” the bank said in a statement to the Pakistan Stock Exchange.
UBL said it has notified the intent to New York Department of Financial Services.
“UBL will continue to work closely with its US regulators throughout the voluntary liquidation process to ensure that the New York branch is wound down in an orderly manner, complying with all applicable Federal and State Laws, rules and regulations,” it added.
The bank, however, said it has well-established multiple correspondent banking relationships that provide US dollar clearing services to its customers.
UBL has 1,359 local and 20 overseas branches. New York operations contributed 0.08 percent to total profit before tax of the bank, according to its annual report 2017. The bank’s assets in the US are estimated at four billion rupee, merely 0.2 percent of its total assets.
Topline Securities said closure of New York branch operations is unlikely to have material impact on bank’s profitability.
UBL and the US Federal Reserve entered into a compliance agreement effective from July 2 to improve its risk management and compliance standards to meet the requirements of the anti-money laundering regulations of the US. The agreement followed the US Fed’s recent examination of UBL’s New York branch operations, where deficiencies relating to the branch’s risk management and compliance with federal money-laundering laws were identified.
The management was required to submit comprehensive compliance plan and take other prescribed measures.
“The written agreement between the bank and Federal Reserve Bank of New York is still in place and the bank is in close contact with the concerned authorities. The closure of that agreement is still pending and is dependent on the regulator,” the brokerage said in a flash note.