KARACHI: United Bank Limited (UBL) has announced termination of written agreement by the Federal Reserve Bank of New York after voluntary liquidation of its NY branch, a bourse filing said on Friday.
UBL NY branch corporate existence would finish on the back of winding down its affairs and liquidating, the disclosure made public by the Federal Reserve Board informed on May 23, 2019.
The notice filed with the Pakistan Stock Exchange (PSX) said, “...in accordance with Section 605 II(c) of the New York Banking Law and the procedures prescribed by the NYDFS, we write to inform that consequent upon the liquidation of “NY Branch”, in an orderly manner, the Federal Reserve Bank of New York (FRBNY) has informed that the written agreement dated 02 July 2018 (WA-2018), signed by and among the FRBNY, UBL and NY Branch has been terminated.”
The termination of WA-20 18 marked the completion of the UBL NY Branch winding down process in an orderly manner under the guidance of both the regulators ie NYDFS and FRBNY, it added.
UBL appreciated the assistance provided by the State Bank of Pakistan, the New York Department of Financial Services, and the Federal Reserve Bank of New York during the voluntary liquidation process and during the time that the NY Branch was in business, according to the notification sent to the PSX.
As part of its global realignment strategy, UBL voluntarily closed its NY branch on January 28, 2019 and surrendered the license to the New York State Department of Financial Services (NYDFS).
The bank had earlier ceased commercial operations in its New York Branch in 2018 and had been providing US dollar clearing services to its customers through multiple correspondent banking relationships, the bank said in its annual report for 2018.
As a result, costs, including among regular expenses, additional legal and consultancy, and staff severance and contract termination charges related to the closure of the branch, the NY Branch incurred a net loss of Rs1,071.720 million for the year ended December 31, 2018 (2017: loss of Rs18.138 million).
“UBL’s decision to close the NY Branch was purely a commercial decision, which was taken after evaluating the commercial viability of continuing the operations of the NY Branch,” the report said.
It further said that there would be no material impact on UBL’s business related to trade finance and other forex business activities, as UBL has established multiple correspondent banking relationships with the renowned banks to provide continued US dollar clearing services that were previously provided by the UBL’s New York branch.