UBL to voluntarily shut down its New York branch

Says decision has been taken keeping in view commercial viability of the branch

KARACHI: United Bank Limited (UBL), one of the top five banks in Pakistan, has announced that it is voluntarily closing down its New York branch as it has been commercially unviable to operate in provided circumstances.

The wind-up may impact the inflow of worker remittances into the country.

"As part of its global realignment strategy, UBL intends to voluntarily liquidate and surrender its licence pursuant to the New York banking law… This is a commercial decision keeping in view the commercial viability of the NY branch," UBL Company Secretary and Chief Legal Counsel Aqeel Ahmed Nasir said in a notification sent to the Pakistan Stock Exchange (PSX) on Thursday.

UBL's share price dropped 2.35% or Rs3.31 to Rs137.34 with trading in 1.28 million shares at the PSX.

UBL is the second leading bank in Pakistan that is shutting down an international branch in New York within a span of 15 months. Habib Bank Limited (HBL) had done the same in August last year.



"UBL's assets in the US can be estimated at Rs4 billion (ie 0.2% of its total assets), according to latest financials," Taurus Securities, a subsidiary of National Bank of Pakistan (NBP), said in a commentary.

Earlier, UBL and the US Federal Reserve had entered into a compliance agreement, effective July 2, 2018, to improve risk management and compliance standards to meet requirements of anti-money laundering regulations of the US.

The agreement had followed the Fed's recent examination of UBL's New York branch operations, where deficiencies relating to risk management and compliance with federal money laundering laws were identified.

Accordingly, the management was required to submit a comprehensive compliance plan and take other prescribed measures.

The brokerage house said the wind-up "may or may not include fulfilling financial obligations, if any, as well".



"The wind-up is subject to all regulatory approvals," said the UBL company secretary.

"The bank already has well-established multiple correspondent banking relationships that provide US dollar clearing services to its customers," Nasir said.

UBL has notified its intent to the New York Department of Financial Services. It will continue to work closely with the 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, he said.

Earlier in August 2017, HBL kick-started the process of winding up its New York branch and paid $225 million in penalty to address US allegations that it was not operating in compliance with the anti-money laundering laws.