United Bank Limited (UBL) has announced its intention to voluntarily liquidate its New York branch and surrender its license in the United States.
The decision has been taken as part of the bank’s global realignment strategy and keeping in view the commercial viability of the operations there.
“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. The Bank already has well established multiple correspondent banking relationships that provide US dollar clearing services to its customers,” a notice issued to Pakistan Stock Exchange (PSX) said.
Earlier, UBL and the US Federal Reserve had entered into a Compliance Agreement (effective July 2, 2018), to improve its risk management and compliance standards to meet the requirements of the Anti-Money Laundering regulations of the US.
The Agreement had 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. Accordingly, the management was required to submit comprehensive compliance plan and take other prescribed measures.
“Our understanding is that because the announcement to voluntarily close the NY Branch is subject to regulatory approvals, including the regulators in the US, the bank may be required to complete all the formalities related to the end of the Compliance Agreement, which may or may not include fulfilling any financial obligations as well,” Mustafa Mustansir at Taurus Securities said.
From a business perspective, the UBL’s NY branch was mainly involved in providing international remittance services. However, the bank has announced to continue to provide USD clearing and other services to its customers by virtue of its correspondent banking relationships.
UBL’s assets in the US can be estimated to amount to Rs 4.0 billion (i.e. 0.2 percent of its total assets), according to latest financials.