Pakistans UBL to close commercially nonviable New York branch

KARACHI: Pakistan’s United Bank Limited said Thursday it was shutting its New York branch as part of a global realignment strategy.

Earlier this year, UBL and its New York branch were directed by the Federal Reserve Bank of New York to strengthen its anti-money-laundering policies.

But the bank cited commercial viability as the reason for closing the branch.

Experts hailed the move, saying the bank should consolidate its local operations.

“Good timely decision,” said Khurram Schehzad from JS Global Capital. “Our banks should consolidate their operations and critically see where it is viable, and where it is not, to operate.”

UBL is not the first Pakistani bank to close down a New York branch.

Habib Bank Limited shuttered operations in the Big Apple after being hit with $630 million in penalties for compliance failures over anti-money laundering and sanctions rules.

HBL settled the matter out of court, agreeing to pay a fine of $225 million.

But fear of a hefty punishment from tough US financial regulators may have been a factor in UBL’s decision, said senior economist Muzzamil Aslam.

“HBL was not only the bank punished, there are other international banks who were penalised. There are even reports that Mitsubishi UFJ Financial Group is under investigation for violation of anti-money laundering laws.”

Veteran banker AB Shahid called for stricter monitoring of banking transactions. “Banks are not sensitive to the transactions taking place in their systems. Right from account opening to transactions, the banks are responsible for monitoring everything.”

UBL shares were down PKR3.31 to close at PKR137.34 on Thursday. The KSE-100 index was down 545.21 points on investor concerns about the country’s economic uncertainty.