Central Bank takes control of UAE Exchange; no new transactions

Company's operations under review as parent company Finablr warns of insolvency

  
Vehicles stop at a red light in front of the main branch of UAE Central Bank in Abu Dhabi, January 29, 2013. Image used for illustrative purpose

Vehicles stop at a red light in front of the main branch of UAE Central Bank in Abu Dhabi, January 29, 2013. Image used for illustrative purpose

REUTERS/Ben Job

The UAE Central Bank is stepping in to oversee the operations of UAE Exchange, a homegrown brand founded by Indian billionaire B.R. Shetty.

The news comes after the London Stock Exchange suspended the trading of shares of its parent company, Finablr and its CEO, Promoth Manghat, stepped down. The London-listed payments and foreign exchange firm had also warned of potential insolvency this week.

No new transactions

The Abu Dhabi-headquartered firm has recently stopped processing new money transfers, including other financial transactions, at its branches and online platforms in the UAE, citing that it is going through operational constraints.

“Due to certain operational challenges, we have temporarily suspended acceptance of any new transactions at UAE Exchange branches and via our online channels,” a spokesperson told Zawya.

The UAE’s banking regulator said that in order to protect consumers, it has required the exchange house to swiftly settle outstanding remittances and all other already initiated transactions.

An inspection team has also been commissioned to undertake a review on the company’s operations in the UAE, to ensure it complies with the applicable laws and regulations.

“The Central Bank of UAE will take additional action, if necessary, once the examination is completed,” the regulator said.

Insolvency

The exchange house’s holding company, Finablr warned on Monday it could be heading towards insolvency.

“The board is unable [to] accurately assess the financial position of the company and there is a material uncertainty about the Group’s ability to continue as a going concern,” it said in a regulatory filing on the London Stock Exchange.

On March 12, Finablr disclosed it is facing difficulty in accessing the “daily liquidity” that the company needs to keep its business operations going.

“Since that announcement, these constraints have become amplified and have now reached a point where they are having a material adverse impact on the company’s operations, including resulting in the company no longer being able to provide certain payment processing services,” the company said.

The board has also just recently found out that some $100 million in cheques “written by Group companies and dating back to before the IPO,” may have been used as security for “financing arrangements for the benefit of third parties.”

UAE Exchange operates 150 branches across the country. It had earlier received complaints about delayed fund transfers, with some customers complaining that the money they remitted from UAE did not reflect on the recipients’ accounts for days.

Its sister company, NMC Health, has recently found itself in the middle of a controversy after its finances were questioned by American short-seller Muddy Waters. 

(Reporting by Cleofe Maceda; editing by Seban Scaria)

Cleofe.Maceda@refinitiv.com

#CENTRALBANK #UAE #FINABLR #UAEEXCHANGE #REMITTANCE #BRSHETTY

Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.

© ZAWYA 2020

More From Commercial