The Board of Directors (BoD) of United Bank Limited (UBL), one of the largest commercial banks in the country, has announced that it will establish an Exchange Company (EC) as a wholly-owned subsidiary of the bank.
The development was shared by UBL in a notice to the Pakistan Stock Exchange (PSX) on Tuesday.
The BoD of UBL in their meeting held on 11 September, 2023 approved the “establishment of an EC with Rs1 billion as initial paid-up capital, as wholly-owned subsidiary of UBL,” read the notice.
The establishment of the subsidiary is subject to approval by State Bank of Pakistan (SBP) and other regulatory compliance, added the notice.
The development comes after the SBP in its bid to strengthen controls amid the massive fall in rupee’s value in the open market, decided to introduce ‘structural reforms’ in the ECs sector.
“As part of these reforms, leading banks actively engaged in foreign exchange business will establish wholly-owned Exchange Companies (EC) to cater to the legitimate foreign exchange needs of general public,” said the SBP in a statement.
In addition, the SBP also raised the minimum capital requirement for EC from Rs200 million to Rs500 million, raising the barrier to entry for the private sector.
Meanwhile, the BoD of UBL also granted approval of an “indicative offer” received from Bestway Group (BG) to acquire entire shareholding of UBL in United National Bank Limited (UNBL UK).
Currently, UBL owns 55% shares in UNBL UK.
“UNBL UK contributed earnings per share (EPS) of Rs0.57 to the consolidated EPS of UBL for the half year ended June 30, 2023. For full year 2022 the EPS contribution of UNBL UK to the consolidated EPS of UBL stood at Rs0.48 per share,” read the notice.
The bank shared that the risk weighted assets of UNBL UK stood at Rs339.2 billion as at June 30th 2023 with a downward impact of 200 basis points to the consolidated capital adequacy ratio of UBL.
“The above approval of the Board of Directors of UBL is subject to the approval/clearance by the SBP and all other regulatory compliances required in this regard in both Pakistan and UK,” it added.
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