The Board of Directors (BoD) of Meezan Bank Limited, the largest Islamic bank in the country, announced that it will establish an Exchange Company (EC) as a wholly-owned subsidiary.

The development was shared by the bank in its notice to the Pakistan Stock Exchange (PSX) on Friday.

“The BoD of Meezan Bank Limited through circular resolution No. 6 of 2023 dated September 12, 2023 has approved the establishment of an EC with initial paid-up-capital upto Rs1 billion,” read the statement.

The development is subject to approval and clearance by the State Bank of Pakistan (SBP) and completion of other regulatory compliance requirements.

“This Exchange Company would be a 100% owned subsidiary of the bank,” it added.

The development comes after United Bank Limited (UBL) also announced that it will establish an EC as a wholly-owned subsidiary.

Last week, 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 EC 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.

Meezan Bank posted earnings of Rs32.91 billion for the first six months of year 2023, up 92% from the profit-after-tax Rs17.14 billion in the same period of the previous year.

Its earnings per share clocked in at Rs18.30 for the six-month period. The Board of Directors also announced a cash dividend for the half year ended June 30, 2023 at Rs4 per share i.e. 40%.