The Board of Directors (BoD) of MCB Bank Limited, one of the largest commercial banks in the country, announced 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 Monday.

“The BoD of the bank vide its resolution, dated September 15, 2023 has granted its approval to establish an Exchange Company, with Rs1 billion as initial paid-up capital, as a wholly-owned subsidiary of the bank,” read the statement.

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

The development comes after Meezan Bank Limited, the largest Islamic bank in the country, announced that it will establish an EC as a wholly-owned subsidiary. United Bank Limited (UBL) also announced that it would establish an EC as a wholly-owned subsidiary.

Earlier this month, 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.

As per MCB’s latest financial results, the bank achieved substantial growth in core earnings, resulting in a 65% year-on-year increase in Profit Before Tax (PBT) for the half-year ending on June 30, 2023, reaching Rs53.84 billion.

Profit After Tax (PAT) posted a growth of 140% to reach Rs26.69 billion; translating into Earning Per Share (EPS) of Rs22.52 compared to EPS of Rs9.39 reported in corresponding period last year.