The Board of Directors of Bank Alfalah Limited (BAFL), one of the country’s largest commercial banks, announced on Tuesday that it will establish an Exchange Company (EC) as a wholly-owned subsidiary, becoming the sixth banking entity to make such an announcement to date.
The development was shared by the bank in its notice to the Pakistan Stock Exchange (PSX).
“The Board of Directors of Bank Alfalah Limited in its meeting held in Abu Dhabi, UAE on 3rd October 2023, has approved the establishment of an exchange company in accordance with the framework prescribed by the State Bank of Pakistan (SBP) with an authorized share capital of Rs2,000,000,000/- divided into 200,000,000 ordinary shares of Rs10/-each,” read the notice.
BAFL said the development is subject to approval and clearance by the State Bank of Pakistan (SBP) and the completion of other regulatory compliance requirements.
“The EC would be a wholly-owned subsidiary of the Bank and will operate as an exchange company within the framework prescribed by the SBP,” it added.
Last 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.
Following this, Faysal Bank Limited (FABL), Bank Al Habib Limited (BAHL), MCB Bank Limited, Meezan Bank Limited, and United Bank Limited (UBL) also announced they would establish an EC as a wholly-owned subsidiary.
The SBP has 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 Bank Alfalah’s latest financial results, the bank posted a consolidated profit after tax of Rs18.63 billion in first six months of year 2023, which is nearly 113% higher than its earnings in the same period of the preceding year.
BAFL reported earnings per share of Rs11.8 as opposed to Rs4.93 in the same period last year.