United Bank Limited (UBL) has announced that it will establish an Exchange Company (EC) as a subsidiary. The Board of Directors approved the establishment with an initial paid-up capital of Rs1 billion. However, this is subject to approval from the State Bank of Pakistan (SBP) and other regulatory compliance.
This decision comes after the SBP introduced ‘structural reforms’ in the EC sector to strengthen controls due to the significant devaluation of the rupee. As part of these reforms, leading banks involved in foreign exchange business will establish wholly-owned Exchange Companies to meet the foreign exchange needs of the public. Additionally, the SBP raised the minimum capital requirement for EC from Rs200 million to Rs500 million.
UBL has also granted approval for Bestway Group (BG) to acquire its entire shareholding in United National Bank Limited (UNBL UK). UBL currently owns 55% shares in UNBL UK. UNBL UK has contributed to UBL’s earnings per share (EPS) with Rs0.57 for the half-year ended June 30, 2023, and Rs0.48 per share for the full year 2022.
The risk weighted assets of UNBL UK as of June 30, 2023, stood at Rs339.2 billion, impacting UBL’s consolidated capital adequacy ratio by 200 basis points. However, the approval by UBL’s Board of Directors is subject to clearance from the SBP and other regulatory compliances in both Pakistan and the UK.
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