Habib Bank Ltd (HBL) has decided to close New York Operations.
According to a letter written by the bank’s company secretary, Nausheen Ahmad, to Pakistan Stock Exchange (PSX), HBL announced to close its operations at the New York branch as it may face civil monetary penalty of up to Rs67 billion.
In a letter written on August 28 to PSE was CC to the director of Surveillance, Supervision & Enforcement Department of Securities & Exchange Commission of Pakistan.
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The letter states that the New York State Department of Financial Services (DFS) seeks to ‘impose an outrageous civil monetary penalty of up to US$629,625,000′ (amounting to Rs66,346,734,375) on HBL. “HBL shall vigorously contest this in the scheduled administrative hearing and the courts of law in the United States, as being unjustified, capricious, unreasonable, not supported by facts or law and as being time barred,” reads the letter.
According to the Wall Street Journal, following the enforcement order Habib Bank has been stopped from opening new dollar-clearing accounts, which are one of the US services to send and receive dollars from abroad, or even correspondent accounts with foreign banks.
Under the 14-page order which was issued after a thorough examination by the New York State Department of Financial Services and Federal Reserve Bank of New York, the bank has also been restricted from increasing the amount of dollar-clearing transaction from the branch til the issue is resolved.
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The branch will require a special permission from NYSDFD for increasing the number of dollar-clearing transactions.
Extending his hope that problem will be fixed as soon as possible Manochere Alamgir, who is currently functioning as General Manager in HBL New York Branch, said that they have hired a new compliance staff and a third-party consultant to resolve the matter as per asked by the Federal Reserve authorities.
HBL takes any instructions from regulators very seriously and we intend that everything will be fixed according to rules, he added.
The report also suggested that action was taken against HBL after it failed to fix the issues despite initial warning of the Federal Reserve and New York State Department officials.
