KARACHI, September 12, 2023: Pakistan’s leading bank-United Bank (UBL) has announced to sale of United National Bank Limited UK (UNBL UK) to Bestway Group, and the establishment of an Exchange Company.
According to a notice to the Pakistan Stock Exchange (PSX), the management has informed that UBL board approved the sale of its 55% stake in UNBL UK to the Bestway Group. Notice mentioned that the UNBL UK contributed Rs0.57 to the Consolidated EPS of UBL for 1H2023 and EPS of Rs0.48 for full year 2022.
UNBL UK is an banking institution incorporated in the United Kingdom. UNBL UK was formed in 2001 from the merger of the UK branches of United Bank Limited and National Bank of Pakistan.
The principal activities of UNBL UK are to provide retail banking, wholesale banking and treasury services to financial institutions and trade finance facilities to businesses of all sizes. UNBL UK operates one branch inside United Kingdom under the trade name of United Bank UK.
To recall, as of 1H2023, UBL’s consolidated Capital Adequacy Ratio (CAR) stood at 14.81%, whereas the unconsolidated CAR stood at 16.92%. In 1H2023 CBS, management mentioned that the difference is due to rupee devaluation and its impact on its subsidiaries outside Pakistan.
After the successful completion of this deal, it will have a positive impact of 200bps on its consolidated CAR, bringing it closer to the levels of the unconsolidated CAR, as per our channel checks.
We believe that the upward revision in CAR will increase the bank’s dividend-paying capacity in the future. To recall, in 1H2023, UBL announced a dividend of Rs22 per share.
As per notice, the board approved establishment of an Exchange Company with Rs1bn as initial Paid Up Capital, as wholly owned subsidiary of UBL subject to approval by State Bank of Pakistan (SBP) and other regulatory compliances.
The decision came following a recent announcement by the SBP encouraging banks to establish wholly-owned exchange companies to serve the legitimate foreign exchange needs of the general public.
SBP’s move comes in response to concerns over the weak operational structure and inadequate compliance levels observed within category ‘B’ exchange companies.
SBP has now advised both category ‘B’ firms and franchisees to either merge with established full-fledged entities or sell their businesses to stronger counterparts. Failing to comply with this directive within the stipulated three-month window will result in the automatic cancellation of licenses for standalone category ‘B’ firms.
SBP has also asked the exchange companies to increase their paid-up capital to a minimum of Rs500mn (excluding losses) by December 31, 2023, up from the current minimum requirement of Rs200mn.
