The management of the National Bank of Pakistan (NBP) has decided to shutdown several foreign branches in different countries.

Seven overseas franchises are already in the process of being closed, andthe bank’s position on another seven branches will be decided in the nextphase, said the quarterly report of SBP without identifying the selectedbranches.

However, one branch of the Kyrgyz Republic will be shut down next month, asthe customers of the host country were directed to settle their accountswith the banks till February-end.

The operations of NBP’s main branch in New York are also in danger.——————————

NBP is a state-owned bank, operating with 21 overseas branches and 4representative offices in different countries. Its domestic footprint ofbranches stands at 1,512.

The report said that the international franchise of the bank is beingstreamlined to both integrate strategy as well as facilitate an enhancedlevel of compliance.

Pakistani banks with foreign branches in different countries have beenfacing various regulatory and business challenges for the last few years.Not only the profitability of the banks has dropped significantly, buttheir operating cost also went up amid the challenges of tough regulatorymeasures in different countries.

Habib Bank Limited (HBL), United Bank Limited (UBL), and a few other bankshave also closed their foreign branches and subsidiaries of financialservices in the past few years.

The quarterly financial report of NBP also mentioned that the bank’sagreement with the Federal Reserve Bank of New York and New York StateDepartment of Financial Services (US regulators) requires the bank toaddress certain compliance and risk management matters relating toanti-money laundering and the US bank secrecy law requirements.

This agreement also requires the implementation of the requisite systemsand controls and allocation of adequate resources to ensure full compliancewith such requirements. In this connection, the bank made significantpersonnel changes in its NY operations to strengthen the team to addressidentified regulatory weaknesses.

The bank has undertaken significant personnel, systems, and process changesin its NY operations to address identified regulatory weaknesses, but ahistorically weak compliance culture will take time to change effectively,and meanwhile, the bank remains vulnerable, the report added.——————————

NBP is working to streamline its operations in the New York branch. WhereasHBL and UBL shut their branches in the past and faced heavy penalties fromthe regulatory bodies of the host countries.

Pakistan’s contribution to the global banking industry is reducinggradually over the years. The overseas branches were not only used togenerate earnings in foreign exchange for the country, but they also playeda significant role in supporting expatriate Pakistanis, primarily byproviding them with banking services like remittances and loans.

With the closure of branches by different Pakistani banks in variouscountries, collaborative measures are being taken by the management ofdifferent banks with money transfer companies to facilitate the expatriatePakistanis, especially with facilitating them on remittance payments to thehomeland.

The innovative payment solution such as Roshan Digital Accounts (RDA) isproving to be an alternate choice for overseas Pakistanis in place ofPakistani banks with foreign branches.