After United Bank Limited (UBL) and Meezan Bank, MCB Bank Limited (PSX: MCB) has also decided to set up an exchange company with an initial paid-up capital of Rs 1 billion, as disclosed to the Pakistan Stock Exchange (PSX) on Monday.
According to the stock filing, this exchange company will operate as a wholly-owned subsidiary of MCB, contingent upon approval from the State Bank of Pakistan (SBP) and compliance with regulatory requirements.
The announcement denotes that MCB has now become the fifth major commercial bank to also operate an exchange company after UBL, Meezan Bank, Habib Bank Limited (HBL) and the National Bank of Pakistan (NBP).
This momentous development follows the recent concerted crackdown against black market operatives, and the subsequent announcement by the State Bank of Pakistan (SBP) to introduce structural reforms in the Exchange Companies’ sector.
The point of the recent crackdown has been to rein in the open market and strengthen governance, internal controls, and compliance culture in the sector. As part of these reforms, leading banks actively engaged in foreign exchange business would establish wholly owned Exchange Companies to cater to the legitimate foreign exchange needs of the general public.
Additionally, the minimum capital requirement for Exchange Companies has been increased from Rs 200 million to Rs 500 million, free of losses.
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