Habib Bank Limited (HBL), one of the top five banks of Pakistan, has announced closure of its New York branch, licensed by the New York State Department of Financial Services (DFS), after American authorities sought to impose a hefty penalty of $630 million due to non-compliance with US anti-money laundering laws.
The bank, according to a bourse filing on Monday, said it will contest the allegations in a court of law.
“HBL has… decided to close its operations in New York in an orderly manner,” HBL Company Secretary Nausheen Ahmad said in a notification to Pakistan Stock Exchange (PSX). “HBL has received a notice from DFS in terms of which DFS seeks to impose an outrageous civil monetary penalty of up to $629,625,000,” she said.
The bank’s share price hit its lower limit of 5% to Rs207.21 at PSX. However, Ahmad contended that “there will be no material impact on HBL’s business outside of the United States” and that the bank “will continue to serve the requirements of its domestic and international customers including US Dollar businesses.”
She said in the notification that despite HBL’s sincere and extensive remediation measures, DFS is still not appreciating or recognising the significant progress that the bank has made at its branch in New York. “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.”
DFS has allowed the bank to submit an application for an orderly winding down of its New York branch. Steps to formalise this will commence shortly, she said.