State-run Allahabad Bank is planning to close its Hong Kong branch for rationalisation of its overseas operations and as a part of its steps initiated under the government's reform agenda for the public sector banks.
State-run Allahabad Bank is planning to close its Hong Kong branch for rationalisation of its overseas operations and as a part of its steps initiated under the government’s reform agenda for the public sector banks. In a stock exchange filing on Friday, the Kolkata-based bank said, “…we wish to inform you that in compliance with the government of India directives under PSBs Reform Agenda, our bank has initiated various steps. As part of its said initiatives and having regard to the agenda for rationalisation of bank’s overseas operations, the bank proposes to close its Hong Kong branch.”
The bank in June had informed that the Hong Kong Monetary Authority (HKMA) had enhanced supervisory arrangements on its Hong Kong branch while “assessing implications of the capital positions” of the bank. The HKMA, de facto central bank, is the government authority in Hong Kong responsible for maintaining monetary and banking stability.
Significantly, the bank’s capital to risk-weighted assets ratio (CRAR) had declined to 8.69% at the end of March quarter from 11.27% at the end of December quarter last fiscal. In a BSE filing, Allahabad Bank had said as per the enhanced supervisory arrangements imposed by HKMA on its Hong Kong branch, the branch should maintain high quality liquid asset in Hong Kong equivalent to 100% of unpledged deposits. “ALHBHK (Allahabad Bank Hong Kong branch) should not proactively solicit customer deposits in Hong Kong. However, transactional deposits such as pledged deposits for commercial loans would be excluded from this supervisory arrangement,” the filing had said, adding ALHBHK should not incur additional non-bank credit exposures.